Hertz: Accounting Issues ‘Least of the Challenges,’ Morgan Stanley Says

Morgan Stanley’s Adam Jonas and team fret that Hertz’s problems go beyond its well-known accounting problems:

The company has had a lot on its plate in recent years: expanding into the used car business, implementing new technology, and acquiring and integrating DTG. While there have clearly been challenges, to which the company is openly admitting, we are confident that many of the integration issues are short-term in nature and that Hertz management, led by Chairman and CEO Mark Frissora, will succeed in overcoming these short term issues. However, we continue to see an alignment of new forces from within and outside of the traditional car rental ecosystem that can put significant pressure on the earnings power of Hertz and its industry peers. We continue to view car rental as a highly cyclical business. In a great year, we believe it is possible for Hertz to achieve an EPS in the $3 range (based on current share count). In a bad year, we believe losses are possible (even excluding 1-time restructuring expenses). In a normal year, we see Hertz´s earnings power at around $1.50 per share.

Despite mounting evidence of industry challenges, Hertz shares continue to trade at all-time highs. Our valuation of Hertz shares suggests substantial downside from current levels. We recommend investors take advantage of the unique market conditions (near record high used car prices and constructive activist sentiment) to reduce exposure.

How much downside? Jonas cut his price target on Hertz to $19 from $20. With Hertz shares off 1.3% at $30.34 today, that means shares could fall an additional 37%. Shares of Avis Budget Group (CAR) have fallen 1.1% to $67.97.

Snapchat valued at more than $10 billion - report

  What is Snapchat? NEW YORK (CNNMoney) Investors are betting there's a lot of money to be made in disappearing photos.

Snapchat has reportedly fetched a huge round of funding from one of the most powerful Silicon Valley investors, valuing the social network at about $10 billion.

The disappearing-message app is not yet profitable, but that has not stopped the flow of funds to Snapchat.

According to the Wall Street Journal, venture capital firm Kleiner Perkins has invested $20 million in Snapchat. That follows an investment earlier this year from Russian firm DST Global, which valued Snapchat at $7 billion, according to the Journal.

Snapchat is rumored to have turned down a $3 billion buyout offer from Facebook. And Alibaba was reportedly mulling an investment in Snapchat earlier this year that also would have valued the company at $10 billion.

Snapchat and Kleiner Perkins declined to comment on the reported funding round.

Despite its lack of ads, investors have been attracted to the fact that Snapchat is wildly popular, particularly among young people.

CEO Evan Spiegel has said Snapchat's core audience is between 18 and 25 years of age -- a demographic advertisers covet. As of May, users were viewing over 1 billion stories and sharing more than 700 million snaps per day, up from just 350 million in October.

Sears Earnings: A Textbook Example of a Company in Freefall

If you have a macabre interest in watching a company struggle against an accelerating and almost certain demise, then you might find it satisfying to tune into the unraveling of Sears Holding Corporation  (NASDAQ: SHLD  ) . While I get no pleasure from saying that, as I've long been a satisfied customer of the 120-year-old company, there's no sense in denying the inevitable.

Sears' latest quarterly results, which were released by the company on Thursday, offer proof of Warren Buffett's admonition that "turnarounds seldom turn." For the three months ended Aug. 2, the retailer lost $573 million, burned through $313 million in cash (as measured by EBITDA), and saw its book value fall by 67% on a year-over-year basis. It was, for all intents and purposes, a bloodbath.

To be clear, Sears isn't giving up without a fight. During the first half of the company's fiscal year, the retailer generated $665 million in additional liquidity -- though most of it, $500 million to be precise, came from the spinoff of its Lands' End subsidiary earlier in the year. It's also continuing to "explore strategic alternatives" for its 51% interest in Sears Canada, a thus-far unfruitful endeavor that began almost a year ago.

Finally, the Chicago-based company isn't relenting in its efforts to "optimize" its store network -- that is, shuttering underperforming stores. During the last six months, it's announced the closure of approximately 130 locations, and said on Thursday that it "may close additional stores during the remainder of the year."

While it probably goes without saying, it seems increasingly clear that the question is no longer whether Sears will survive, but instead, when will it be forced to follow in the footsteps of Circuit City, Borders Group, and Linens 'n Things, among other now-defunct brick-and-mortar retailers, by seeking the so-called "protection" of the bankruptcy courts, a description I've never completely understood.

Sears' most acute problem is liquidity -- as is typically the case with a company in its position. It finished the quarter with $829 million in cash and equivalents. On top of this, it has $240 million remaining on a revolving credit facility, and is technically free to raise an additional $760 million in second-lien debt, though it's far from certain that creditors will be forthcoming with the latter in the event the funds are urgently needed.

Meanwhile, Sears has burned through upwards of $300 million in cash every quarter since the middle of last year. If it continues at this pace, in turn, it will have no choice but to try its luck in the credit markets at some point during the next few quarters. And it will be at that point, if not sooner, that investors will get a tangible sense of Sears' near-term ability to survive.

In sum, if it isn't already clear, Sears' stock has long since come within the exclusive province of speculators. Long-term, fundamentals-based investors need not apply.

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5 Stocks Insiders Love Right Now

DELAFIELD, Wis. (Stockpickr) -- Corporate insiders sell their own companies' stock for a number of reasons.

>>Hedge Funds Hate These 5 Stocks -- Should You?

They might need the cash for a big personal purchase such as a new house or yacht, or they might need the cash to fund a charity. Sometimes they sell as part of a planned selling program that they have put in place for diversification purposes, which allows them to sell stock in stages instead of selling all at one price.

Other times they sell because they think their stock is overvalued and the risk/reward is no longer attractive. Some even dump their own stock because they have inside knowledge that a competitor is eating their lunch and stealing market share.

But insiders usually buy their own shares for one reason: They think the stock is a bargain and has tremendous upside.

>>Warren Buffett's Top 25 Stocks for 2014



The key word in that last statement is "think." Just because a corporate insider thinks his or her stock is going to trade higher, that doesn't mean it will play out that way. Insiders can have all the conviction in the world that their stock is a buy, but if the market doesn't agree with them, the stock could end up going nowhere. Also, I say "usually" because sometimes insiders are loaned money by the company to buy their own stock. Those loans are often sweetheart deals and shouldn't be viewed as organic insider buying.

At the end of the day, it's large institutional money managers running big mutual funds and hedge funds that drive stock prices, not insiders. That said, many of these savvy stock operators will follow insider buying activity when they agree with the insider that the stock is undervalued and has upside potential. This is why it's so important to always be monitoring insider activity but twice as important to make sure the trend of the stock coincides with the insider buying.

>>5 Stocks Ready for Breakouts

Recently, a number of companies' corporate insiders have bought large amounts of stock. These insiders are finding some value in the market, which warrants a closer look at these stocks. Here's a look five stocks whose insiders have been doing some big buying per SEC filings.

Accelerate Diagnostics

One health care player that insiders are active in here is Accelerate Diagnostics (AXDX), which focuses on developing and commercializing instrumentation for the rapid identification and antibiotic susceptibility testing of infectious pathogens. Insiders are buying this stock into major strength, since shares are higher by 67% so far in 2014.

>>3 Stocks Under $10 to Trade for Breakouts

Accelerate Diagnostics has a market cap of $857 million and an enterprise value of $820 million. This stock trades at a premium valuation, with a price-to-book of 22.14. This is a cash-rich company, since the total cash position on its balance sheet is $38.56 million and its total debt is just $267,000.

A director just bought 20,000 shares, or about $397,000 worth of stock, at $19.89 per share. A beneficial owner also just bought 20,000 shares, or about $430,000 worth of stock, at $19.96 per share.

From a technical perspective, AXDX is currently trending above its 200-day moving average and below its 50-day moving average, which is neutral trendwise. This stock recently fell sharply from $31.86 to its low of $18.71 a share. During that drop, shares of AXDX have been consistently making lower highs and lower lows, which is bearish technical price action. That said shares of AXDX have started to bounce off that $18.71 low and it's now starting to trend within range of triggering a near-term breakout trade.

If you're bullish on AXDX, then I would look for long-biased trades as long as this stock is trending above its recent low of $18.71 or above its 200-day at $17.25 and then once breaks out above some near-term overhead resistance at $21.42 a share with high volume. Look for a sustained move or close above that level with volume that hits near or above its three-month average action of 219,627 shares. If that breakout starts soon, then AXDX will set up to re-test or possibly take out its next major overhead resistance levels at its 50-day moving average of $24.31 to $26 a share.

Colfax

A diversified machinery player that insiders are jumping into here is Colfax (CFX), which provides gas-and fluid-handling and fabrication technology products and services to commercial and governmental customers worldwide. Insiders are buying this stock into modest strength, since shares are up 8% so far in 2014.

>>5 Hated Earnings Stocks You Should Love

Colfax has a market cap of $8.5 billion and an enterprise value of $9 billion. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 45 and a forward price-to-earnings of 22. Its estimated growth rate for this year is 12.7%, and for next year it's pegged at 32.2%. This is not a cash-rich company, since the total cash position on its balance sheet is $482.18 million and its total debt is $1.15 billion.

A director just bought 7,447 shares, or about $500,000 worth of stock, at $31.59 per share.

From a technical perspective, CFX is currently trending above its 200-day moving average and well below its 50-day moving average, which is neutral trendwise. This stock is starting to bounce higher right off its 200-day moving average and it's quickly moving within range of triggering a major breakout trade that could push the stock into a previous gap-down-day zone.

If you're in the bull camp on CFX, then I would look for long-biased trades as long as this stock is trending above its 200-day at $66.41 or above more near-term support at $65.72 and then once it breaks out above some near-term overhead resistance levels at $69 to $70 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 544,194 shares. If that breakout begins soon, then CFX will set up to re-fill some of its previous gap-down-day zone from earlier this month that started at $73 a share.

Alcoa

One basic materials player that insiders are active in here is Alcoa (AA), which produces and manages primary aluminum, fabricated aluminum, and alumina. Insiders are buying this stock into major strength, since shares are up sharply by 41% so far in 2014.

Alcoa has a market cap of $20 billion and an enterprise value of $26 billion. This stock trades at a cheap valuation, with a forward price-to-earnings of 21. Its estimated growth rate for this year is 78.8%, and for next year it's pegged at 37.3%. This is not a cash-rich company, since the total cash position on its balance sheet is $1.18 billion and its total debt is $8.06 billion. This stock currently sports a dividend yield of 0.80%.

A director just bought 30,120 shares, or about $498,000 worth of stock, at $16.54 per share.

From a technical perspective, AA is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong for the last six months, with shares moving higher from its low of $10.81 to its intraday high of $17.22 a share. During that uptrend, shares of AA have been consistently making higher lows and higher highs, which is bullish technical price action. That said, shares of AA have now entered overbought territory, since the stock has a relative strength index reading of 77.

If you're bullish on AA, then you might be best served waiting for this stock to pull back off overbought levels. Bulls can look to buy AA off weakness on a pullback back towards its 50-day moving average of $14.61 a share.

Blue Capital Reinsurance

One financial player that insiders are jumping into here is Blue Capital Reinsurance (BCRH), which offers collateralized reinsurance in the property catastrophe market. Insiders are buying this stock into notable strength, since shares are up by 13% over the last six months.

>>3 Stocks Rising on Big Volume

Blue Capital Reinsurance has a market cap of $174 million and an enterprise value of $43 million. This stock trades at cheap valuation, with a forward price-to-earnings of 8.6. Its estimated growth rate for this year is 822.6%, and for next year it's pegged at 2.7%. This is a cash-rich company, since the total cash position on its balance sheet is $129.40 million and its total debt is zero. This stock currently sports a dividend yield of 6.4%.

A beneficial owner just bought 38,200 shares, or about $760,000 worth of stock, at $19.90 to $19.93 per share. That same beneficial owner also just bought 23,500 shares, or about $464,648 worth of stock, at $19.71 per share.

From a technical perspective, BCRH is currently trending above its 50-day moving average, which is bullish. This stock has been uptrending strong for the last two months, with shares moving higher from its low of $17.15 to its recent high of $20.05 a share. During that move, shares of BCRH have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of BCRH within range of triggering a big breakout trade.

If you're bullish on BCRH, then I would look for long-biased trades as long as this stock is trending above its 50-day at $18.35 and then once it breaks out above some near-term overhead resistance levels at $20.05 to its all-time high at $21.02 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 55,887 shares. If that breakout hits soon, then BCRH will set up to enter new all-time-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $25 to $30 a share.

Synergy Resources

One final stock with some decent insider buying is Synergy Resources (SYRG), which acquires, explores, develops, produces and exploits crude oil and natural gas properties primarily located in the Wattenberg field in Denver-Julesburg Basin in northeast Colorado. Insiders are buying this stock into big strength, since shares are up sharply by 29% so far in 2014.

Synergy Resources has a market cap of $931 million and an enterprise value of $918 million. This stock trades at a cheap valuation, with a trailing price-to-earnings of 52 and a forward price-to-earnings of 15. Its estimated growth rate for this year is 111.10%, and for next year it's pegged at 107.90%. This is barley a cash-rich company, since the total cash position on its balance sheet is $47.98 million and its total debt is $37 million.

A director just bought 20,000 shares, or about $241,000 worth of stock, at $12.05 per share.

From a technical perspective, SYRG is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock recently found some buying interest right around $11.75 to $11.60 a share. Shares of SYRG are now starting to bounce higher off those support levels and it's starting to trend back above its 50-day moving average. That move is quickly pushing shares of SYRG within range of triggering a major breakout trade.

If you're bullish on SYRG, then look for long-biased trades as long as this stock is trending above some near-term support levels at $11.60 to $11.50 and then once it breaks out above some near-term overhead resistance levels at $12.73 to its 52-week high at $14.11 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 845,800 shares. If that breakout gets underway soon, then SYRG will set up to enter new 52-week-high territory above $14.11 a share, which is bullish technical price action. Some possible upside targets off that move are $17 to $18 a share.

To see more stocks with notable insider buying, check out the Stocks With Big Insider Buying portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.

RELATED LINKS:

>>4 Hot Stocks to Trade (or Not)

>>5 Dividend Stocks Ready to Pay You More

>>Beat the S&P With 5 Stocks Everyone Else Hates

Follow Stockpickr on Twitter and become a fan on Facebook.

At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including

CNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.

Google's Q2 Earnings Release

Google Inc. (GOOG) last month announced financial results for the quarter ended June 30, 2014. "Google had a great quarter with revenue up 22% year on year, at $16.0 billion," said Patrick Pichette, CFO of Google. "We are moving forward with great product momentum and are excited to continue providing amazing user experiences, with a view to the long term," he added.

Q2 financial summary

Google Inc. reported consolidated revenues of $15.96 billion for the quarter ended June 30, 2014, an increase of 22% compared to the second quarter of 2013. The company reports advertising revenues consistent with GAAP on a gross basis without deducting traffic acquisition costs (TAC). In the second quarter of 2014, TAC totaled $3.29 billion, or 23% of advertising revenues.

GAAP operating income in the second quarter of 2014 was $4.26 billion, or 27% of revenues. This compares to GAAP operating income of $3.47 billion, or 26% of revenues, in the second quarter of 2013. Non-GAAP operating income in the second quarter of 2014 was $5.14 billion, or 32% of revenues. This compares to non-GAAP operating income of $4.21 billion, or 32% of revenues, in the second quarter of 2013. GAAP net income (including net income [loss] from discontinued operations) in the second quarter of 2014 was $3.42 billion, compared to $3.23 billion in the second quarter of 2013. Non-GAAP net income in the second quarter of 2014 was $4.18 billion, compared to $3.36 billion in the second quarter of 2013. GAAP EPS (including impact from net income [loss] from discontinued operations) in the second quarter of 2014 was $4.99 on 686 million diluted shares outstanding, compared to $4.77 in the second quarter of 2013 on 677 million diluted shares outstanding. Non-GAAP EPS in the second quarter of 2014 was $6.08, compared to $4.96 in the second quarter of 2013.

Revenues and other information

Google Inc. revenues for the quarter ended June 30, 2014 were $15.96 billion, representing a 22% increase over second quarter of 2013 revenues of $13.11 billion.

· Sites Revenues – The company's sites generated revenues of $10.94 billion, or 69% of total revenues, in the second quarter of 2014. This represents a 23% increase over second quarter of 2013 sites revenues of $8.87 billion.

· Network Revenues – The company's partner sites generated revenues of $3.42 billion, or 21% of total revenues, in the second quarter of 2014. This represents a 7% increase over the second quarter of 2013 network revenues of $3.19 billion.

· Other Revenues – Other revenues were $1.60 billion, or 10% of total revenues, in the second quarter of 2014. This represents a 53% increase over second quarter of 2013 other revenues of $1.05 billion.

Foreign exchange impact on revenues

Excluding gains related to a foreign exchange risk management program, foreign exchange rates remained constant from the first quarter of 2014 through the second quarter of 2014, Google's revenues in the second quarter of 2014 would have been $77 million lower. Excluding gains related to their foreign exchange risk management program, had foreign exchange rates remained constant from the second quarter of 2013 through the second quarter of 2014, Google's revenues in the second quarter of 2014 would have been $120 million lower.

Depreciation and loss on disposal of property and equipment and amortization expenses

Depreciation and loss on disposal of property and equipment and amortization expenses were $1.08 billion for the second quarter of 2014, of which $1.07 billion was related to Google, compared to $1.03 billion in the second quarter of 2013. Of the $1.07 billion, $116 million was related to amortization of Motorola intangibles, which Google will retain subsequent to the disposal of Motorola Mobile.

Stock-Based Compensation (SBC) – In the second quarter of 2014, the total charge related to SBC was $880 million compared to $743 million in the second quarter of 2013. The analysts currently estimate SBC charges for grants made to employees prior to June 30, 2014 to be approximately $3.42 billion for 2014. This estimate does not include expenses to be recognized related to employee stock awards that are granted after June 30, 2014 or nonemployee stock awards that have been or may be granted.

Operating Income – GAAP operating income in the second quarter of 2014 was $4.26 billion, or 27% of revenues. This compares to GAAP operating income of $3.47 billion, or 26% of revenues, in the second quarter of 2013. Non-GAAP operating income in the second quarter of 2014 was $5.14 billion, or 32% of revenues. This compares to non-GAAP operating income of $4.

4 Big Stocks Getting Big Attention

BALTIMORE (Stockpickr) -- Put down the 10-K filings and the stock screeners. It's time to take a break from the traditional methods of generating investment ideas. Instead, let the crowd do it for you.


Read More: Warren Buffett's Top 10 Dividend Stocks



From hedge funds to individual investors, scores of market participants are turning to social media to figure out which stocks are worth watching. It's a concept that's known as "crowdsourcing," and it uses the masses to identify emerging trends in the market.


Crowdsourcing has long been a popular tool for the advertising industry, but it also makes a lot of sense as an investment tool. After all, the market is completely driven by the supply and demand, so it can be valuable to see what names are trending among the crowd.


While some fund managers are already trying to leverage social media resources like Twitter to find algorithmic trading opportunities, for most investors, crowdsourcing works best as a starting point for investors who want a starting point in their analysis. Today, we'll leverage the power of the crowd to take a look at some of the most active stocks on the market today.


Read More: Do You Own These 5 Toxic Stocks? Watch Out!

Without further ado, here's a look at today's stocks.

Post Holdings

Nearest Resistance: $40

Nearest Support: N/A

Catalyst: Q2 Earnings

Shares of cereal maker Post Holdings (POST) fell off a cliff this morning, following the firm's third-quarter earnings call. As I write this afternoon, shares are down more than 18%, the stock's biggest single-day drop since it became an independently-traded stock in 2012. Big acquisition costs in the third quarter contributed to a net loss of 92 cents per share for the quarter, a switch from a slim profit a year ago.

From a technical standpoint, you don't want to own POST right now. While this stock has been in a downtrend for almost all of 2014, today's drop just escalated things. From here, look out below.

Read More: 5 Breakout Stocks Under $10 Set to Soar

Petrobras

Nearest Resistance: $17.50

Nearest Support: $15

Catalyst: Q2 Earnings

Petrobras (PBR) is down 3.5% on volume this afternoon, selling ahead of the firm's second-quarter earnings call. Analysts expect adjusted EPS of 0.55 real on average, a number that'll get tested against actual performance after Brazilian equity markets close today. Speculation has been pretty rife this earnings season in more-volatile, high-volume stocks and PBR is no exception today.

PBR has been in a solid uptrending channel since the end of March, but that's not particularly helpful now. Shares are in the middle of the channel, leaving some room both to the upside and downside for shares to move between without changing the technical picture here. For most investors, it makes sense to wait for the earnings call.

Read More: 5 Large-Cap Stock Charts to Trade for Gains

Delta Airlines

Nearest Resistance: $38

Nearest Support: $30

Catalyst: Technical Setup

U.S. legacy carrier Delta Airlines (DAL) is seeing increased trading volume this afternoon, ostensibly because of news that Russia is considering a ban on Siberian overflights for American and European carriers, a move that could add considerable fuel costs to some of Delta's most lucrative intercontinental routes. But really, the reason for today's price action in Delta is technical.

DAL has been a momentum story for the last year, rallying hard and bringing the rest of the airline industry with it. That changed at the start of August, when shares of DAL violated trend line support for the first time. At this point, it makes sense to stay away from the long side of Delta until this stock can catch a bid again.

Read More: 5 Stocks Insiders Love Right Now

MercadoLibre

Nearest Resistance: $140

Nearest Support: $95

Catalyst: Q2 Earnings

Argentina-based online retailer MercadoLibre (MELI) is rallying more than 15% today, boosted by bullish numbers for the second quarter. MELI earned second quarter profits of 72 cents per share for the quarter, trouncing analysts' 26-cent estimates. While that number excludes the effects from Venezuelan devaluation, the comparison is stark enough to send buyers grabbing for shares.

Read More: 5 Hated Stocks That Could Pop When the S&P Drops

MELI had been in a downtrend since last October, but today's big breakout changes that. Now, shares have cleared resistance at $95, and there's minimal upside resistance going all the way up to $140. For traders who aren't too risk averse, now looks like a good time to join the buyers in MELI.

To see these stocks in action, check out the at Most-Active Stocks portfolio on Stockpickr.



-- Written by Jonas Elmerraji in Baltimore.

RELATED LINKS:

>>4 Stocks Under $10 Moving Higher

>>3 Stocks Spiking on Unusual Volume

>>5 Hated Earnings Stocks You Should Love

Follow Stockpickr on Twitter and become a fan on Facebook.

At the time of publication, author had no positions in the names mentioned.

Jonas Elmerraji, CMT, is a senior market analyst at Agora Financial in Baltimore and a contributor to

TheStreet. Before that, he managed a portfolio of stocks for an investment advisory returned 15% in 2008. He has been featured in Forbes , Investor's Business Daily, and on CNBC.com. Jonas holds a degree in financial economics from UMBC and the Chartered Market Technician designation.

Follow Jonas on Twitter @JonasElmerraji

5 Tax Strategies to Pay for College Without Going Broke

Saving for college is not for the faint of heart. The cost of an education has been spiraling upward and although there are some fine 529 plans to help, the numbers can be mind-boggling.

For men and women who own their own businesses, there are a few tips that can help them create a “tax scholarship” for their children, according to William Cummings, president and owner of Cummings Financial Organization, a money management firm based in Tampa, Fla.

“Hopefully people start planning early,” said Cummings, who used his ideas to help put his three children through college. Owning his own business gave him the chance, he said, to take advantage of IRS rules to help pay the tuition bills.

Cummings, who calculates that the cost of a year of public school tuition could rise past $33,000 by the 2020 academic year, offers tips that anyone can use to reduce the cost of college. They include living at home, establishing in-state residency and placing 529 plan savings in the name of a grandparent, thereby increasing the chances a student will be eligible for student aid programs.

(It's worth noting that while 529 plans held by grandparents are not reportable on the federal student aid application, using the account to pay for college will affect the student's aid eligibility the following year.)

There are also various tax credits, including the Lifetime Learning Credit, which allows parents to deduct $2,000 of educational expenses per year for dependent children.

Any strategy to help ease the tuition burden must be weighed against the tax consequences to the prospective student and the parents, Cummings says.

Parents, Cummings said, shouldn’t be too quick to borrow against or slow their retirement plan contributions. It might be better, he said, to use student loans or aid, “because you can’t get a scholarship for retirement.”

For small-business owners, here are Cummings’ 5 Tax Tips to Pay for College Without Going Broke:

1. Hire Your Children

Giving the kids the chance to work is a good way to shift income. This helps because they probably won’t earn enough to owe taxes. The money can be set aside in an IRA or other investment vehicle. For example, if a child does office work or painting or lawn mowing on rental properties for, say $2,500 per year, the savings can build up over several years before high school graduation. Cummings says it’s important to document the job and ensure that the work is legitimate.

2. Stock Transfer

Putting stock owned by parents in the name of a child can save tax payments. Beware, Cummings says, of the so-called kiddie tax, though, that mandates children can make at most $2,000 per year in unearned income using this strategy. Anything above that is subject to the tax rate of the parents.

3. Tuition Reimbursement

Offering employees tuition reimbursement for taking college courses can lower costs because of the tax benefits associated with such programs. The IRS puts a cap of $5,250 on such a program. It’s important that all employees receive the same benefits. In other words, the children of the business owner can’t receive a benefit not available to other employees.

4. Gift or Leaseback

By making a gift of a piece of property to a child and then leasing it back, the money saved in lower tax payments can be put toward paying for college, as can any lease payments. Beware of the kiddie tax mentioned in No. 2, which applies up to age 24 unless the child is no longer a dependent of the parents.

5. Divorce Planning

For couples no longer married, but able to work on college strategies together, there are ways to maximize tax benefits. Generally, such planning involves deciding which parent claims a deduction for the child as a dependent, leaving the other free to take advantage of tax saving rules while avoiding the kiddie tax.

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Vizio Recalls 245,000 Flat Screen TVs at Risk of Tipping Over

www.cpsc.gov Vizio is recalling about 245,000 flat panel televisions because the stands they come with can give way, leading the TVs to tip over, the U.S. Consumer Product Safety Commission said on Wednesday. The recalled TVs, made by AmTRAN Technology of Taiwan and manufactured in China and Mexico, are part of the Vizio E-Series. The recall includes 39-inch and 42-inch models. The LED TVs were sold for $370 to $450 between December and June at retailers nationwide including Amazon.com, (AMZN) Best Buy (BBY), Walmart (WMT) and Target (TGT). Vizio told the commission that the company has received reports of at least 51 TVs toppling. The recalled TVs are black and have the brand "Vizio" on the front in the lower right corner and the company logo in the rear. A list of models and serial numbers can be found on the CPSC site. If you have one of the recalled TVs, you're asked to detach the stand, put the TV someplace safe and request a free replacement stand sent to you. Even those with wall-mounted TVs are asked to request the new stand in case those units are ever moved to a stand, the CPSC said. Consumers can contact Vizio at (855) 472-7450 8 a.m. to 8 p.m. Eastern weekdays and 10 a.m. to 7 p.m. weekends. In addition, Vizio is supposed to post a safety notice on vizio.com. More from Mitch Lipka
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Groupon's Long, Painful Road to Recovery

Groupon Inc.'s(GRPN) transformation into a company that isn’t solely dependent upon emailed daily-deal offers is taking a lot longer than Wall Street anticipated.

The Chicago company late Tuesday reported its eighth straight quarterly loss, posting results that fell short of analysts’ expectations. The stock dropped as much as 20% on Tuesday to $5.68, its lowest level since early June. Shares are down more than 50% this year.

The guts of the quarterly report spooked investors. Groupon reported smaller commissions, a new credit line and disappointing guidance. It has diversified by offering the sale of physical goods and longer-lasting discounts through mobile phones, but the moves have yet to shine through significantly on the bottom line.

Wall Street is getting restless.

“We are not yet convinced that Groupon is on a consistent path towards growth and profitability,” said Edward Woo, an analyst at Ascendiant Capital Markets, which has a sell rating and $5 price target on Groupon. The share price “is likely to remain volatile and weak until it demonstrates it can grow both consistently.”

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Groupon counters that it’s efforts to diversify will take time. In the second quarter, the company introduced a tablet-computer-based cash-register system called Gnome, with the goal of taking on Square Inc., PayPal and others.

“We’re a business in transformation,” Groupon CEO Eric Lefkofsky told WSJ’s Greg Bensigner. “We’re still in investment mode. We believe we can accelerate our business.”

But analysts aren’t so sure. Jefferies describes the company’s pace of execution as “somewhat underwhelming.” Sterne Agee says progress remains slow and Wunderlich Securities finds it difficult to see Groupon rebounding in the next quarter or two.

“We question whether the company can successfully manage the transition from deals site to retailer and now to ‘commerce partner,’” Evercore analyst Ken Sena wrote to clients.

Groupon shares are down more than 70% from when the company went public in November 2011 at a $20 IPO price. Judging by the caution coming from analysts, the company has a long way to go to return to that level.

–Greg Bensinger contributed to this report.

Defense News Roundup: U.S. Bolsters Aircraft Missile Defenses, May Increase Assistance to Iraq

The U.S. military has a reputation of being a somewhat secretive organization. But, in one respect at least, the Pentagon is one of the most "open" of our government agencies. Every day of the week, rain or shine, the Department of Defense tells U.S. taxpayers what contracts it's issued, to whom, and for how much -- all right out in the open on its website.

So what was the Pentagon up to last week?

Between "base" spending levels, and supplementary spending on overseas contingency operations (OCO), the DoD is budgeted to spend about $11.8 billion a week in fiscal 2014, of which $6.2 billion goes to military hardware, infrastructure projects, and supplies. All through July, however, the Pentagon ran under budget. This past week, hardware, infrastructure, and supply contracts totaled only $4.22 billion in value.

And what did the generals get for their (read "our") money?

Better missile defenses for (military) airplanes
Last week the DoD awarded defense contractor Exelis (NYSE: XLS  ) a $190 million contract to supply the U.S. Special Operations Command, or SOCOM, with as many Suite of Integrated Radio Frequency Countermeasure, or SIRFC, components and services for its fleet of CV-22 Osprey tiltrotor aircraft as SOCOM needs over the next five years.

Designed to detect, jam, and decoy missile-guidance radars, SIRFC is an onboard electronic warfare system already used aboard U.S. Army helicopters such as the Black Hawk, Apache, and Chinook to defeat incoming radar-guided missiles. It is designed specifically to defeat such anti-aircraft weapons as surface-to-air missiles, and also radar-guided anti-aircraft "flak" guns.

Better protection for soldiers, too
A smaller contract went to Oshkosh Corp. (NYSE: OSK  ) to bolster protection for troops on the ground. Valued at $45 million, the award will fund repairs and upgrades on 800 of the company's Mine-Resistant, Ambush-Protected All-Terrain Vehicles, dubbed "M-ATV," and used primarily to transport troops and supplies in Afghanistan. Work performed under this contract will continue through the end of next year -- which suggests U.S. troops will be present in Afghanistan at least that long as well.

And don't forget about the allies
Foreign buyers of U.S. military equipment were behind a number of contracts awarded last week. Among them:

Honeywell (NYSE: HON  ) won one of the week's biggest contracts to support the militaries of U.S. allies Australia, Morocco, Turkey, and the United Arab Emirates. Honeywell will be shipping out to these countries a total of 440 T55-GA-714A engines and 365 T55-GA-714A engine fielding kits. Among other aircraft, the T55-GA-714A engine is used to power CH-47 Chinook transport helicopters, an aircraft that is present in (or, in the case of Turkey, on order by) the militaries of all four countries. The total value of this contract modification to Honeywell will be nearly $122 million. Lockheed Martin (NYSE: LMT  ) won a $50 million contract to supply the militaries of South Korea and Finland with M934E6 and M934E7 warhead fuses for use with these countries' arsenals of Stinger shoulder-fired anti-aircraft missiles (often called "MANPADS," short for man-portable air defense systems). Deliveries of the fuses will continue through Aug. 25, 2018. Textron's (NYSE: TXT  ) Cessna unit won a $64 million contract to provide "support" and training services to Afghan pilots and mechanics servicing 26 C-208B "Caravan" and six T-182T "Skylane" utility aircraft through based at Kabul International Airport, Kandahar Air Base, and Shindand Air Base in Afghanistan through Jan. 31, 2016.

Opportunities on the horizon
So much for the contracts everyone knows about. Now, let's end last week's roundup with one contract that you may not yet have heard of.

Here again, it's Textron that looks to be a winner. Early last week, the U.S. Defense Security Cooperation Agency, which coordinates sales of military services and hardware to foreign governments through the Pentagon, notified Congress of the planned sale of parts and equipment, plus "aviation sustainment support, on-the-job maintenance training, and maintenance advice" -- this time for the Iraqi Aviation Command.

Valued at $500 million in total, Textron will be helping to keep Iraq's fleet of Bell 407, OH-58, and Huey II helicopters flying, as the government deploys them to fend off attacks by ISIS insurgents.

Mind you, this contract is not "official" yet, and the Pentagon hasn't yet officially announced the award to Textron. In all probability, most investors don't even know that it's in the works -- except that now, you do.

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Iraq Air Force UH-1H II "Huey." Photo: Wikimedia Commons.