The witching hour is upon us, and in celebration of one of our favorite holidays (Fools love tricks and treats), our Smarties are handing out stock advice in place of Bottle Caps. Don't Snicker... it's important to know which companies look like Duds and which look Red Hot. Check it out, Now or Later. Hopefully, it'll lead to a Payday.

In today's Motley Fool Take:

Disney's Triple Play

The Anaheim Angels won it all last night. If you ask the unlikely World Series victors what they plan to do next, don't be surprised if the answer is, "We're going to Disneyland."

The park itself is just a three-mile hike from the stadium in which the team came out on top during last night's seventh and decisive game. The Angels are also owned by Disney(NYSE: DIS), which poses one of the most impressive triple plays in entertainment history -- though it won't show up on the media conglomerate's ESPN highlight reel.

First pitch. Disney announces it wants to shed its athletic teams. It loves ESPN, but in taking an active ownership role with the Angels and hockey's Mighty Ducks, it has discovered it's much easier to be the broadcaster of all sports than the master of specific participants. If you believe in the "Buy Low, Sell High" mantra, cashing out of the World Series champions now couldn't come at a better time.

Second pitch. Baseball is America's past pastime. With football proving to be the real ratings monster, the baseball field has truly become a diamond in the rough. The apathy is real. By sporting two wildcard teams in the unlikely title matchup, ratings were off by 24%, relative to last year's series through the first six games. So why is Disney smiling?

All seven games aired on rival Fox(NYSE: FOX). Not only is Fox smarting from the sluggish numbers, but because the network held up some of its season premieres as a result of its expanded October schedule, Disney's new fall shows made some major headway. While General Electric's(NYSE: GE) NBC and Viacom's(NYSE: VIA) CBS still rule the ratings roost, Disney is off to a strong start to wrestle third place back from Fox in key, young demographic groups.

Third pitch. With tourism sluggish at the company's theme parks, particularly California Adventure in Anaheim, you can't beat the attention Disney garnered from the games. Early in the series, San Francisco Giants' manager Dusty Baker said his children kept asking to go back to Disneyland. While Dusty's batboy son Darren ran for home plate in Game 5, going home is probably the last thing on his mind right now.

There's no doubt Disney will find a way to use this Cinderella story to market its ailing resorts and turn its foul balls into home runs.

Discussion Board of the Day: Major League Baseball

What did you think of the World Series? What about the future of baseball? Are the Montreal Expos going to become a traveling team next season? There's more to the Fool than stocks and Barry Bonds. All this and more -- in the Major League Baseball discussion board. Only on

Kellogg Milks Q3

Kellogg (NYSE: K) snapped, crackled, and popped its way to improved third-quarter results today. The king of breakfast cereals earned $203.5 million for the period, or $0.49 a share -- a penny ahead of expectations. In last year's Q3, the company earned $150.3 million, or $0.37 a share, excluding charges ($0.48 including them). Its free cash flow improved this quarter, as well.

The maker of Frosted Flakes, Pop Tarts, and Apple Jacks saw total sales decline about 2% to $2.14 billion as a result of fewer shipping days compared to the year-before quarter. Kellogg said that on a "comparable" basis, sales improved 7%. So investors can better detect how the company's core operations are performing, the company tries to weed out the impact of its Keebler purchase and the effects of both switching to 13-week quarters and changing the way it accounts for amortization in reporting "comparable" numbers.

Comparable sales in the domestic cereal market -- the bulk of Kellogg's business -- improved 6%, crucial growth for the company. Keebler and the other snack-food lines in its stable didn't relax, either, returning comparable growth of 5%.

Kellogg continues to integrate Keebler and has been on a cost-cutting and cost-saving spree over the last year. As a result, operating costs shrunk as a percentage of sales to around 26%, and the operating margin improved to 19.4% from the year ago's 15.8%. Gross margins improved, well, marginally.

The company generates solid operating cash and free cash flow. While it has used this moolah to pay off long-term debt in the past, it chose to buy back shares this quarter, in an effort to offset share dilution associated with stock options. Kellogg has also considered investing in its pension funds. Neither option is particularly wasteful, but the company shouldn't lose sight of its debt load after buying Keebler.

For a big, established company like Kellogg, these results are commendable. Shares aren't exactly a bargain at the moment, but investors looking for safety and slow, predictable growth might consider a spoonful of this cereal.

Quote of Note

"Red serpents, fiery forms, and yelling hags,
Fit company for mad adventurers."
-- Philip Freneau (1752-1832), American poet

Sony Snaps Back

Things are on the rebound for Sony(NYSE: SNE). The $42 billion electronics and entertainment giant turned a second-quarter loss in 2001 into a profit of $0.37 a share this year. The free cash flow turnaround is just as dramatic, going from a $2.7 billion loss to a $935 million gain.

Most of the good news this quarter is attributable to the electronics and gaming divisions. Sales of the popular PlayStation 2 helped spur a 500% profit increase in that segment. Demand for computers and digital cameras jumped, keying a turnaround in the electronics division.

One disappointment came from the entertainment and film segment. Thanks to movies such as Men in Black II, Mr. Deeds, and xXx, revenue increased 27%. Profit actually fell 55%, however, because of the huge advertising expenditures needed to promote the flicks.

Company-wide, sales rose only slightly, as most of the earnings came from cost-cutting and restructuring. You can expect that trend to continue; CEO Nobuyuki Idei raised the full-year earnings target by $240 million, while lowering sales projections by $800 million. Saying he's "concerned that consumer confidence may deteriorate even further," Idei will continue the restructuring, while keeping a watchful eye on spending.

Sony's results are typical of many well-run companies these days. While earnings may be on the rise, it remains to be seen if such growth is sustainable.

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'Tis the Season to Avoid Funds?

Mutual funds have a nasty habit. Once or twice a year (usually in December), they distribute the capital gains they've been storing up for months. Shareholders of the fund receive the distributions, which are usually reinvested in the fund.

That sounds great, except those distributions don't increase the investors' net worth or the value of the investment. On the day of distribution, the net asset value (NAV) of the fund drops proportionate to the value of the distribution. So while shareholders who reinvest distributions will end up with more shares, the value of the investment stays the same. And here's the real kicker: Shareholders will have to pay taxes on those distributions.

Also, the distributions are made to all shareholders, regardless of how long someone has been invested. Send your money to a mutual fund right before the distributions, and you'll have to pay taxes on growth you never saw. Which is why, at this time of year, most investors are advised to stay away from mutual funds. But not this year.

A capital gain is the result of an appreciating asset, and, with the stock market in the midst of a long, hairy bear market, appreciating assets have been hard to come by. Plus, any gains that do exist can be offset by losses, which are legion.

But what about bond funds, which have done very well these last few years? Morningstar fund analyst Brian Lund doesn't think it's a big concern. "Turnover at bond funds tends to be much lower than at stock funds," says Lund. "A manager with a 10-year Treasury note from 1999 yielding 6% is probably pretty happy with that paper, at this moment. If he sells it for the high price, what's he going to do with the money? Reinvest in a Treasury at 4%?"

So what's an investor to do? Here are some ideas:

  • If you have a fund that is valued below your cost basis, you could sell your mutual fund for a loss, then buy back a similar fund. That way, you can claim the capital loss on your tax return but still be invested. While you can't do this with stocks without violating the "wash sale" rules, you can do this with mutual funds as long as you don't buy back the same fund or a fund that is substantially the same. (This presumes that the funds you sell and buy are no-load funds; otherwise, the tax savings probably won't be worthwhile.)

  • Call the mutual fund company before you invest and find out when distributions will be made. Distributions aren't just made in December, so always call the fund company before you invest.

  • You can avoid all these tax shenanigans by keeping mutual funds in Individual Retirement Arrangements (or "Accounts," depending on which IRS document you read).

Quick Takes

EchoStar Communications (Nasdaq: DISH) , still eager to scoop up rival DirecTV from Hughes Electronics(NYSE: GMH), is reportedly ready to strengthen a competitor in order to get clearance for the deal. EchoStar aims to transfer a large number of frequencies, as well as a few satellites, to Cablevision(NYSE: CVC).

US Airways announced it's laying off nearly 500 pilots in continued desperate attempts to stay afloat. Meanwhile, while UAL Corp.'s(NYSE: UAL) United Airlines also struggles, and its flight attendants offer to take pay cuts, its new CEO has been given millions in compensation. What a confused and confusing industry.

According to a Reuters report, Pfizer(NYSE: PFE), Warner-Lambert, and Parke-Davis are alleged by the government to have "fraudulently avoided paying fully the rebates owed to the state and federal governments under the national drug Medicaid Rebate program for the cholesterol-lowering drug Lipitor." To settle this matter, the firms will fork over $49 million.

J.C. Penney (NYSE: JCP) , aiming to turn itself around with new CEO and turnaround specialist Allen Questrom, has raised its quarterly earnings expectations due to strong sales. Some other major retailers, such as Wal-Mart(NYSE: WMT), report that sales are on track.

The Wall Street Journal (subscription required, free trial available to Fools) reports that, "Increasing use of diesel fuel in Europe has resulted in a gasoline surplus, boosting exports and stabilizing prices in the U.S. despite a volatile market." Thanks, Europe!

The Journal also reported today that if America continues to experience slow growth, the Fed should trim interest rates in the next few months. If a cut happens, it's likely to be a half-percent, instead of the quarter-percent cuts we've seen more of recently. The Fed's short-term interest rate is currently at 1.75%, with little left to cut.

And Finally...

Today on Zeke Ashton puts a price on quality and integrity.... Selena Maranjian uses behavioral economics and the sniper case to argue we should examine our choices rationally.... In Fool's School, invest in real estate, the easy way!... Our Fool Community discusses Apple's valuation.... And the Post of the Day: Berkshire Hathaway.

Bob Bobala, Robert Brokamp, Tom Jacobs, LouAnn Lofton, Bill Mann, Selena Maranjian, Rex Moore, Rick Munarriz, Matt Richey, Jackie Ross, Reggie Santiago, Dayana Yochim