As we enter 2013, I thought I would share a few market pet peeves that I have and resultant requests and notes of caution for 2013.

To Certain Amazon Bears:

Please stop believing that the Amazon (AMZN) bulls aren't aware of the company's very high price/earnings (P/E) ratio. As a massively followed and scrutinized company, Amazon's P/E ratio is well understood by the market (I am not an Amazon bull, by the way).

The Amazon bull case is simply that Amazon's top-line will continue to grow at its historically rapid pace (as the dominant on-line retailer takes market share from the bricks-and-mortar stores) and margins will eventually expand once top-line eventually slows and resultant growth expenditures are reduced.

Longer-term, they expect that Amazon may have revenues and margins more comparable to a dominant bricks-and-mortar retailer like Wal-mart (WMT), which currently has an enterprise value over 120% above that of Amazon.

A fellow contributor recently wrote an article highlighting the many shortfalls of using EBITDA (earnings before interest, taxes, depreciation, and amortization) for securities analysis. While the article provided a very insightful look into the many shortfalls of EBITDA, I disagree with the author's conclusion not to use EBITDA for analytical purposes. In fact, I believe that EBITDA can be a very useful analytical and valuation tool, when used properly.

A Flawed Metric Used By Many

Undeniably, EBITDA ignores a number of important factors; not least of which being Capex (capital expenditures) and interest expense, which can consume a substantial portion of a company's cash flow. Despite these obvious shortfalls, EBITDA remains one of several primary metrics used for the analysis and valuation of companies and their securities.

Take a look at security research reports (particularly for corporate bonds, but also for equities), bank loan and bond covenant statements, credit

On Monday, Sprint (S) and Softbank (SFTBY.PK) announced a deal in which Softbank will acquire 70% of Sprint. Under the terms of the deal, Softbank will tender for 55% of Sprint's outstanding shares at $7.30/share and will also buy newly issued shares of Sprint at $5.25/share. This deal implies a weighted average cost of $6.20/share for Softbank - approximately 23% above Sprint's closing share price on October 10 (the day before deal rumors began).

Following Monday's announcement, Sprint's shares fell 0.7% to close at $5.69. One apparent reason for the sell-off was that investors now see limited further upside for Sprint's shares, between now and when the deal closes in 6 to 8 months. I believe that this is far from the case; not least because the current valuation appears to be overly conservative.

"New Sprint's" Current Implied Valuation

While it's true that the announced deal would cap

A recent article by a fellow Seeking Alpha contributor supporting gold investments stated the following:

In fact, the author [another author criticizing gold investments] notes that "historically, gold has been known as an effective store of value." I would have thought such a statement would end the entire debate...

My question is, why would that end the debate? Shouldn't we examine the extent to which gold has been an effective store of value, and how it has performed against other asset classes? It seems to me that one of the main arguments made by some gold advocates amounts to little more than gold is a good investment because it will outperform any cash that you stash under your mattress (although almost no one actually invests in such a manner).

For example, one of the points made by gold advocates is the observation that: "In Roman times, an ounce of

Nokia (NOK) and Microsoft (MSFT) unveiled their newest Lumia Windows 8 phones today at a media event in New York. While the launch was poorly received by the investment community (and the stock has sold-off considerably today), I believe the reaction was more about presentation than substance. Before I go into the problems with the launch event, let's briefly discuss the positives that came from the presentation.

(click images to enlarge)

The Good…

I thought that the Nokia presentation started out well, with a good summary of the phone's many impressive capabilities. I believe that the hardware, photo/video features, mapping/navigation capabilities, and wireless charging features were innovative and very impressive. In addition, the phone and its Windows 8 software interface are stylish and aesthetically pleasing. I won't go into detail on the many positives of the phone's features, as that's beyond the scope of this article, but I did find

A fellow contributor recently wrote that now was not the time to rush into buying stocks. Even if there was considerable stock appreciation from today, the article argued that a large bear-market correction (as in 2000 and 2008) could bring the market back, again, to below current levels. The article then went on to illustrate how much stock prices would need to appreciate (from here) in order to break-even, should a bear market of 40% occur.

To begin with, I would argue that 40% is not a good base-case scenario to use -- as there have only been three bear markets over the past 70 years of 40% or greater ('73, '00, and '08). Just because two of them happened to be in the last 12 years, I wouldn't assume that this is the new norm. One also needs to bear in mind what another decade or so of

Since my last article urging readers to buy Sprint (S), the company delivered blowout second-quarter results on July 26. Among other positives, revenues increased 6%, despite the continued shutdown of the Nextel platform (Sprint platform revenues increased 16%), Sprint platform post-paid churn hit a record low of 1.69%, and ARPU hit a record high of $63.38. Apple (AAPL) iPhone sales held up much better than they did for Verizon (VZ) and AT&T (T), and adjusted OIBDA guidance for 2012 was increased from around $3.9 billion to $4.5 billion to $4.6 billion.

In light of these results, shares have increased 48% (as of Tuesday's market close), prompting calls from many that the run-up has been overdone. While such a reaction of caution is natural, following a large share price increase over a short period of time, I believe that the share price reaction has actually been too limited.

Putting

Nokia's (NOK) revenue decline, over the past year, has been steady and dramatic. From Q1 of 2011 to Q1 2012, revenues have fallen steadily, each and every quarter on a year-over-year basis, culminating in a staggering decline of 29% for Q1 2012. These declines have resulted from increased phone competition (both for low and high-end phones), the company's transition away from the Symbian operating system platform, and the fact that the Lumia (the line of Microsoft (MSFT) Windows' phones replacing the Symbian smart phones) only recently launched at the end of 2011.

On a comparative basis, I believe that Sprint's (S) current valuation is very attractive, when compared to that of AT&T (T). While this may seem counter-intuitive - considering Sprint's historic losses and AT&T's historic strength and profitability - the goal is, obviously, to invest in the future and not the past. With that in mind, let's take a comparative look at the two companies.

Revenue growth trends favor Sprint

Sprint's recent revenue growth trends have been much better than those of AT&T (Sprint grew revenues by 3.4% in 2011 versus revenue growth of 2.0% for AT&T). Furthermore, the rate of change is also favoring Sprint, which improved their year-over-year growth rate from 3.4% in FY 2011 to 4.8% in Q1 2012. AT&T's y-o-y revenue growth, on the other hand, slightly declined (to 1.8% in Q1 2012 from 2.0% for FY 2011).

AT&T suffers from a disproportionately

Sprint (S) has had an amazing run, as of late, for reasons that I discussed in a recent article. Since the market close on the day of Sprint's most recent earnings, through yesterday, Sprint has outperformed the S&P 500 by 31%, versus outperformance of 12% and 14% for Verizon (VZ) and AT&T (T), respectively (see below).

	Closing share price
Since earnings-day:	VZ	AT&T	Sprint	S&P 500
April 25th (earnings day):	39.48	31.74	2.43	1,390.69
June 20th:	43.30	35.41	3.13	1,355.69
Change:	9.7%	11.6%	28.8%	-2.5%
Over(under)performance:	12.2%	14.1%	31.3%
Source: Yahoo Finance

The question, now, is how much upside remains for the stock? Looking at longer-term margin potential and current trends, I would argue that additional upside is considerable and the market is still substantially undervaluing Sprint. But, before we consider further upside potential for the shares, let's first review how Sprint has recently addressed many market concerns, allowing

On Monday night, Microsoft (MSFT) unveiled, what appears to be, an attractive and innovative tablet. Named "The Surface," the new tablet features capabilities similar to those found with Apple's (AAPL) iPad, but with some notable differences, as well.

While Microsoft's new tablet will remain at a significant disadvantage with respect to available apps (compared to those available for the iPad), it will also offer desirable product features not found with the iPad. Notably, the tablets will include and/or be able to run Microsoft's Office software (Word, Excel, Power-Point) and will have an ultra-thin keyboard integrated into a magnetic cover, as well as a built-in stand.

At first glance, the tablet looks sharp and appears to address the main weakness of the iPad (limited work-related software and no keyboard). While you can buy and connect a keyboard (and a stand) to the iPad, I believe that the seamless integration of

A fellow S.A. contributor recently wrote an article arguing that Amazon (AMZN) overstates their free-cash-flow by leasing, rather than purchasing, certain assets -- thereby, eliminating the capital expenditures required to purchase the assets. While a very well-written and interesting analysis, I disagree with his conclusions for several reasons.

First of all, and most simply stated, the analysis is detached from reality. Amazon does, in fact, lease these assets. As such, the company's cash flow statement (rightfully) reflects this reality and there's no compelling reason to shift the valuation focus from actual free-cash-flow to an adjusted number that pretends that the company is purchasing assets that they are not.

To be fair, I do believe that lease-adjusted credit ratios are a useful tool for credit analysis (i.e. using Adjusted Debt/EBITDAR) -- as operating leases do have some debt-like characteristics, from a credit perspective (to the extent of their committal nature

On Monday, I wrote an article estimating volume requirements for Sprint's $15.5 billion 4-year iPhone contract with Apple (AAPL). Based on my estimations, I calculated that Sprint (S) will need to sell 23.8 million iPhones over the length of the contract - while the company is on pace to hit 25.2 million, based on the current run-rate (adjusted for seasonality).

Conservatively, this estimate did not include any consideration for sales from Sprint's pre-paid operations, although the company recently announced that its Virgin Mobile pre-paid subsidiary will offer the iPhone on June 29 and its Boost subsidiary is rumored to follow suit (in September of this year). All-in-all, I believe that the analysis of the current run-rate trends provides reason for optimism, with respect to Sprint's Apple contract.

That said, extrapolating four-years out from a run-rate of two quarters of sales (after launch) is filled with limitations. For starters,

Much has been written, over the last year, about Sprint's (S) $15.5bn iPhone commitment with Apple (AAPL) and the risks associated with the deal. Following the completion of two quarters of iPhone sales from Sprint and, in light of, the recent announcement that Sprint will carry the iPhone under its Virgin Mobile pre-paid brand, it's a good time to crunch the numbers and see how things are looking with respect to the contract.

First of all, we only know about the dollar value and length of the Apple contract ($15.5bn over 4 years). In order to translate this dollar obligation into a volume commitment, we need to make price assumptions. To do so, let's look at the prices at which Sprint offers the iPhone without a contract:

Model	No-contract price
iPhone 4 (8GB):	549.99
iPhone 4s (16GB):	649.99
iPhone 4s (32GB):	749.99
iPhone 4s (64GB):	849.99
Source: Sprint website

Given

Back on April 25, Sprint (S) reported strong results -- subscriber trends were solid, revenue and earnings beat estimates, and OIBDA (operating income before depreciation and amortization) guidance was revised to the upper end of the previously disclosed range. Strangely, the shares traded down 1.6% that day (a day when the S&P 500 was up 1.3%).

Around that time, I discussed possible reasons for the lack of performance -- none of which seemed to justify the disappointing share price developments. Subsequent to the earnings' day close, however, Sprint shares have proceeded to outperform the S&P 500 by a whopping 27%. With that in mind, let's very briefly examine the possible catalysts for this recent share price movement within the context of beta, industry/peer performance, and company-specific news.

Beta

Sprint is a high-beta stock, and the overall market is down 5.0% since the company's most recent earnings announcement. Therefore, the

When people first become familiar with options strategies, I believe that there's a tendency to both oversimplify the rationale for the trades and overlook the risks/downside. Not only are there hidden transaction costs (wide bid/ask spreads) and liquidity issues that are often ignored, but other underlying problems are also overlooked. In the following article, I will examine a few of these issues with respect to some of the most commonly discussed option strategies.

Straddles

I recently read an article from someone touting straddles (concurrently selling puts and calls of a security in the expectation that the stock will remain range-bound and the options will expire unexercised) for Google (GOOG). This is certainly a reasonable strategy, but only if the options are priced attractively. Therein lies the problem. There was absolutely no analysis of the intrinsic value of the call and put options and why they may be considered too

Facebook's (FB) shares, at Tuesday's close of $28.84, have fallen 24% from the $38 IPO price and 36% from the post-trading highs of $45. Many lament how this is a terrible result, which reflects the greed of Facebook's early investors and Morgan Stanley (MS) and will do further harm to the already damaged psyche of the retail investor. I would argue, however, that the Facebook share price implosion is actually a good thing, for the following reasons.

First of all, what damages investor psyche is investing at price levels that are greatly disconnected from an asset's intrinsic value and then losing substantial sums on those investments (e.g. what happened with the bursting of the Internet bubble of 2000 and the housing bubble of 2008). In order to avoid such outcomes, the bubbles themselves, need to be avoided. In this regard, investors need to learn that investing based solely on expected

Dell (DELL) announced another disappointing earnings report, yesterday, in what now seems to be a regular occurrence for the company. Shares were down 12.73% to $13.16 in after-hours trading. At this point, with the stock down over 45% since Michael Dell re-took the reins on January 31, 2007 (the S&P 500 (SPY) is down about 8% since that time, by comparison), it is again time to question the wisdom of Dell's lack of a dividend plan. Clearly, the lack of a dividend is not the only (or even the main) source of Dell's financial woes, but it has now become an obvious problem that could be easily remedied and should be addressed.

Historically, Dell has not paid a dividend, despite having ample resources with which to do so. In this regard, the company has stated:

"We believe that our earnings are best utilized by investing in internal growth opportunities, such