Table of Contents

1.  Market Outlook
2.  LEAPS Options
3.  Panera (PNRA)
4.  Additional Investing Ideas
5.  Investor Trivia -- Dialing for Dividends
6.  Featured Topic -- How Buffett Made a +361,000% Gain
7.  Free Investing Resources

Today's Top Stock Picks

Five Reasons Why You Should Use This Powerful Strategy In Today's Crazy Market
Would you rather lose 25% of your capital with no possibility to make it back, or have just 10% at risk?
Read More. . .

Strong Earnings Growth Should Help Push this Stock Up More than +50%
Panera (PNRA) is playing to the growing trend of eating better by opening new stores -- which could mean a rally for shareholders.
Read More. . .

Market Outlook

The major averages all appeared to be headed for another loss this past week until news of a possible bailout for troubled bond insurer Ambac Financial (NYSE: ABK) helped spark a late recovery on Friday. Still, given the mounting economic troubles, the modest gains are little more than a hollow victory.

With each passing week, new data is giving traders a clearer and clearer portrait of the health of the economy -- and it's not a pretty picture.

The market was clearly unnerved by a much steeper-than-expected drop in regional manufacturing activity, but that was just the beginning. We also saw new building permits (a reliable indicator of future activity) slip to the lowest pace in nearly two decades. And consumer inflation, which ticked up an alarming +4.1% in 2007, is now at its highest level in 17 years. Though we can chalk some of that increase up to spikes in food and energy costs, prices for other goods and services like clothing and medical care are also on the rise.

And it certainly didn't help that a refinery outage helped crude oil prices close above the psychological $100 per barrel mark for the first time ever on Tuesday.

This all follows downbeat reports from earlier in the month (soft retail sales, a surprising loss of 17,000 jobs in January, the first contraction in the service sector in five years, etc.), hammering home one salient point: the economy is in trouble. Nevertheless, Friday's late rally helped most of the major averages salvage the week and finish in the green.

Without evidence that the economy is stabilizing, it will be difficult for the market to stage a sustained turnaround. Traders are continuing to take their cues from the economic news du jour, and next week will see the release of some important numbers -- including durable goods orders and an updated report on inflation at the wholesale level.

In this challenging and unpredictable environment, you might wish there was a way to stay in the market and profit from a future rebound, without having to leave all your hard-earned principal at risk. Fortunately, there is -- LEAPS. As Karim Rahemtulla, editor of Smart Profits Report, explains below, these flexible options contracts might just offer the best of both worlds -- an opportunity to park much of your cash in the safety of a money market account, yet still cash in on a market advance.

Also in today's Digest, StreetAuthority Market Advisor editor Paul Tracy digs into Panera Bread (Nasdaq: PNRA, $38.25). The up-and-coming fast-casual dining chain is consistently rated tops in terms of customer loyalty and is just beginning to expand into faster-growing markets overseas. While the company is battling rising costs and slower consumer spending at the moment, the shares could easily bounce back into the low $60s once conditions return to normal.

Good Investing!

-- Nathan Slaughter
Co-Editor
TopStockAnalysts Digest

In a crazy, topsy-turvy market like this, many investors can barely afford to take their eyes away for too long, for fear that the next time they look, the bears will have once again ravaged their portfolio.

Most don't know where to turn for solid, profitable advice and spend too much time listening to mainstream media sources that specialize in bland, one-size-fits-all reporting and pay way too much attention to what the crowd is doing.

So at the start of what should be another volatile week, separate yourself from the crowd and invest in a smarter way. Today, I'm going to show you one way to do that...

"Leap" Ahead Of The Crowd With This Pro Technique

Most ordinary investors are perfectly content to stick with a tried-and-tested stock investing strategy. There's nothing wrong with that, but when the market decides to lurch around like a roller coaster, many folks end up dazed and totally confused.

They simply don't have the knowledge that allows them to stay protected and profitable when the market heads south. Don't be one of those guys. You can certainly do better.

As you may know, I'm very fond of using certain professional investment strategies as an alternative investment tool to just plain old stock investing. And contrary to popular myths, they're not confusing or complicated.

I'm talking primarily about strategies like covered call options and bull spreads. But today, I want to focus on one strategy in particular that is excellent in a volatile market: LEAPS options. Let me give you five reasons why...

Five-Star Protection And Profitability In A Down Market

#1: LEAPS Are Cheap: In the current market, the possibility of getting stopped out of an investment or enduring a hefty loss is significantly increased. The whipsaw action has smashed many portfolios that I'm sure investors thought were solid.

So let me ask you this: Would you rather lose 20% or 25% of your capital with no possibility to make any money back, or have just 10% of your capital at risk, with a comfortable time cushion built in to recover any losses and still make a profit? LEAPS are long-dated securities that allow you to risk a very small amount of money up front compared to what you would have to fork out for the underlying shares.

For example, you could buy 100 Walt Disney (NYSE: DIS) shares today for $32 - a total outlay of $3,200. Or you could buy one options contract (equivalent to 100 shares) in January 2009 $32.50 LEAPS calls for $2.30 - a total outlay of just $230 ($2.30 x 100).

#2: Time Is On Your Side: When you trade short-term options, time is your enemy. With LEAPS, though, you can make the same rational decisions about investing in a company that you do with stocks. But because LEAPS can expire in one, two or even three years in some cases, it gives you the flexibility to withstand a lot of adverse short-term market action. So in the Disney example above, you'd give yourself almost a year to be right while the market volatility subsides.

#3: Build A LEAPS Portfolio That Beats Stocks: Because LEAPS are available on so many companies, sectors, and ETFs today, you can build an entire portfolio of LEAPS, leave the rest of your money in a nice money market account and make more on your investment than you would with a stock portfolio.

Of course, the downside is that you'd miss out on any dividend payments. But on the upside, you can almost get a free ride on the market if you work it properly.

Here's how: On your next stock trade, consider buying a LEAPS option instead. As you've seen, you can save a big chunk of cash by doing so. Put the money that you didn't spend on the stock into a money market account for two years. The interest you'll get on that hefty amount may well cover a large chunk of the money you spent on the LEAPS - maybe ALL the money.

#4: You Can Go Long Or Short With LEAPS: You don't just have to go long with LEAPS. You can protect your portfolio from downside moves by buying LEAPS on individual stocks or indices without worrying about the unlimited downside risk of shorting stocks. Your downside is limited to what you paid for the LEAPS.

#5: LEAPS Are Easy To Trade: You can execute LEAPS in any type of trading account, including your IRA. They are liquid investments that provide you with a well-rounded, diversified portfolio.

P.S. When was the last time you heard anyone in the mainstream media talk about using LEAPS? It's about as rare as seeing Haley's Comet. Maybe they think it's too complicated and you won't understand. Or maybe they just don't want you to know, so they can skim the money for themselves. But there's no reason why you shouldn't add this strategy to your trading arsenal. I've written a report that lets you in on the secret and shows you how to notch a +133% win in just two months and turn $500 into more than $1,000, or $6,000 into $24,500. Check it out here.

Panera Bread Co. (Nasdaq: PNRA, $38.25) operates a chain of more than 1,100 bakery cafes in the U.S. Roughly 40% of its current locations are owned directly by the company, with the remaining 60% operated under franchise agreements.

PNRA operates in about 40 states and has traditionally focused on opening locations in malls rather than as standalone locations.

Competitive Advantages:  PNRA's main competitive advantage is its brand name and the loyalty of its customers. According to a series of surveys reported in The Wall Street Journal, Panera has the highest level of customer loyalty among so-called "fast-casual" restaurant chains. Fast-casual chains are restaurants that offer the speed of fast food chains and the food quality and atmosphere of more traditional full-service restaurants.

The firm has developed a reputation for using fresh ingredients and preparing items from scratch in-house. For example, PNRA freshly bakes all of the bread used in its restaurants -- dough is delivered daily to all locations. This quality gives Panera a leg-up on most fast-food chains.

And PNRA's use of fresh and higher-quality ingredients also plays into another key trend -- Americans' increasing desire to eat healthier foods. Consumers are shying away from unhealthy foods like burgers and fries and moving toward alternatives like natural and organic foods -- Panera has several menu items that are lower in fat or cholesterol or use all-natural ingredients.

Some fast-food chains have begun to adapt their menus to try and target PNRA's traditional market. For example, McDonald's (NYSE: MCD) has introduced a line of salads and gourmet sandwiches, as well as specialty coffees. But these chains still don't have the capability to offer the menu variety of Panera.

And the firm also offers something else that fast food chains do not -- a better atmosphere. PNRA locations are designed to feel like cafes with comfortable furniture and restaurant-quality lighting. Often locations offer services such as wireless Internet access to encourage consumers to linger in their cafes.

Growth Drivers:  Panera has two main growth drivers -- growing its base of locations and growth in sales at existing cafes. As for the first, the company still has only 1,100 locations, all in the U.S. That's a fraction of the 13,700 locations McDonald's has in the nation. And PNRA has just begun to tap into international markets. The chain plans to open is first stores in Canada this year and has no exposure to either Europe or Asia.

All told, PNRA should be able to continue opening up 160-180 new stores per year over the next few years. Eventually, the company believes it could have as many as 4,000 U.S. locations without poaching on existing restaurants.

Growth at existing locations has become more difficult in recent quarters with PNRA reporting declining comparable store sales growth -- there's still growth, but not at quite the level of a few years ago. Comparable store sales is a key metric used in the restaurant business, measuring growth in locations open for more than one year.

Nevertheless, longer-term PNRA has an outstanding record of comparable store sales growth. And management has taken steps to re-accelerate growth including introducing popular new menu items.

Valuation and Outlook:  Panera stock has been hit due to concerns over slowing consumer spending and weakening comparable store sales trends over the past year-and-a-half. But management has already taken steps to help reverse that trend.

Meanwhile, the shares trade at a bargain basement valuation. The stock sells for less than 17 times 2009 earnings and sports a long-term growth rate of +18%; the firm's PEG ratio is currently less than 1.0 -- unusual for a well-established growth stock.

Expansion into new markets coupled with management's menu initiatives should help to re-accelerate growth in coming quarters, offsetting the effects of weaker consumer spending. And management has also raised prices lately, helping to offset increases in the cost of food ingredients. That should help keep margins high.

As sales growth recovers, PNRA could easily trade to a PEG of 1.5, sending the stock into the low $60s over the next two years -- for a gain of more than +50%