The market treaded water for most of today, but with stocks steadily trending downward this summer, is it time to buy? Shannon Zimmerman thinks that might be the case for large-cap stocks. He sees a silver lining in the sale prices the market's offering.

In today's Motley Fool Take:

Hoarding Home Depot


Seth Jayson (TMFBent)

To judge by this morning's second-quarter earnings release, no one told Home Depot(NYSE: HD) consumers that they were supposed to be less confident. While the summer's financial headlines have been full of dire sales warnings for everyone from Ford(NYSE: F) to Wal-Mart(NYSE: WMT), customers with a tendency to tinker don't seem to have had any trouble opening up their wallets. Revenues had a brisk rise at Lowe's(NYSE: LOW), as Phil Wohl mentioned yesterday.

Today, we learn that the average Home Depot home improver spent 8.2% more per purchase -- just more than four bucks -- to help push comps up 4.8%. All told, the big orange retailer notched sales of $20 billion for the quarter, 11% better than last year's tally. Earnings per share shot up even more, rising 25% to $0.70 per stub.

If you're interested in investing in companies that know how to deliver for the shareholder, you will probably dig what Home Depot is doing. At the top of the sheets, check out the 2.2% improvement in gross margin. Multiply by $20 billion, and you get an idea of what that can do for the bottom line. Mix in generous stock buybacks, such as the $6 billion recently spent, with another $1 billion on the way, and you have a recipe for reliable investor rewards.

If you need to pick nits, well... SG&A popped up 1.4% this quarter as a portion of revenues. Trimmer operations would have made things even sweeter.

For the full year, management raised its earning guidance from 10-14% to 14-17%. Even after today's 4% pop, shares are priced at about 17 times earnings. OK, that's not a thumping cheap value. But given the firm's solid consistency and opportunities for growth in Mexico and China, investors would be Foolish to hoard a little Home Depot, especially if it can be purchased during the occasional market discounts.

Seth Jayson isn't surprised to learn that his average Home Depot ticket far exceeds the average, but he has no position in any company mentioned. View his Fool profile here.

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Apple's Real Rivalry


Alyce Lomax (TMF Lomax)

If you go by the headlines alone, it sounds like RealNetworks(Nasdaq: RNWK) is about to embark on a heady money-losing venture as it halves prices for its music download service Harmony, looking to take a bite out of Apple(Nasdaq: AAPL). Well, don't get me wrong, it is, but it's not quite what it sounds, and I'm not sure it's cause for much alarm at all.

RealNetworks announced its Freedom of Choice campaign today, which is a fire sale of sorts, offering song downloads for $0.49 each and albums for $4.99 each. Compared with the pricing for the industry standard -- Apple, iPod, and iTunes services, which recently delivered its 100 millionth download -- Real's offering the equivalent of a two-for-one sale.

Though RealNetworks now expects its upcoming quarterly loss will be wider by a penny related to the campaign, these prices aren't going to be an ongoing business initiative. So, while it's an interesting move, rumors of an all-out price war may be greatly exaggerated.

It's another day that brings to mind that desperate times call for desperate measures, and we've seen some pretty wild attempts in recent history, from rivals such as Roxio(Nasdaq: ROXI) and Dell Computer(Nasdaq: DELL).

Real's been rabid to rip market share from Apple. Although Real may have gotten some sympathy several years ago for having called out Microsoft(Nasdaq: MSFT) for anticompetitive concerns, it seems a little harder to sympathize with it lately.

Apple may have garnered 70% of the download market and then rebuffed Real's overtures to play beautiful music together, but that didn't give Real any good reason to -- in Apple's words -- "hack" into the iPod. This seems one in the latest pot shot at Apple, which consumers have chosen over the competition, which also includes Sony(NYSE: SNE) and even Wal-Mart(NYSE: WMT). At this rate, Real may start to get "real annoying."

What Real seems to forget is that Apple's products are so darn popular, and current pricing may not be that much of a concern for the downloading public (downloaded albums are still a lot cheaper than CDs, and for some, downloading single songs certainly saves money compared with entire unwanted albums).

So, this campaign may paint Real as a bit of a rebel without a cause. Though yes, it might result in a flurry of Harmony downloads in the near term, the sheer fact that Harmony does work with a variety of players doesn't require loyalty. I'm not convinced Real's plan will further its long-term agenda much -- or take a very big slice of the Apple pie.

Read more on Apple, Real, and music downloads:

Alyce Lomaxdoes not own shares of any of the companies mentioned.

Discussion Board of the Day: Apple

What do you think of RealNetworks' latest attempt to swipe iTunes market share? Discuss your views with other Fools on the Apple discussion board.

McAfee Finds More Security


Tim Beyers

Shortly after we came back from our big vacation overseas in May, my Apple(Nasdaq: AAPL) PowerBook was hit with a computer virus. I can't tell you which one, but it was enough to cripple my Microsoft(Nasdaq: MSFT) Office for the Mac software. Symantec's(Nasdaq: SYMC) Norton Anti-Virus found the bug, and then eradicated it by exterminating my entire in-box. (Thanks, guys.)

Fortunately, I only lost a month's worth of e-mail because I back up my data to an external hard drive. But I've learned my lesson. I now back up my data a whole lot more, although still probably not as often as I should.

Indeed, viruses are spreading. There are more than 90,000 classes of computer viruses out there, according to Sophos, a maker of anti-virus software. No wonder researcher Meta Group says that it expects 12% of information technology budgets to be spent on securing computer systems over the next couple of years. With the Department of Commerce estimating $872 billion in gross domestic product from IT last year, services, hardware, and software for security could eclipse $100 billion in 2004 and continue growing steadily.

So you can go ahead and color me unsurprised to hear yesterday that anti-virus software maker McAfee(NYSE: MFE) acquired privately held Foundstone for $86 million in cash. McAfee is one of the two acknowledged heavyweights in virus-crushing software, with Symantec being the other. Foundstone will add to McAfee's portfolio by providing software that shows businesses where their networks are vulnerable to outside attack, a high-value service that will likely continue to deliver healthy margins. (Foundstone says it has more than 400 customers, including AT&T(NYSE: T), McKesson(NYSE: MCK), and Motorola(NYSE: MOT).)

The deal is the latest in a spree of acquisitions in tech security lately -- even Time Warner's(NYSE: TWX) AOL unit recently got in on the game. AOL's move followed on the heels of Microsoft and Motley Fool Stock Advisor pick Dell(Nasdaq: DELL) signaling their intent to fight the good fight against digital bugs.

But yesterday's news interested investors because it shows that McAfee is intent on continuing its recent momentum by buying to complete its product portfolio. Trading at roughly 20 times its expected forward earnings, and 15 times its free cash flow when compared to its enterprise value, McAfee shares are anything but cheap at today's prices. Strong growth delivered from acquisitions such as the Foundstone deal could change that in a hurry.

For more Fool coverage of the virus wars, check out these articles from Alyce Lomax:

Fool contributor Tim Beyers still thinks the Mac is much more insulated against viruses than those pesky Windows PCs, but he also thinks you can never be too careful. Tim owns no shares in any of the companies mentioned, and you can view his Fool profile here.

Quote of Note

"If the world should blow itself up, the last audible voice would be that of an expert saying it can't be done." -- Peter Ustinov, British actor and author

More on Today

In Time to Buy?, Shannon Zimmerman says that when the going gets tough, the tough go shopping.... Charly Travers offers advice on withstanding the volatility of the biotech sector in Surviving Biotech's Downturns.... In Pay Up for Growth, Legg Mason's Mary Chris Gay shares when to pay for growth and when to sell a stock.

In other news:

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