Table of Contents

1.  Market Update
2.  Research in Motion (RIMM)
3.  Burlington Northern Santa Fe (BNI)
4.  Additional Investing Ideas
5.  Investor Trivia -- Higher Returns and Dividends Abroad
6.  Featured Topic -- Turning Garbage into +25% Returns
7.  Free Investing Resources

Today's Top Stock Picks

Long-Term Growth of +34.2% has Made this One of the Market's Hottest Stocks
This company is behind an immensely popular device that has helped push its share price up +154% in the last year alone. Read More. . .

This Railroad Owns Key Routes in Major Coal and Agricultural Markets
BNI is well-placed to handle surging commodity demand in coming years. And as older contracts expire, it has significant scope to raise prices. Read More. . .

Market Update

In October 2006, we were celebrating the Dow Jones Industrials' rapid ascent to the 12,000 level, which was within reach for the first time ever. Curiously, crude oil futures had just dipped to a yearly low below $60 per barrel that very same week.

Today, 20 months and seven interest rate cuts later, the Dow is once again sitting just shy of 12,000 -- except now the momentum is in the opposite direction. Meanwhile, oil prices have since skyrocketed and are poised to hit $140 per barrel. Of course, we can't pin all of the market's woes on oil, but there's no doubt soaring energy prices are a big reason why stocks have retraced all of their gains over the past year and a half.

For this past week, anyway, crude prices were relatively well-behaved in the wake of two major announcements. First, news came out over the weekend that Saudi Arabia is mulling plans to boost production by up to 200,000 barrels per day. Furthermore, government officials in China, the world's second-largest oil-consuming nation, have just approved a near +20% hike in gas prices. This is the sharpest increase in retail fuel prices that state regulators have ever approved, and many observers believe it will help to curb demand.

Unfortunately, aftershocks in the financial sector have rumbled through Wall Street over the past few days. Lehman Brothers (NYSE: LEH) posted the first quarterly loss in the history of the company; Fifth Third Bancorp (Nasdaq: FITB) announced plans to slash its dividend by two-thirds, and Citigroup (NYSE: C) warned that further writedowns are on the horizon.

Adding to that pressure, a key gauge of inflation at the wholesale level jumped +1.4% in May, the biggest increase in over six months. And on the corporate front, shipping giant FedEx (NYSE: FDX) rang the alarm bell by cautioning that full-year earnings are likely to come in below expectations.

Against all this, the Dow has logged heavy triple-digit losses in recent days, and all of the major averages finished with steep losses of -2% or more for the past week.

Despite weakness in the broader markets, some stocks continue to swim against this swift current with little difficulty, like Research in Motion (Nasdaq: RIMM, $144.56), which has advanced +70% in the past five months alone. And below, you'll read what has fueled this impressive run-up -- and why it might not be over.

After that, StreetAuthority Market Advisor editor Paul Tracy gives us a closer look at Burlington Northern Santa Fe (NYSE: BNI, $103.02) and explains why shares of the railroad giant are poised to keep chugging along.

Good Investing!

-- Nathan Slaughter
Co-Editor
TopStockAnalysts Digest

Research in Motion (Nasdaq: RIMM, $144.56) is the company behind the immensely popular BlackBerry smartphone and other wireless communications devices.

Whether it's corporate IT managers or everyday consumers, people are increasingly turning to feature-rich smartphones for music, email, GPS and other functions. According to Morningstar, this is the fastest-growing segment of the mobile phone market -- expanding at a red-hot +60% clip last year. And Research in Motion has a commanding 40% share of the North American market.

To understand how fast the company is growing, look no further than its 2008 annual report. Over the past 12 months, management has added over 80 new carrier partners to its vast retail distribution platform, including key allies in China and India, bringing the total up to 350. And those partners have been busy: despite the emergence of Apple's (Nasdaq: AAPL) iPhone, year-over-year BlackBerry unit shipments spiked +115%.

Starting virtually from scratch in 2000, the BlackBerry subscriber base has grown by leaps and bounds, reaching 8.4 million in 2007 and then swelling to 14 million at the end of fiscal 2008 -- and foreign consumers now account for one-third of that total. With operations spanning 135 countries, Research in Motion has enjoyed torrid revenue growth of +98% over the past year, and earnings have skyrocketed +104% to $1.29 billion.

However, while most are well aware of the firm's exceptional growth rates, few realize that margins have been marching steadily higher as well. In fact, operating margins improved from 2.5% in 2005 to 20.3% in 2006 to 26.6% in 2007. And as of last quarter, that all-important figure stood at 28.8%. By comparison, rival Nokia (NYSE: NOK) only manages to generate about half as much operating income per dollar of sales, with a margin of around 14%.

Much of the credit for the recent improvement goes to management, which has done a commendable job of leveraging its investments in research and development (R&D). Over the past year, those expenditures have dropped from 7.8% of sales to just 6.0%. Meanwhile, selling, general and administrative (SG&A) expenses are also being spread over a larger revenue base, dropping from 17.7% to 14.7% of sales -- a reduction of 300 basis points.

Over the next five years, shareholders can expect to see substantial bottom-line improvement on the order of +34.2% annually -- making the stock's forward earnings multiple of 27 much more palatable. Other attributes, including strong brand-name recognition and unheard-of returns on equity exceeding 40%, only add to the appeal. All this has paid off handsomely for shareholders as the company has surged +154% in the past year alone.

Burlington Northern Santa Fe (NYSE: BNI, $103.02) is the second-largest railroad in the U.S. with more than 32,000 miles of track covering 28 U.S. States and two Canadian provinces.

Catalyst(s):  BNI has plans to further boost prices in key markets over the next few years. Many of BNI's current coal and agricultural contracts were signed years ago at rates far lower than what the railroad earns on new deals. As the contracts gradually expire, BNI has been re-pricing the deals at higher rates. BNI believes it can grow pricing across its major business lines by +3-5% annually through 2012.

In addition, older contacts include far less generous fuel surcharge provisions than more recent deals. BNI has also been able to renegotiate agreements to include provisions to recoup virtually all of its rising diesel costs. In the most recent quarter, BNI recovered roughly 80% of the increase in its fuel costs via surcharge agreements; management has set forth a goal of increasing that recovery rate to 100% over the next five years.

Finally, BNI continues to make operational improvements. The company is implementing more advanced systems to monitor the progress of shipments across its network. And BNI has worked consistently to eliminate bottlenecks in its network. The end result -- a significant drop in operating costs that also helps to shore up profitability.

Competitive Advantages:  The main competitive advantage of most rails is the location of their network. It is extremely expensive to buy up right-of-ways to lay new tracks and building out a railroad network is becoming more expensive thanks to rising raw materials costs. Therefore, existing network infrastructure in strategic locations is extraordinarily valuable.

BNI has one of the best networks of any of the major U.S. rails. The company has the largest network of track in key coal-producing regions of the western U.S.; coal production from this region is growing quickly and is helping to offset declining production from older eastern mines. The transport of coal from western mines to East Coast utilities is a particularly lucrative deal for the rails.

And BNI also has an extensive network in the Midwest, America's key region for agricultural production. This network is also strategically located to serve some of the nation's largest ethanol-producing regions.

Valuation and Outlook:  BNI trades at 15 times 2009 earnings estimates. But management recently updated long-term guidance, saying that the railroad could generate long-term EPS growth of more than +13% annualized using conservative assumptions. Based on the more bullish trends of the past few years, that growth rate could easily be closer to +15%. With that growth, BNI looks to be reasonably valued.

And BNI has also announced plans to continue an aggressive share buyback plan in coming years financed by its large and growing free cash flow. BNI has plans to spend roughly $9 billion on share repurchases in the coming five years, a move that could bring its share count down by nearly -20% by 2012. That's on top of a -25% reduction in share count since 1998 under BNI's existing share plan. BNI also has plans to boost dividends to return more of its free cash to shareholders.

With an enviable track network in regions such as the coal mines of the western U.S. and the key agricultural markets of the Midwest, BNI is well-placed to handle surging transport demand in coming years. And as older contracts expire, BNI has significant scope to raise prices. With these points in mind, BNI looks like a solid "Buy" under $115 per share.