May Fund Flows: ‘Prelude to the Storm,’ Says Morningstar

Morningstar said Tuesday that May was another strong month of mutual fund inflows: Investors added $38.6 billion into long-term funds, excluding figures for money-market and fund of funds, as well as ETFs.

Taxable-bond funds stayed ahead of the pack with $21 billion in flows.

Investors, who embraced core, intermediate-term bond funds in 2012, are increasingly turning to less interest-rate-sensitive bond sectors and are shunning government bond sectors, according to Michael Rawson, CFA.

In May, interest rates spiked, with the 10-year Treasury rate increasing by nearly half a percent to 2.16%. At the same time, the Barclays Aggregate Bond Index fell 1.78%.

Investors took profits in U.S. equity funds in May “but continued their love affair with emerging-markets stocks,” says Rawson.

Municipal-bond funds experienced net outflows for the third month in a row. Meanwhile, money-market funds (also tracked by Morningstar) grew by $27 billion—their first monthly inflow of 2013.

Darkening Skies

In May, the improving economy and jobs report led to the conclusion that the Fed may ease up on quantitative-easing measures. Flows into the intermediate-term bond category weakened but were positive for the month—and did not turn negative until early June.

In May, it was nontraditional-bond and bank-loan funds that took in the largest share of flows, according to Morningstar.

The PIMCO Total Return Bond had strong outflows. But PIMCO Unconstrained, the largest fund in the nontraditional category, gained more than $1 billion in flows, as did JP Morgan Strategic Income Opportunities.

The bank-loan category also attracted strong inflows, led by Oppenheimer Senior Floating Rate with a $700 million haul. (The fund rose 0.24% in May and 3.54% during the first five months of 2013.

Equity Tremors

The rise in rates did not sit well with equity investors in May.

“While the S&P 500 was up 2.34% for the month, yield-oriented sectors such as REITs and utilities each lost more than 6%, according to Morningstar sector indexes,” Rawson said.

U.S. equity fund investors took out a net $700 million in May, including withdrawals of $1.9 billion from large-growth funds.

On the other hand, international-equity funds gained $8.5 billion, with diversified emerging-markets funds leading the way.

A new fund, ING Emerging Markets Index, “burst onto the scene” with $470 million of inflows in May, says Morningstar. Meanwhile the Vanguard Emerging Markets Stock Index brought in $363 million.

International funds that each brought in more than $1 billion included the Silver-rated GMO International Intrinsic Value and Gold-rated Oakmark International.

(Oakmark International has gained 45% in the past 12 months compared with 28% for the MSCI EAFE Index.)

Fund Family Winners

Vanguard led the pack again, with more than $11 billion in flows.

In May, the fund giant officially launched two international bond funds: the Vanguard Total International Bond Index Fund and Vanguard Emerging Markets Government Bond Index Fund, which didn’t officially start trading until June 4. PIMCO stayed in second place, though its $2.5 billion of flows was its weakest showing for the year to date, Morningstar reports.

Franklin Templeton was close behind PIMCO, adding more than $2 billion; its Templeton Global Bond Fund led the way. Fidelity came in fourth, thanks to strong flows into the Fidelity Series Investment Grade Bond and Strategic Advisers Core Income.

“For the second month in a row, flows to MFS were lifted by a strong interest in Bronze-rated MFS Massachusetts Investors Trust,” said Rawson.

Hartford, Janus and Columbia, however, each had strong outflows.

The Silver-rated Hartford Capital Appreciation saw redemptions of $1.4 billion, while Neutral-rated Janus Fund saw outflows of $481 million.

***

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Bull of the Day: Ruckus Wireless (RKUS) - Bull of the Day

Ruckus Wireless (RKUS) didn't make enough noise when it came public, and the noise it has created at earnings hasn't exactly been music to investors ears. Still, it is a Zacks Rank #2 (Buy). It is the Bull of the Day.Making a ConnectionRecently, analysts are both Deutsche Bank and William Blair noted that the WLAN space was seeing some positive purchasing trends. The idea of constrained IT budgets did not come up nor did customers waiting for the latest and greatest technology.With the way things are going, investors who are looking at the long term might even see a budget flush at the end of this year. The budget flush happens when a business manager spends all available budget all at once to make sure that next year they get an equal amount of budget or more depending on success.Company DescriptionRuckus Wireless provides Wi-Fi solutions. The company offers SmartCell Gateway, a platform to support and manage its Smart Wi-Fi access points as well as for the integration of Wi-Fi and other services into service provider network infrastructure. The company was incorporated in 2002 and is headquartered in Sunnyvale, California.Earnings HistoryLooking to the earnings history, we have a limited data set with only two reports. Worse than having limited data is when they are both misses!The most recent quarter was expected to show a gain of $0.03, but was instead a break even quarter. That miss of $0.03 helped push the stock lower by 22% in the session following the earnings release.IPO Had Access DeniedNot too long ago, RKUS came public and had a major flop of an IPO. The stock was offered at $15 and raised $126 million for the company, but closed down 18% to $12.25 on its first day of trading. Since then, the stock seemed to have a stronger signal for investors.The stock ran to highs of $26 and change before losing the signal again with investors. Now back in the low teens, many are banking on a strong second half for the telco and telco equipment providers to boost shares back to all-time h! ighs.Earnings Estimates AdjustedAfter its recent IPO analysts have had a chance to fine tune their estimates. The 2013 Zacks Consensus has been trimmed from $0.16 to a nickel. At the same time the 2014 Zacks Consensus Estimate has dropped from $0.30 in January of this year to the current level of $0.16. Analysts often have trouble with a new company that does not have a full year of data available to discern trends. This is likely the case for RKUS, but the new, lower bar means the company has a much better chance of beating the number. ValuationThe valuation picture for RKUS is a stiff one. This is often the case for a stock that is fresh off an IPO with only two quarters behind it. With minimal earnings at present the 45x trailing PE doesn't seem to really be a fair comparison to the 12x industry average. Similarly, a 304x forward PE seems to be more of a data error than a basis for an investment decision. At the same time, a 250% growth in earnings from 2013 to 2014 works to level the absurd PE ratios. The Chart The chart on this stock is one that doesn't scream a Zacks Rank #2 (Buy). Instead it looks like one of those stocks that got ahead of itself and has later corrected. Taking advantage of the correction is one thing that I suggest investors look into as the stock bottomed in June and is on the rise. I am very positive on the whole telco equipment space after companies like GOOG and MSFT recently missed earnings. The likelihood of a flood of wearable devices coming in 4Q is pretty high, and all of them will need wireless connections... and playing a basket of wireless equipment stocks makes a lot of sense right here. Brian Bolan is a Stock Strategist for Zacks.com. He is the Editor in charge of the Zacks Home Run Investor service, a Buy and Hold service where he recommends the stocks in the portfolio.Brian is also the editor of Breakout Growth Trader a trading service that ! focuses o! n small cap stocks and also carries a risk limiting strategy. Subscribers get daily emails along with buy, and sell alerts.Follow Brian Bolan on twitter at @BBolan1Like Brian Bolan on Facebook

Europe Stocks Drop as Investors Watch BOE After Fed Talk

(Corrects description of jobless threshold in first and fifth paragraphs, and size of rally in third paragraph of story published yesterday.)

European stocks fell as the Bank of England said it won't raise interest rates or reduce bond purchases until the U.K.'s jobless rate falls to 7 percent, sparking concern it expects the economic recovery to be slow.

Natixis SA dropped the most in six months after posting a 29 percent decline in second-quarter net income. Rexel SA lost 4.2 percent after its largest shareholder sold a 10 percent stake. Randgold Resources Ltd. led mining stocks lower after reporting a slump in sales and earnings. ING Groep NV surged to a two-year high after quarterly pretax profit rose.

The Stoxx Europe 600 Index declined 0.2 percent to 302.81 at the close of trading, as Bank of England Governor Mark Carney said the U.K. economy hasn't reached "escape velocity." The benchmark gauge has rallied 9.9 percent since June 24 as the Federal Reserve, the European Central Bank and the Bank of England pledged to continue stimulus.

"It looks like rates are not going to rise in the next three years, though they could, as Carney has stressed they are not pre-committed," Marc Ostwald, a strategist at Monument Securities in London, wrote in an e-mail. "This is a rather valueless bit of forward guidance as is the case with the ECB. Where is the evidence that there is a stable relationship between U.K. unemployment and U.K. inflation trends?"

Threshold Set

The Bank of England said it will seek not to raise its benchmark interest rate or reduce bond purchases until the U.K.'s unemployment rate falls to 7 percent, linking stimulus measures to a threshold for the first time. The unemployment rate was at 7.8 percent in the quarter through May and the BOE expects it will stay above 7 percent at least until the third quarter of 2016.

The BOE's Monetary Policy Committee last week voted to maintain the bank rate at 0.5 percent, the level it has been held at since March 2009, and the stock of asset purchases at 375 billion pounds ($580 billion).

In the U.S., Fed Bank of Chicago President Charles Evans, a proponent of monetary stimulus, said late yesterday he would not rule out a decision to reduce bond purchases from September.

Fed Bank of Dallas President Richard Fisher, one of the most vocal critics of quantitative easing, said Aug. 5 that policy makers were "closer to execution mode" in considering the right time to begin reducing purchases.

DAX Declines

National benchmark indexes retreated in 11 of the 18 western-European markets. The U.K.'s FTSE 100 slipped 1.4 percent, while Germany's DAX Index lost 0.5 percent. France's CAC 40 rose 0.2 percent.

Natixis declined 3.8 percent to 3.79 euros, its biggest decrease since Feb. 4. Quarterly net income on a pro-forma basis dropped to 248 million euros ($330 million). The bank took a 20 million-euro charge on its debt, after booking a 91 million-euro gain in the year-earlier period.

Rexel (RXL) slid 4.2 percent to 18.15 euros. Ray Investment SARL sold 28.8 million shares at 18.25 euros each in the electrical-equipment distributor, according to a personal familiar with the sale. Ray Investment now holds 60.8 million shares, or more than 21 percent, in the company.

A gauge of mining companies declined for a second day as Australia's highest court upheld the country's tax on iron-ore and coal profits, dismissing a challenge from Fortescue Metals Group Ltd. and state governments.

Randgold, Rio

Randgold Resources retreated 1.4 percent to 4,366 pence. The gold producer said second-quarter profit slumped 61 percent from a year earlier to $46.3 million, while sales declined 27 percent to $252.8 million.

Rio Tinto Group fell 1.5 percent 2,953.5 pence. The commodity producer lost three bidders for its iron-ore unit in Canada after offers came below the company's expectations, Reuters reported, citing people familiar with the matter.

Andritz AG tumbled 7.9 percent to 39.10 euros, for its largest decline in three months. The Austrian maker of hydro-power turbines posted second-quarter profit that missed estimates and said full-year earnings will drop.

ING (INGA), which received a 10 billion-euro government bailout in 2008, gained 5.1 percent to 8.26 euros. Underlying pretax profit for the banking unit rose 14 percent to 1.15 billion euros in the second quarter as the interest margin improved and cost cuts paid off, the biggest Dutch financial-services company said.

Securitas AB climbed 8.4 percent to 70.50 kronor, its largest increase since October 2008. The seven-day rally also marked its longest winning streak since March 2011. The security provider posted net income of 461 million kronor ($70 million) in the second quarter, exceeding the average analyst estimate of 437 million kronor.

This Week in Sirius XM Radio

Things never get dull for the country's lone satellite-radio provider. Shares of Sirius XM Radio (NASDAQ: SIRI  ) moved sharply lower on the week, shedding 5.5% to hit $3.27. The media darling's drop was far worse than the more modest declines for the Dow and Nasdaq.

Sirius XM slipped after Apple (NASDAQ: AAPL  ) unveiled a streaming service and deeper iOS integration in cars. Higher mortgage rates may also be problematic for Sirius XM. Meanwhile, Pandora (NYSE: P  ) made a surprising move that could lower its streaming royalties. But at the same time, the number of shares of Sirius XM sold short did decline slightly in the latest bimonthly report.

There was more going on this week beyond the share-price gyrations, though. Let's take a closer look.

Apple turns up the Radio
There has been iRadio chatter for months, and reports that Apple had struck deals with the final two major labels last week made it a lock for the tech giant to announce its new platform during this week's WWDC.

iTunes Radio will be built into iTunes as a free ad-supported music-discovery service. Users who want an ad-free experience can pay $25 a year for the existing iTunes Match service that will now include ad-free iTunes Radio.

The product itself sounds like a bigger threat to Pandora than to Sirius XM. The model is certainly similar, and the premium offering is even priced less than Pandora's $36 a year.

However, Apple also revealed that it's working with at least five automakers to integrate iOS in their dashboard technology by as early as next year. If iPhone owners can stream iTunes Radio seamlessly from their Bluetooth-enabled car audio systems, does Sirius XM become a luxury instead of a near necessity?

Gaining interest
It may not seem like a big deal now, but mortgage rates hit a 14-month high this week. According to the Mortgage Bankers Association, the average rate on a 30-year mortgage has spiked from 3.59% early last month to 4.15% now. The move has resulted in a 36% plunge in refinancing applications.

How does this play into satellite radio? Well, let's think about car sales. Showrooms are always hungry to make deals, so you can bet that automakers will be aggressive in keeping financing rates low. However, a lot of people who were taking advantage of low refinancing rates and rising home prices to take out money in a refi to buy a new car or other big-ticket item will now be less likely to do so.

Sirius XM relies on new-car sales to grow its subscriber base, so this bears watching.

Pandora goes terrestrial
Pandora turned heads on Tuesday when it announced the purchase of a small radio station in South Dakota.

Legal counsel for the music-discovery website believes that snapping up the FM station will help it qualify for the lower royalties that 16 of the 20 largest Internet radio companies pay. Songwriter royalty collector BMI immediately moved to sue Pandora to block the move, but it will be interesting to see if this move brings to light the great inequity that has different companies paying different rates per song streamed online.

Short people
Bears continued their slow retreat out of Sirius XM. There were 368.8 million shares of Sirius XM held short at the end of May, well off the February peak of 414 million.

The trend has gone in Sirius XM's favor, with shorting activity declining for five of the six bi-monthly reporting periods since late February's peak, but it will be interesting to see whether the weak trading in June and Apple's new iTunes Radio announcement woo back the naysayers.

A Sirius future
It was an interesting week for Sirius XM. The new week isn't likely to be dull.

Even though Sirius XM has been one of the market's biggest winners since bottoming out three years ago, there is still some healthy upside to be had if things go right for it -- and plenty of room for it to fall if things don't. Read all about Sirius in The Motley Fool's premium report. To get started, just click here now.

Don't Get Too Worked Up Over Genesee & Wyoming's Earnings

Although business headlines still tout earnings numbers, many investors have moved past net earnings as a measure of a company's economic output. That's because earnings are very often less trustworthy than cash flow, since earnings are more open to manipulation based on dubious judgment calls.

Earnings' unreliability is one of the reasons Foolish investors often flip straight past the income statement to check the cash flow statement. In general, by taking a close look at the cash moving in and out of the business, you can better understand whether the last batch of earnings brought money into the company, or merely disguised a cash gusher with a pretty headline.

Calling all cash flows
When you are trying to buy the market's best stocks, it's worth checking up on your companies' free cash flow once a quarter or so, to see whether it bears any relationship to the net income in the headlines. That's what we do with this series. Today, we're checking in on Genesee & Wyoming (NYSE: GWR  ) , whose recent revenue and earnings are plotted below.

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. FCF = free cash flow. FY = fiscal year. TTM = trailing 12 months.

Over the past 12 months, Genesee & Wyoming burned $12.9 million cash while it booked net income of $112.8 million. That means it burned through all its revenue and more. That doesn't sound so great. FCF is less than net income. Ideally, we'd like to see the opposite.

All cash is not equal
Unfortunately, the cash flow statement isn't immune from nonsense, either. That's why it pays to take a close look at the components of cash flow from operations, to make sure that the cash flows are of high quality. What does that mean? To me, it means they need to be real and replicable in the upcoming quarters, rather than being offset by continual cash outflows that don't appear on the income statement (such as major capital expenditures).

For instance, cash flow based on cash net income and adjustments for non-cash income-statement expenses (like depreciation) is generally favorable. An increase in cash flow based on stiffing your suppliers (by increasing accounts payable for the short term) or shortchanging Uncle Sam on taxes will come back to bite investors later. The same goes for decreasing accounts receivable; this is good to see, but it's ordinary in recessionary times, and you can only increase collections so much. Finally, adding stock-based compensation expense back to cash flows is questionable when a company hands out a lot of equity to employees and uses cash in later periods to buy back those shares.

So how does the cash flow at Genesee & Wyoming look? Take a peek at the chart below, which flags questionable cash flow sources with a red bar.

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. TTM = trailing 12 months.

When I say "questionable cash flow sources," I mean items such as changes in taxes payable, tax benefits from stock options, and asset sales, among others. That's not to say that companies booking these as sources of cash flow are weak, or are engaging in any sort of wrongdoing, or that everything that comes up questionable in my graph is automatically bad news. But whenever a company is getting more than, say, 10% of its cash from operations from these dubious sources, investors ought to make sure to refer to the filings and dig in.

With 15.1% of operating cash flow coming from questionable sources, Genesee & Wyoming investors should take a closer look at the underlying numbers. Within the questionable cash flow figure plotted in the TTM period above, other operating activities (which can include deferred income taxes, pension charges, and other one-off items) provided the biggest boost, at 23.7% of cash flow from operations. Overall, the biggest drag on FCF came from capital expenditures.

A Foolish final thought
Most investors don't keep tabs on their companies' cash flow. I think that's a mistake. If you take the time to read past the headlines and crack a filing now and then, you're in a much better position to spot potential trouble early. Better yet, you'll improve your odds of finding the underappreciated home-run stocks that provide the market's best returns.

If you're interested in transportation companies like Genesee & Wyoming, then you should check out our special report that features 3 companies who depend on, and invest in, that industry. Learn the basic financial habits of millionaires next door and get these 3 focused stock ideas in our free report, "3 Stocks That Will Help You Retire Rich." Click here for instant access to this free report.

We can help you keep tabs on your companies with My Watchlist, our free, personalized stock tracking service.

Add Genesee & Wyoming to My Watchlist.

Japan Stocks Rise as Leasing Shares Climb on Abe’s Plan

Japan's Topix Index (TPX) closed at its highest since August 2008, led by leasing companies on a report Prime Minister Shinzo Abe will encourage the practice as part of his growth strategy.

Orix Corp. (8591), which provides leasing and loans, jumped 9.2 percent. Mizuno Corp. soared 18 percent after the sportswear company more than doubled its net-income forecast. A gauge tracking agricultural stocks climbed to the highest since 2008 on a separate report that Abe plans to double the industry's income in a decade. Sony Corp. (6758) dropped 1.7 percent after Japan's biggest exporter of consumer electronics surged 19 percent over the past five trading days.

The Topix added 0.6 percent to close at 1,253.24 in Tokyo, the highest since Aug. 29, 2008, after falling as much as 0.7 percent. The gauge capped a 3.5 percent gain this week. The Nikkei 225 Stock Average rose 0.7 percent to 15,138.12 today. Gains were limited amid signs the market may be overheating.

"Leasing companies continue to draw attention as they surge on a report about the government's growth strategy," said Takashi Aoki, a Tokyo-based fund manager at Mizuho Asset Management Co., which oversees about 3.4 trillion yen ($33 billion). "The market is trading in a tight range as profit-taking takes place while investors buy on dips."

The Topix has risen 46 percent this year, outperforming all major equity indexes amid unprecedented easing from the Bank of Japan. The gauge traded at 1.3 times book value, compared with about 2.4 for the Standard & Poor's 500 Index and 1.7 for the Stoxx Europe 600 Index.

Abe Strategy

Abe will encourage leasing to revive capital spending to a level last seen before the collapse of Lehman Brothers Holdings Inc., the Nikkei newspaper said without citing anyone. The prime minister will outline a growth plan in a speech today after the market close.

Orix jumped 9.2 percent to 1,638 yen. Mitsubishi UFJ Lease & Finance Co. surged 17 percent to 597 yen.

Abe's growth strategies will also include boosting the agricultural industry and tripling infrastructure exports to about 30 trillion yen by 2020, public broadcaster NHK reported.

The Topix Fishery, Agriculture & Forestry Index rose 3.5 percent, the biggest gain since Feb. 26. Nippon Suisan Kaisha Ltd., a maker of seafood products, added 6.3 percent to 219 yen. Sakata Seed Corp. gained 6.1 percent to 1,530 yen.

Investors are more confident in a Japanese leader than at any time since at least September 2010. Abe's policies are perceived more optimistically than those of his counterparts in the U.S., Europe and China, according to a worldwide poll of investors, analysts and traders who are Bloomberg subscribers.

Overheating Signs

Shares opened lower today after the 14-day relative strength index, a measure of trading momentum, held above 70 for both the Topix and the Nikkei 225 for the past six days. That's a level some traders say signals a sell-off.

Sony slid 1.7 percent to 2,046 yen after its 14-day RSI climbed to 81 yesterday.

Futures on the S&P 500 added 0.2 percent today. The equity gauge fell 0.5 percent in New York yesterday, halting four days of record gains. A report showed jobless claims jumped by 32,000 to 360,000 last week, the most since the end of March. Housing starts slumped 16.5 percent in April, the most since February 2011.

Of the 803 companies on the Topix that have reported full-year earnings since April 1, and for which Bloomberg has estimates, 482 beat analysts' projections.

Mizuno soared 18 percent to 505 yen, the biggest gain since 1999, after saying net income will more than double to 4.2 billion yen in the current fiscal year.

The Nikkei Stock Average Volatility Index fell 0.5 percent to 26.53, indicating traders expect a swing of about 7.6 percent on the benchmark gauge during the next 30 days.

Why Citigroup Is Tanking -- Again -- Today

Just when it looked like the banking sector was leveling off from the power dive it went into last Wednesday, down it goes again, taking Citigroup (NYSE: C  ) along with it. The superbank is already down 0.50% on the day. This is a hangover from last week, and it's lasting longer than we'd like.

Market roundup
First, here's where Citi's peers and the rest of the market stand on this first day of the trading week:

Bank of America (NYSE: BAC  ) is down 0.17%. JPMorgan Chase is down 0.40%. Wells Fargo is down 0.44%

The markets are more of a mixed bag, but net out in the negative, with the Dow Jones Industrial Average down 0.46% on the day, the S&P 500 down 0.18%, and the Nasdaq Composite up 0.13%.

Foolish bottom line
Last week, things were going along swimmingly until Wednesday morning, when B of A reported earnings. Based on how the market reacted, you'd have thought it was the worst quarter ever, but that was far from the case: Results were solid, if not stellar, and far better that B of A investors probably had the right to expect.

But it tipped the banking sector -- along with the markets -- into a dive. The S&P 500 lost 2.1% for the week. Goldman Sachs (NYSE: GS  ) alone lost 7% off its share price and had reported strong first-quarter earnings just days earlier. Citi investors had also gotten a glowing first-quarter report on Monday, but once the B of A effect took hold, that was that.

On Friday, it did briefly seem like investor optimism was about to take hold again, with many stocks getting back a little of what they'd lost in the previous two days, but investors seem to be in a pessimistic mood again today. All told, in the last five days, Citi investors have lost 2.48% of their related wealth.

This is one of those many times when the market is behaving irrationally. Citi had a good first quarter, and the superbank's investors need to stay calm and carry on. The market will have its ups and down, but so long as you have faith in the fundamentals of the companies you're invested in, your money is in the right place. That's what Foolish investing is all about.

Looking for in-depth analysis on Citi?
If so, look no further than our new premium report on the superbank. In it, Matt Koppenheffer -- The Motley Fool's senior banking analyst -- will fill you in on both reasons to buy and reasons to sell Citigroup. He'll also clue you in on what areas investors need to watch going forward. For instant access to Matt's personal take on Citi, simply click here now.

Why Cameco Is Ready to Rebound

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, uranium producer Cameco (NYSE: CCJ  ) has earned a respected four-star ranking.

With that in mind, let's take a closer look at Cameco and see what CAPS investors are saying about the stock right now.

Cameco facts

Headquarters (founded)	Saskatoon, Canada (1987)
Market Cap	$7.8 billion
Industry	Coal and consumable fuels
Trailing-12-Month Revenue	$2.4 billion
Management	CEO Timothy Gitzel (since 2011) CFO Grant Isaac (since 2011)
Return on Equity (average, past 3 years)	8.3%
Cash/Debt	$814.7 million / $1.6 billion
Dividend Yield	2%
Competitors	AREVA BHP Billiton Rio Tinto

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 98% of the 1,834 members who have rated Cameco believe the stock will outperform the S&P 500 going forward.

Just yesterday, one of those Fools, All-Star Chemdawg, succinctly summed up the Cameco bull case for our community:

[R]eactors coming back online slowly but the uranium is so cheap it is not economical to mine. [T]hat won't stay that way long. Cigar Lake is due to start actually producing this year. [S]ometimes being the best has its advantages ... you stay alive when the weaker ones go 10 toes up. [O]utperform.

If you want market-thumping returns, you need to put together the best portfolio you can. Of course, despite a strong four-star rating, Cameco may not be your top choice.

If that's the case, we've compiled a special free report for investors called "The Tiny Gold Stock Digging Up Massive Profits," which uncovers a smaller miner with big potential. The report is 100% free, but it won't be around forever, so click here to access it now.

Want to see how well (or not so well) the stocks in this series are performing? Follow the TrackPoisedTo CAPS account.

China drives global diamond jewelery sales to $79 billion

  World's hottest diamond markets HONG KONG (CNNMoney) A diamond is forever ... especially in China.

Global diamond jewelry sales hit a record $79 billion last year, led by strong interest from the Chinese for the rare gem, according to a report from De Beers.

Polished diamond sales in China rocketed by 14% last year alone, double the pace of growth seen in the U.S.

Overall, sales of diamond jewelry to the Chinese have been the fastest growing in the world, averaging about 21% a year over the last decade. China now accounts for 13% of global demand, up from just 3% in 2003.

The U.S. is still the world's largest diamond market but companies such as De Beers are increasingly looking to China for growth.

As disposable incomes rise, Chinese consumers are driving global markets for luxury products, including expensive watches, handbags, cars and diamonds. China now accounts for nearly one-third of global luxury purchases, according to the report.

China is still seeing much higher than average growth in diamond sales, even though some luxury segments have been hurt by a government anti-corruption campaign, and a slowing economy.

Mid-Afternoon Market Update: FMC Slips On Weak Outlook; Integrys Energy Shares Surge

Related AKS Mid-Day Market Update: FMC Slips On Weak Outlook; Integrys Energy Shares Surge AK Steel Unveils Q2 Outlook - Analyst Blog

Closing in on the final hour of trading on Monday, the Dow traded down 0.16 percent to 16,920.20 while the NASDAQ declined 0.02 percent to 4,367.02. The S&P also fell, dropping 0.12 percent to 1,960.59.

Leading and Lagging Sectors

Monday morning, the basic materials sector proved to be a source of strength for the market. Leading the sector was strength from AK Steel Holding (NYSE: AKS) and Thompson Creek Metals Company (NYSE: TC).

Telecommunications services shares fell around 0.65 percent in trading on Monday. Top losers in the sector included NQ Mobile (NYSE: NQ), down 4 percent, and ORBCOMM (NASDAQ: ORBC), off 5 percent.

Top Headline

Oracle (NYSE: ORCL) announced its plans to buy Micros Systems (NASDAQ: MCRS) in a $5.3 billion deal.

The offer price of $68 per share represents a 3.4% premium over Micros' closing price on Friday.

Equities Trading UP

Integrys Energy Group (NYSE: TEG) shares shot up 12.12 percent to $68.34 after Wisconsin Energy (NYSE: WEC) announced its plans to acquire Integrys Energy Group in a deal valued at $9.1 billion.

Shares of Central Garden & Pet Company (NASDAQ: CENT) got a boost, shooting up 7.78 percent to $9.70 after Harbinger Group offered to buy Central Garden & Pet Co for $10 per share.

MICROS Systems (NASDAQ: MCRS) shares were also up, gaining 3.34 percent to $67.97 after Oracle (NYSE: ORCL) announced its plans to buy MICROS for $68 per share.

Equities Trading DOWN

Shares of Meritor (NYSE: MTOR) were 12.95 percent to $12.70 after the company reached a $500 million settlement with Eaton (NYSE: ETN) related to an anti-trust suit filed in 2006. The company’s board also authorized a repurchase of up to $210 million.

Ixia (NASDAQ: XXIA) shares lost 2.36 percent to $11.59 after the company reported its Q4 earnings of $0.15 per share on revenue of $120.60 million. Ixia now expected Q1 sales of $109.0 million to $113.0 million.

FMC (NYSE: FMC) was down, falling 4.64 percent to $71.28 after the company lowered its FY14 earnings forecast and issued a weak Q2 outlook.

Commodities

In commodity news, oil traded down 0.58 percent to $106.21, while gold traded up 0.11 percent to $1,318.10

Silver traded down 0.23 percent Monday to $20.90, while copper rose 0.80 percent to $3.15.

Eurozone

European shares were lower today.

The eurozone’s STOXX 600 declined 0.51 percent, the Spanish IBEX Index dropped 0.33 percent, while Italy’s FTSE MIB Index fell 1.33 percent.

Meanwhile, the German DAX declined 0.66 percent and the French CAC 40 dropped 0.57 percent while UK shares slipped 0.36 percent.

Economics

The Chicago Fed National Activity Index rose to 0.21 in May, versus economists’ expectations for a reading of 0.20.

The flash reading of Markit PMI manufacturing index rose to a reading of 57.5 in June versus a reading of 56.4 in May. However, economists were expecting a reading of 56.0.

Sales of existing homes rose 4.9% to an annual rate of 4.89 million in May. However, economists were estimating a sales rate of 4.74 million.

Posted-In: Earnings News Eurozone Futures Commodities Economics Markets

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