5 Best Small Cap Stocks To Own For 2014

We live in a yield-obsessed era.

Whether it's dividend yields, junk bond yields or lowly government bond yields, investors seek yields in every corner of the market.

But many overlook the most important type: free cash flow yield. It's a simple yet powerful measure that points to the market's top bargains. And you should measure each stock in your portfolio against this underappreciated metric.

You can figure out this yield by identifying a company's annual free cash flow (which is its operating cash flow minus its capital spending) and dividing it by the company's market value. For example, a company with $50 million in free cash flow and a $1 billion market value has a 5% free cash flow (FCF) yield ($50 million/$1 billion).

Most companies in the S&P 400 (a mid-cap index), S&P 500 and S&P 600 (small caps) have FCF yields below that 5% threshold, yet any time you see a figure that's higher, it's a certifiable value. In recent years, I've cited Wal-Mart Stores (NYSE: WMT) as an example of a compelling FCF yield. The giant retailer has stumbled during the past half-decade, but whenever its stock falls out of favor, value investors have swooped in and purchased, thanks to that solid FCF yield.

Hot Gas Utility Companies To Own In Right Now: Texas Instruments Incorporated(TXN)

Texas Instruments Incorporated engages in the design and sale of semiconductors to electronics designers and manufacturers worldwide. The company?s Analog segment offers high-performance analog products comprising standard analog semiconductors, such as amplifiers, data converters, and interface semiconductors; high-volume analog and logic products; and power management semiconductors and line-powered systems. Its Embedded Processing segment includes DSPs that perform mathematical computations to process and enhance digital data; and microcontrollers, which are designed to control a set of specific tasks for electronic equipment. The company?s Wireless segment designs, manufactures, and sells application processors and connectivity products. Its Other segment offers smaller semiconductor products, which include DLP products that are primarily used in projectors to create high-definition images; and application-specific integrated circuits. This segment also provides handhe ld graphing and scientific calculators, as well as licenses technologies to other electronic companies. The company serves the communications, computing, industrial, consumer electronics, automotive, and education sectors. Texas Instruments Incorporated sells its products through a direct sales force, distributors, and third-party sales representatives. It has collaboration agreements with PLX Technology Inc.; Neonode, Inc.; and Ubiquisys Ltd. The company was founded in 1938 and is headquartered in Dallas, Texas.

Advisors' Opinion:

• [By gurujx]

  Texas Instruments (TXN): Sr. Vice President & CFO Kevin March Sold 180,000 Shares

  Sr. Vice President & CFO Kevin P March sold 180,000 shares of TXN stock on Oct. 25 at the average price of $40.03. Kevin March owns at least 344,777 shares after this. The price of the stock has increased by 5% since.

5 Best Small Cap Stocks To Own For 2014: Sky-mobi Limited(MOBI)

Sky-mobi Limited engages in the operation of a mobile application store in the People?s Republic of China. It works with handset companies to pre-install its Maopao mobile application store on handsets and with content developers to provide users with applications and content titles. The users of its Maopao store could browse, download, and purchase a range of applications and content, such as single-player games, mobile music, and books. The company?s Maopao store enables mobile applications and content to be downloaded and run on various mobile handsets with hardware and operating system configurations. It also operates a mobile social network community, the Maopao Community, where it offers localized mobile social games, as well as applications and content with social network functions to its registered members. The company owns proprietary mobile application technology in the cloud computing, the MRP format, and SDK development environment. As of March 31, 2011, it had entered into cooperation agreements with approximately 523 handset companies to pre-install Maopao. The company was formerly known as Profit Star Limited and changed its name to Sky-Mobi Limited in October 2010. Sky-mobi Limited was incorporated in 2007 and is headquartered in Hangzhou, China.

Advisors' Opinion:

• [By Roberto Pedone]

  Another stock that's starting to move within range of triggering a big breakout trade is Sky-mobi (MOBI), which, through its subsidiaries, engages in the operation of a mobile application platform embedded on mobile phones to provide mobile application store and services in the People�s Republic of China. This stock has been red hot so far in 2013, with shares up a whopping 88%.

  If you look at the chart for Sky-mobi, you'll notice that this stock recently formed a triple bottom chart pattern at $3.31, $3.28 and $3.40 a share. That bottoming pattern occurred over the last two months. Shares of MOBI have now started to uptrend and flirt with its 50-day moving average of $3.76 a share. That move is quickly pushing MOBI within range of triggering a big breakout trade.

  Traders should now look for long-biased trades in MOBI if it manages to break out above some near-term overhead resistance levels at $3.71 to $3.83 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action of 145,934 shares. If that breakout triggers soon, then MOBI will set up to re-test or possibly take out its 52-week high at $4.96 a share. Any high-volume move above that level will then give MOBI a chance to tag its next major overhead resistance levels at $5.55 to $6.13 a share.

  Traders can look to buy MOBI off any weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support levels at $3.40 to $3.28 a share. One can also buy MOBI off strength once it takes out that breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

5 Best Small Cap Stocks To Own For 2014: FuelCell Energy Inc.(FCEL)

FuelCell Energy, Inc., together with its subsidiaries, engages in the development, manufacturing, and sale of high temperature fuel cells for clean electric power generation primarily in South Korea, the United States, Germany, Canada, and Japan. The company offers proprietary carbonate Direct FuelCell Power Plants that electrochemically produce electricity from hydrocarbon fuels, such as natural gas and biogas. Its fuel cells operate on a range of hydrocarbon fuels, including natural gas, renewable biogas, propane, methanol, coal gas, and coal mine methane. The company also develops carbonate fuel cells, planar solid oxide fuel cell technology, and other fuel cell technologies. It provides its products to universities; manufacturers; mission critical institutions, such as correction facilities and government installations; hotels; and natural gas letdown stations, as well as to customers who use renewable biogas for fuel, including municipal water treatment facilities, br eweries, and food processors. The company was founded in 1969 and is headquartered in Danbury, Connecticut.

Advisors' Opinion:

• [By Lauren Pollock]

  FuelCell Energy Inc.'s(FCEL) fiscal fourth-quarter loss narrowed as the power-equipment maker reported broad sales growth across all segments and wider gross margins. But the loss was still steeper than expected, sending shares down 11% to $1.65 premarket.

• [By Monica Gerson]

  FuelCell Energy (NASDAQ: FCEL) tumbled 4.99% to $2.51 after falling 4.00% on Wednesday.

  Posted-In: market losersNews Movers & Shakers Intraday Update Markets

• [By John Kell and Lauren Pollock var popups = dojo.query(".socialByline .popC"); ]

  FuelCell Energy Inc.(FCEL) said its fiscal first-quarter loss narrowed as strong gains in product sales drove the power-equipment maker’s overall revenue higher. Shares surged 18% to $4.64 premarket.

• [By Monica Gerson]

  FuelCell Energy (NASDAQ: FCEL) shares gained 16.79% to $4.59 in the pre-market after the company reported Q1 results. FuelCell posted its quarterly net income of $0.02 per share on revenue of $24.2 million.

5 Best Small Cap Stocks To Own For 2014: Panera Bread Company(PNRA)

Panera Bread Company, together with its subsidiaries, owns, operates, and franchises retail bakery-cafes in the United States and Canada. Its bakery-cafes offer fresh baked goods, sandwiches, soups, salads, custom roasted coffees, and other complementary products, as well as provide catering services. The company also manufactures and supplies dough and other products to company-owned and franchise-operated bakery-cafes. As of March 29, 2011, it owned and franchised 1,467 bakery-cafes under the Panera Bread, Saint Louis Bread Co., and Paradise Bakery & Cafe names. The company was founded in 1981 and is based in St. Louis, Missouri.

Advisors' Opinion:

• [By Dan Caplinger]

  One key area for improvement, though, is for Starbucks to address a long-standing problem: food. Panera Bread (NASDAQ: PNRA  ) , which is quickly shaping up to be a rival for Starbucks, has focused on high-quality food offerings to deliver its cafe experience. So far, Starbucks hasn't fully taken advantage of its recent purchase of the La Boulange bakery line, but if it can finally expand into combining food and beverage more extensively, it could provide a new source of growth both from existing customers and with new locations.

• [By Dan Newman]

  A deeper look into pay-what-you-want
  Just as far as banking is from a rock band, fast-casual restaurant�Panera Bread (NASDAQ: PNRA  ) operates five stores with a pay-what-you-want system -- although for Panera, these stores represent a charitable aspect of the company more than any profit motive. It opened the first of such stores in its home of St. Louis as a way to offer meals to those who might need one, and it recently expanded the program by offering one item, turkey chili, as a pay-what-you-can meal across all of its St. Louis locations. Panera notes that these restaurants typically take in between 70% and 80% of revenue compared with regular locations, and about 60% of customers pay the standard amount, with 20% paying more than usual and 20% paying less.

• [By Andrew Marder]

  This morning, Panera Bread (NASDAQ: PNRA  ) had one of those stock price charts where it appears as though the apocalypse came along, and the market just disappeared. The weak earnings report that the company released yesterday sent the shares down almost 7% overnight, after a 2% drop late in trading on Tuesday. Panera now trades at a price-to-earnings ratio of 26.7, pulling it closer to its competitors.