John Kerry and John Edwards embarked on a two-week bus, boat, plane, and train trip this morning that will have them campaigning in 21 states during the next two weeks. Doing some quick math, that's more than one state a day. We, on the other hand, are planning a weekend that is heavy on hammock time. Glad we're not running for president.

Here's hoping your weekend is exactly as relaxing or productive as you want it to be.

In today's Motley Fool Take:

Will Marvel Maintain Its Strength?


Tim Beyers

I probably have more than 2,000 comic books stored away, most of them collected when I was teenager. It's a very rare occasion that I actually take one or more from the boxes and reminisce, but when I do I instantly recognize the story. It's very Hollywood, actually: Hero taken to the brink, only to summon the courage at the last second to sidestep the villain's dastardly plan, thus clutching victory from the jaws of defeat.

After a lengthy period of thumping the market and contemporaries, Motley Fool Stock Advisor pick Marvel Enterprises(NYSE: MVL) is starting to look, well, mortal. Thursday, the creator of Spider-Man reported lower operating margins and income. Second-quarter operating margins declined from 48% last year to 41% during the June period. Earnings were $0.25 per share, down from last year's $0.28. The report caused investors to flee like the terrified mob cowed by Dr. Octopus in Sony's(NYSE: SNE)Spider-Man 2, sending the stock lower by more than 12%.

Marvel's cost of sales, as well as taxes, provided the one-two punch that sent it reeling. Marvel spent more than $62 million to do business during the second quarter, a 266% increase over last year's $17 million. And with losses finally behind it, Marvel's effective tax rate jumped higher and farther than The Hulk's signature leaps, to 32% from 16% a year ago. In total, the Feds took more than $15 million from Marvel's bottom line.

That's not to say there wasn't good news in the report. Marvel's sales jumped 73% to $155 million. And Marvel revised upwards its total 2004 guidance. Still, the revised numbers show a decline in income on higher sales -- mixed news to say the least.

As with its many comic book heroes, Marvel now appears to be entering a period where it will be tested repeatedly, and the company will likely have to squeeze pennies to make investors happy. Yet there's reason to be hopeful. In a post to our Marvel discussion board Fool contributor Rich Smith points out that Marvel's stock may be vastly undervalued on a cash flow basis.

Indeed, free cash flow has been one of the company's major strengths, and there's no reason to think this won't continue. Moreover, films starring Elektra and the Fantastic Four are in the works, and deals for new episodes in the X-Men and Spider-Man series have apparently been inked. Don't count our hero out just yet.

For more Fool coverage of Marvel:

Of all the Marvel heroes, Fool contributor Tim Beyers was always partial to Spider-Man. Tim owns no shares in any of the companies mentioned, and you can view his Fool profile here.

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Washington Post's Educational Advantage


Nathan Slaughter

Media giant Washington Post(NYSE: WPO) has a sprawling portfolio of newspaper, magazine, online, cable, and broadcasting assets, but lately the driving force behind the company has been the educational services provided by subsidiary Kaplan. The education segment followed up last quarter's impressive 45% spike in revenues with a similar 41% gain. This increase helped propel overall revenues 16% higher to $818.4 million. Second-quarter earnings jumped 40% to $84.9 million, or $8.82 a share, easily outpacing estimates of $8.32.

The wave of advertising spending that lifted ad revenues 15.5% at Gannett's(NYSE: GCI) flagship USA Today bypassed Washington Post's namesake daily, whose ad revenues only managed to climb 1%. Fortunately, print weakness was partially offset by strength in the online counterpart, The online publishing division reported local and national online advertising growth of 61%, pushing sales 39% higher to $15.4 million. Total revenues in the newspaper publishing division rose 5% to $234 million.

With help from political spending in advance of November's election, broadcasting revenues from the company's six television stations rose 10% to $90.2 million. This is in line with similar advances of 10.3% at Gannett, 10.7% at New York Times(NYSE: NYT), and 11% at E.W. Scripps(NYSE: SSP).

The cable division also had a 10% increase in revenues. Both digital cable and cable modem Internet services have been completely rolled out and are available for all of the division's 712,000 basic cable customers. Around 17,000 digital subscribers have been added over the past year, bringing the total to 220,400 -- for a penetration rate of 31%. This trails Cablevision's(NYSE: CVC) 35.9% and Comcast's(NYSE: CMCSA) 37.5%, but the company is beginning to reap the rewards from the capital invested to get these premium services up and running.

The education segment, though, continues to shine the brightest. Some might recall using Kaplan's materials to study for the SAT, but that is only the tip of the iceberg. In addition to test preparation, the company's wide-ranging services include learning centers, book publishing, software, professional licensing certification, and continuing education, and both undergraduate and graduate degree programs. Thanks to Kaplan's growth (both internally and via acquisition), operating income soared from $3.5 million to $29.4 million.

The long-awaited rebound in advertising spending has yet to fully reach Washington Post's core print business, but other divisions have picked up the slack. Aside from newspaper and magazine publishing (which despite a small drop in revenues experienced a surge in income thanks to a 14% pickup in ad spending at Newsweek), every other segment posted double-digit increases in both revenues and operating income. That revenue diversity will help keep the company on an even keel until the choppy advertising market settles.

Fool contributor Nathan Slaughter owns none of the companies mentioned.

Discussion Board of the Day: Cheap Air Fares

Will AMR's hike send its rivals scrambling, or will the carrier be left with little choice other than to kick off another sale once its low-cost peers fail to follow suit? Where are flight rates headed? Where can you find the best bargains? All this and more in the Cheap Air Fares discussion board. Only on

Target Cleans House


Brian Gorman

Target (NYSE: TGT) has agreed to sell its Mervyn's department store chain in exchange for $1.65 billion in cash as the discount retailer continues its drive to shed less profitable units and focus on its core business.

The sale, which involves 257 locations in several states in the west and south, comes just a month after Target announced it would unload its Marshall Field's stores to May Department Stores(NYSE: MAY). Target also agreed to sell Mervyn's credit card receivables to General Electric's(NYSE: GE) GE Consumer Finance unit for $475 million. All told, the transactions will amount to a $270 million pre-tax gain for Target in the third quarter.

The sale of Mervyn's has been in the works for some time and will likely be cheered by investors. To see why, just look at the firm's latest sales figures: Target's name brand same-store sales rose an anemic 2.2% in a difficult June, while Mervyn's showed just a 0.2% gain.

The question now becomes, what will Target do with its new cash? The company had $622 million in cash and equivalents on hand as of May 1 and $9.6 billion in long-term debt. The official line is that the proceeds will go to a $3-billion-dollar buyback of stock and to reduce debt levels. Another possibility, though, is that the extra money could lead to an acquisition. Talk has been swirling the last few weeks that Target is mulling the purchase of Canadian discount retailer Zeller's.

The acquisition may be worth considering, since the retailer does appear to need room to grow. The company expects to have about 1,300 stores in the U.S. by the end of this fiscal year, and it seems it will eventually reach the limit of its potential domestically. Further, updates of existing stores will only take sales so far. Through a Zeller's purchase, Target would immediately gain a major foothold in Canada, where competitor Wal-Mart(NYSE: WMT) is already enjoying solid results. For Target, a move into Canada could be an easy way to keep profits heading north.

Fool contributor Brian Gorman is a freelance writer in Chicago. He does not own shares of any companies mentioned in this article.

Quote of Note

"History will be kind to me for I intend to write it." -- Sir Winston Churchill

A Nanotech That Deserves Respect


W.D. Crotty

Tom Gardner expects his Motley Fool Hidden Gems recommendations to face a bumpy road. They are small and have little analyst coverage. In a word, they are "hidden." But hidden is usually a good thing in investing.

Hidden Gems recommendation Flamel(Nasdaq: FLML) hit some potholes this morning when it announced its quarterly revenues increased 80% and its net loss decreased slightly. The stock is off about 6% in afternoon trading.

To be fair, the company did miss the earnings estimates of the three analysts that follow it. One expected a $0.20 per-share profit. The lowest estimate was a $0.06 per-share loss. The actual loss was $0.07 per share. Shucks!

Flamel and its peers in the Merrill Lynch(NYSE: MER)Nanotech Index(AMEX: NNZ) are the Rodney Dangerfield of stock groups -- they are getting no respect. The index and Flamel are close to 52-week lows. So miss the analyst estimates and you really get no respect.

Flamel uses its polymer chemistry expertise to make new and already-marketed drugs safer and more effective. It is the ability to work with FDA-approved drugs -- which would have greatly reduced development times -- that makes near-term revenue and earnings possible.

Remember the three analysts? They expect the company to earn anywhere from $0.20 to $1.63 per share in 2005. Yes, that is a wide range. But, the growth of revenue and earnings at Flamel could be explosive -- and that is one reason it is a Hidden Gems recommendation.

The company's Medusa nanoparticle technology improves the delivery of native protein drugs through a more evenly controlled release of the drug. The technology also avoids side effects and enables a longer span of time for drug release -- both of which are a significant advantage. Bristol-Myers Squibb(NYSE: BMY) has a phase 2 trial using Medusa for a long-acting (24-hour) human insulin.

The company's microparticle Micropump allows small-molecule drugs to have extended delivery times. Generic-drug company Biovail(NYSE: BVF) and drug giant GlaxoSmithKline(NYSE: GSK) have products set for phase 3 trials.

The company also has a number of undisclosed partnerships, an "undisclosed" Micropump project with Merck(NYSE: MRK), and its own pipeline.

Today's stock action is not indicative of any change of fortune at Flamel. In fact, the company announced the start of construction for a new manufacturing facility. Flamel is clearly getting ready for the future.

The company has a more than respectable $101 million in cash. That's plenty considering the latest quarter's loss was $1.6 million. The stock isn't getting respect in today's trading, but Flamel's long-term future looks like a gem.

Fool contributor W.D. Crotty does not own stock in any of the companies mentioned.

More on Today

In The Tech Stock Opportunity, Whitney Tilson argues that the tech sector is fertile ground for value investors.... In Freddie Mac: No Housing Bubble, Salim Haji gets the scoop on why Freddie Mac thinks that the U.S. real estate market today is rational.... Rick Munarriz takes a closer look at DreamWorks, Disney, and Pixar and sees potential for rewards and pitfalls in Animation Niche's Overdrawn.... Bill Nygren shares why he stands behind certain solid stocks in Matt Logan's 5 Stocks for the Next 10 Years.

In other news:

For a list of all our stories from today, see our Today's Headlines page.