Why InterDigital, IAMGOLD, and Hillshire Brands Are Today's 3 Best Stocks

The S&P 500 puts an end to its three-day win streak as InterDigital, IAMGOLD, and Hillshire Brands lead individual stocks to the upside.

Jun 3, 2014 at 5:15PM

Despite generally positive data on the economic front, and even though the VIX continues to head toward multi-year lows, even optimists decided to take a day off today.


The big report of the day was U.S factory orders for April, which rose 0.7%, slightly ahead of economist expectations, but down notably from the 1.5% expansion in March. Keep in mind, though, that the polar vortex engulfed a good chunk of the U.S. in January and February and reduced factory output, so March's surge was akin to pulling a rubber band one way and having it snap back in the other direction. All things considered, factory order growth remains strong (and hit an all-time high in April) and would certainly be conducive to this rally continuing.

Also providing a bright spot was the midday release of U.S. auto sales figures which showed moderate strength for two of the nation's three largest automakers thanks to favorable weekend weather across much of the country. On the heels of strong Jeep sales Chrysler noted that its unit volume jumped 17% while General Motors reported a 12.6% increase in unit sales from the prior-year period despite a number of ongoing recalls and an investigation into why certain of these recalls didn't occur sooner.

By days end the broad-based S&P 500 had dipped ever so slightly by 0.73 points (-0.04%) to close at 1,924.24, ending its three-day winning streak.


Source: Karlis Dambrans, Flickr.

Leading the charge to the upside today among individual stocks is wireless technology intellectual property company InterDigital (NASDAQ:IDCC), which jumped 20.7% after announcing a patent license agreement with Samsung and issuing its updated second-quarter guidance. By far the bigger news of the two was the patent agreement with Samsung that settles a dispute between the two over the alleged use of InterDigital's patents in new mobile devices. Without the need for hefty court fees InterDigital is free to collect royalty revenue from Samsung amicably to the delight of shareholders. InterDigital also updated its quarterly revenue guidance for the second-quarter to a fresh range of $72 million-$80 million compared to current Wall Street estimates which call for roughly $48 million. Companies like InterDigital could present a lot of value for larger tech companies looking to add royalty revenue to their product portfolio, however, their erratic revenue growth can be tricky to gauge at times.

Shares of gold miner IAMGOLD (NYSE:IAG) had a wild day, spiking higher by 12.5% despite no readily apparent news. However, gold prices did move higher for the first time in seven sessions which could be adding some fuel to IAMGOLD's move. In addition, IAMGOLD updated its drilling progress at Monster Lake last week noting that it contained "three sheared, altered, and mineralized zones." This is just the company's first exploratory program in the region and it could be quite successful if mineral yields remain high throughout the drilling process. However, IAMGOLD also has one of the highest cost-structures due to its mines in Africa where high labor costs and work disruptions had become the norm for years. Unless we see a genuine rebound in gold prices there are probably better miners to consider within the sector.

Finally, the Days of Our Lives love triangle between Tyson Foods (NYSE:TSN) and Pilgrim's Pride (NASDAQ:PPC) over who will purchase Hillshire Brands (NYSE:HSH) continued today, with Pilgrim's Pride upping its bid for Hillshire Brands to $55 per share from the $45 per share it offered last week. Hillshire rose 9.5% in response.

Source: Nakeva Corothers, Flickr.

This bid handily trumps the $50-per-share offer from Tyson at the end of last week and puts Pilgrim in position to snag Hillshire away from Tyson. Once again, this bid is contingent on Hillshire Brands dropping its bid to acquire Pinnacle Foods for $4.23 billion. While I've been dead wrong three straight times now, I still see absolutely no value in the deal at these shares. Although cost synergies from merging distribution channels will benefit the acquiring company, it will take years to realize these full benefits. In the meantime, Hillshire is now valued at 29 times forward earnings and more than 13 times trailing EBITDA -- an insane price to pay for Hillshire in my personal opinion. Pilgrim declared bankruptcy in 2008 for overpaying to acquire a peer and it could be setting itself up for a similar fate with this bid. I'd suggest keeping your nose clean of this entire bidding war.

InterDigital, IAMGOLD, and Hillshire Brands all soared today, but none are likely going to be able to keep pace with this top stock over the long run
Give us five minutes and we'll show how you could own the best stock for 2014. Every year, The Motley Fool's chief investment officer hand-picks one stock with outstanding potential. But it's not just any run-of-the-mill company. It's a stock perfectly positioned to cash in on one of the upcoming year's most lucrative trends. Last year his pick skyrocketed 134%. And previous top picks have gained upwards of 908%, 1,252% and 1,303% over the subsequent years! Believe me, you don't want to miss what could be his biggest winner yet! Just click here to download your free copy of "The Motley Fool's Top Stock for 2014" today.

Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

The Motley Fool recommends General Motors. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers