This being Halloween, it seems appropriate to ask, who’s afraid of big, bad Wal-Mart? If you were thinking women’s apparel retailer Cato Corp. (CTR), think again. This microcap has consistently stood its ground.

In todays investment column, I introduced nine good-yielding strip-mall REITs that may benefit from Wal-Mart’s struggles. Cato is another such outfit.

You’d never know it given Cato’s skimpy research coverage; two analysts follow it now, both from small firms, and for most of the past few years, there was only one analyst, Marc Bettinger of Stanford Group Company, who regularly reported on CTR. So it’s not surprising to see low share-price valuation metrics.

Table A

Note: TTM = Trailing 12 months

He has a Buy rating on the stock now, as lower gas prices are especially beneficial to this discounter’s largely blue-collar clientele, helping the company post strong results. However his rating has bounced around over time as Cato’s comparable-store sales trends ebbed and flowed and as broader macroeconomic data influenced attitudes toward the spending prowess of low-end consumers.

But through it all, Cato hung in and managed to deliver for customers - it aims to price just a little above Wal-Mart but to offer fashions and services that far exceed what can be obtained from the mega-merchant -and for shareholders.

Growth, what Wall Street usually demands, has not been Cato’s stock in trade.

Table B

Note: TTM = Trailing 12 months

But there’s more to life than growth. This debt-free company features solid fundamentals.

Table C

Note: TTM = Trailing 12 months

Most significantly, rather than investing heavily to try to grow more quickly than it really could, Cato has historically given greater emphasis to returning cash to shareholders through dividends.

Table D

Note: TTM = Trailing 12 months

The above-average yield is not the result of a depressed stock price but of the merchant’s deliberate decision to make generous payments to shareholders. Despite the relatively high payout ratio, Cato’s liquidity has enabled the dividend to grow more quickly over the past five years than has its sales or earnings per share.

Cato seems liquid enough to remain at least worthwhile as a total-return (yield plus growth) play since cash from operations is typically five times as great as annual dividend payments. If Cato can boost its EPS growth rate to 10 percent over the long term, as analysts project, so much the better.

It hasn’t been an easy year for Wm. Wrigley Jr. Co. (WWY), given difficulties integrating the June 2005 Life Savers/Altoids acquisition and increased aggressiveness of confectionary rival Cadbury Schweppes Plc (CBRY.L). Both issues appear to have helped take a toll on what had been traditionally high returns on capital. Table A shows how in this area, Wrigley slowed more than an already-lackluster industry.

Table A Trailing 12 month Return on Investment

This has cut into the stock’s valuation.

Table B

Last week, though, the stock jumped when Wrigley announced that William Perez, formerly with Nike, would become President and C.E.O. Former leader William Wrigley is staying on as executive chairman.

Today, Cadbury Schweppes Plc (CBRY.L) reiterated its revenue target but lowered its margin target. Wrigley stock is down about 1 percent currently. Investors may be concerned that without the yoke of its former margin target, Cadbury will feel be bolder, in terms of pricing, as it introduces its Trident brand into the U.K. market, where Wrigley holds a 98 percent share.

While analysts are hardly bearish on Wrigley, they are less bullish than they were a year ago, as we see in Table C.

Table C

These aren’t the boldest developments investors have ever seen. But if Wrigley is able to get beyond its acquisition integration problems, as some see as possible on October 23, George Askew of Steifel Nicholas suggested that “the worst is behind Wrigley” then perhaps enough little things will add up.

Thanks in good measure to the housing slump, the economy’s decelerated. That in turn, has lifted hopes in some quarters that the Federal Reserve will reduce interest rates down the road or at least, will be hesitant to raise them. Either scenario, but especially the first, could provide a nice boost to income stocks.

Below, we’ve listed the top ten income stocks, as defined by our Reuters Select stock screens. The stocks included have yields above 3 percent. To identify top stocks, we sort the overall list based primarily on the recent performance of the screen(s) in which the stocks appear and also on relevant data measures; sentiment gauges and company fundamentals, including, for income stocks, dividend growth characteristics. (Click here for a more detailed explanation of how we rank the stocks.)

The queen of controversy has done it again.

Earlier this month pop superstar Madonna, following a lead of other Hollywood stars, sought to adopt a young boy from a poor African country. Since then a battle has raged about the legality of the move, the morality of it, the motive behind the adoption of the tot from Malawi and whether the father of the boy understood the adoption process. Madonna this week went on “The Oprah Winfrey Show” to talk about the decision. The entertainer said on the show that she worries that the furor will discourage adoptions.

Some in the Chicago press deemed the Oprah appearance a success. The singer was “calm and resolute” as she “condemned the news media,” said the Chicago Tribune. Columnist Mary Mitchell, in the rival Sun Times, finds it hard to applaud Madonna but can’t condemn the adoption decision, either. “The fear of creating a new Black Diaspora is driving the Madonna furor,” Mitchell concludes.

In London, Madonna’s current home, the Guardian declared the singer “looked at times close to tears as she defended her actions.”

The rest of the world has been less kind at times. Andrea Peyser of the New York Post accused Madonna of “cavarlierly ripping him from his father while bulldozing through Malawian laws.” In another column Peyser said the pop star “manipulated” the boy away from his father.

Yet Lenore Skenazy, in the rival New York Daily News, lauds the entertainer. “If it takes an international superstar to make international, interracial adoption hip, who’s complaining? not the 12 million orphans in Africa,” she writes. “Any action that gets any kid adopted is one we should applaud - and emulate.”

African bloggers are weighing in. “This is a new form of tourism,” raged ‘Diary of a Mad Kenyan Woman,’ a blog in the Global Voices Online network. “It is not a curse to be born an AfricanI wouldnt change it for the world. It is a curse to be poor, and helpless and powerless, such that the best gift you can give your children is to make them the gift itself. To Western celebrities?”

Another blogger, who says she’s a young African woman, wonders in BluePainKiller, “how the results of this adoption case will contribute to the tricky ground of how African laws are viewed under the microscopic eye of the international community, media and critics. Africa already has a negative representation regarding abused laws or lack thereof.” (picture: Reuters/handout)

What’s your view? Publicity ploy or unfair attacks on a noble action?

The number of stocks that are new to Reuters Select is larger than usual at 252,  twice as many as we typically see added to our 19 stocks screens. Whatever one may want to say about earnings season in general, it seems that core fundamentals and market sentiment, the main factors that drive our screens, seem to be on the rise, at least for now.

Here are this week’s top-ten newcomers based on today’s screen listings, compared with the list we compiled a week ago. (Click here for an explanation of how we rank the stocks on the overall list. The 19 screens, as a whole, have appreciated nearly 315 percent since we began tracking data on Jan. 28, 2000.)

It’s a good thing Aetna Inc. (AET) doesn’t sell women’s apparel.

Its shares are flying high, up nearly 7 percent as of this writing, in response to a strong third-quarter profit. Commercial medical cost containment improved sharply with previously-seen upticks now being characterized by CEO Ron Williams as “an aberration rather than an enduring trend.” J. Paul Newsome of A.G. Edwards, reiterated his “Buy for Aggressive Investors” rating in a report headlined “Finally, Aetna shows its skills: MCR (medical cost ratio) improves to 78.8% vs. prior year 79%.”

In another part of its report, Aetna lowered membership growth guidance. The company now expects 650,000 new members in 2006, down from a prior 900,000-1 million expectation. Williams attributed this to pricing discipline, and Newsome calmly accepted it: “while again disappointing, (it) was at least expected.”

Doug Simpson of Merrill Lynch takes a different view, as he rates the stock no better than “Neutral”. He is concerned that so much of the 2007 earnings expectations depend on keeping the medical cost ratio stable and achieving “a sizeable improvement in enrollment growth later in the latter three quarters of the year.”

Judging by today’s share price action, Simpson seems to represent a minority view. Aetna shareholders should be glad for that, and for the fact that property casualty insurers aren’t analyzed the way retailers are. Bebe Stores Inc. (BEBE) is down about 12 percent so far today, despite well controlled pricing and margins, as the company’s same-store-store sales growth forecast for the next quarter was trimmed from 13 percent to high single-digits.

When one of two companies in what is essentially a duopoly is in crisis, you’d think Wall Street would look kindly upon the healthy one. But the uneven performance of Boeing Co. (BA) stock this year, despite the problems at rival Airbus, a division of European Aeronautic Defense and Space Company NV (EAD.PA), says otherwise. 

As we approach mid-day trading, Boeing is down about 3 percent. The company beat expectations in the third quarter, mainly on lower corporate-level expenses. Regarding the core business, investors were disappointed by an increase in planned research & development expenditures. David Strauss of UBS Investment Research told clients, that “2006/07 R&D has now increased by over $1B or nearly 20% since its original forecast . . . . ”

One might expect Boeing to benefit from stepped-up expenditures on the large 747-800 and mid-sized 787 jets, both of which are expected to gain market share. As to mid-size planes, Joseph Campbell said in a Lehman Brothers research report that Boeing could wind up with an 80 percent share of this market segment, up from a previously-expected even split between the two manufacturers. Meanwhile, Boeing is starting work on a replacement for its old 737 workhorse.

Assuming Boeing earns $4.55 a share in 2007, that being the mid-point of the guidance management provided, we estimate earnings per share would have to grow at an average rate of only 5 percent over the next five years for an investment in Boeing stock to break even. That’s equal to the low end of the range of Wall Street long-term growth rate forecasts; 5 percent to 20 percent with a “consensus” figure of 13.95 percent.

Our breakeven forecast assumes Boeing shares would have a market price/earnings ratio five years hence. Recognizing that one might want to factor in a possible reduction in the P/E, as could happen if investors in the future perceive upcoming earnings deceleration, we note that the break-even growth rate would equal the 13.95 percent consensus if Boeing trades at a 28 percent discount to the S&P 500.

Want to leave a bundle to your family, not to mention your attorneys? Here’s the key: Become very smart or talented or both; write, record or think up an idea and make lots of money off it. Don’t forget to have your picture taken. And be sure to die.

Forbes’ list of top-earning deceased celebrities is crammed with household names, but what most have in common is that their faces are plastered on everything from t-shirts to coffee mugs.

Sure, all of them were famous while living, but postmortem royalties can be a wonderful thing.

For an idea of just how wonderful, peruse this list:

1. Kurt Cobain	$50 mln
2. Elvis Presley	$42 mln
3. Charles M. Schulz	$35 mln
4. John Lennon	$24 mln
5. Albert Einstein	$20 mln
6. Andy Warhol	$19 mln
7. Dr. Seuss (Theodor Geisel)	$10 mln
8. Ray Charles	$10 mln
9. Marilyn Monroe	$8 mln
10. Johnny Cash	$8 mln
11. J.R.R. Tolkien	$7 mln
12. George Harrison	$7 mln
13. Bob Marley	$7 mln

Cobain and Einstein were new to the list, which is in its sixth year. In that time, Presley has ruled the roost, kept company — sort of — by mainstays Schultz, Lennon, Tolkien, Marley and Seuss, while celebs like Jimi Hendrix, James Dean, Tupac Shakur and Frank Sinatra have made only cameo appearances.

Read Reuters story on the list, from reporter Robert Macmillan, here.

(Photos: Reuters file)

It looks like connecting the dots is not part of the Wall Street skill set.

Yesterday, Ford Motor Co. (F) reported a horrible quarter that clarifies a situation that Argus Research analyst Kevin Tynan described as going beyond a need for shrinkage. He said, “Ford needs to become a company flexible enough to be profitable at lower production volumes on each line (and) on each platform.” Translation: It needs to really transform its manufacturing process.

Goldman Sachs gets it. As other analysts cut ratings, it upgraded Ford from Sell to Neutral stating that restructuring would trump fundamentals.

A connect-the-dots investor might look for companies that stand to benefit from efforts on the part of Ford to improve its factory operations, and might come across an outfit like Rockwell Automation Inc. (ROK), whose whole business is based on helping factories run more efficiently.

Had said investor followed that trail yesterday and actually bought Rockwell, he wouldn’t be to happy today: Rockwell is down 4 percent at mid-day after the company cut its 2007 guidance, due to lackluster manufacturing activity in general and weakness in the auto sector in particular.

OK. Lower guidance is lower guidance. It’s not exactly as if anyone could expect Rockwell to fly high today. Even so, it looks like Rockwell is in a business that’s pretty important to some big companies, not just Ford but also General Motors Corp. (GM) and other auto-related firms.

Maybe 2007 really will be a lackluster year. Or, perhaps, the company will find it necessary to turn around and raise guidance later in the year, after auto executives crystallize restructuring strategies. Perhaps 2008 will be Rockwell’s year.

In any case, it’s not as if Rockwell is overpriced.

Table A

Note: TTM = Trailing 12 months

Rockwell’s core fundamentals also look good.

Table B

Note: TTM = Trailing 12 months

Connecting the dots may not produce immediate gratification, but there is something to be said for patience.

Politicians seem to care deeply about China’s respect for intellectual property, and media giants remain antsy about upstart web sites. Interestingly, though, when a big-name U.S. corporation is formally accused of basing a substantial portion of its business model on patent infringement, nobody, at least nobody on Wall Street, seems to care.

What else are we to assume when Amazon.com (AMZN) stock is up 1.4 percent near mid-session the day after International Business Machines Corp. (IBM) filed suit accusing it of violating patents. And it’s not as if Big Blue is talking about buried little things nobody ever notices. IBM spokesman Scott Brooks told Reuters that “Amazon’s entire business model is built upon these patents and that damages could be substantial” and that IBM first called Amazon’s attention to these issues more than four years ago.

Perhaps, Wall Street’s calmness reflects Research In Motion Ltd.’s (RIMM) having survived a patent challenge that for a while looked like it might actually threaten continuation of the Blackberry product line. After all was said and done, money talked: Research In Motion agreed to a license fee and is now getting on with its life. That’s a viable precedent since Brooks didn’t talk in terms of cease-and-desist but acknowledged, right from the outset, that IBM is seeking a licensing deal from Amazon.

In theory, a settlement could turn out to be financially burdensome for Amazon.com. But considering the often turtle-like pace of litigation, it may be a long time before that issue impinges on its stock. For now, and probably for quite a while, Wall Street’s usual assessment of fundamentals will continue to rule the day.