As virtually everyone on the planet knows by now, Apple (AAPL) just released a drug on Friday that cures cancer, fixes broken bones and eliminates bad breath. No, sorry, I mean the company released a definitive solution to world peace. No, that's not right either. It has solved the mystery of death, and on Friday it simultaneously resurrected Albert Einstein, Jimi Hendrix and Princess Diana.

Well, actually, I guess that's not true either. Apple's actually had something bigger than that in mind. It released a brand-new cell phone, called the iPhone! Which has a built-in camera! And accesses the web! And has a touch screen! (You can check it out at Apple's website.)

I know you can just barely contain your excitement. I pretty much feel the same way.

What is all the hype about? I mean, most people who want a cell phone already have a cell phone, and they're locked into multi-year contracts. And fewer than 10% of the people who have phones with built-in cameras have ever taken pictures with them. And having music and your contacts list in the same device isn't exactly a big whoop either. I've had them on my Treo for years. There's some pretty cool map, traffic and voice mail features in the iPhone, but there are some problems, too, like the fact that it only works on one wireless carrier's network, is slow on the Web and will end up costing you at least $2,000 over two years once you add the least expensive data service fees to the device.

But I guess there's no point in being cynical about the new iPhone. Apple will probably sell at least 1 million of them through the end of this fiscal year in August, and up to 8 million of them in the 2008 fiscal year. After that it really gets interesting, because the 2.0 version of the device is bound to be a lot stronger than what's released on Friday. Already, Apple has promised that the second version will work on faster networks, provide more storage and have a longer battery life.

No promises about curing cancer, but perhaps that's in version 3.0.

If you've been reading my blog, or even are a subscriber to my Strategic Advantage service, then you know that I like turnaround stories. I like companies that have been beaten down -- ones that investors have turned their backs on. Why do I like these companies? Because they have a lot of potential to bounce back, surprise people and make investors who believe in their story a lot of money.

One such company is 3M Company (MMM). This famous maker of Post-It notes and Scotch tape looks ready to break out of the funk that it's been in since former CEO Jim McNerney decided to jump ship and take the captain's chair over at Boeing (BA) back in 2005.

During his four-year tenure at 3M, McNerney scaled back capital spending and research and development efforts to help boost profitability. McNerney's efforts helped push 3M's operating margins and returns on capital north of 20%, which are sector leading levels. But with the company's famously innovative research team stifled by the cut back in research and development, 3M is now challenged with capacity constraints and a weak product pipeline. So, to support revenue growth in the high single digits, 3M needs to start spending again.

Early indications by the new management team, led by CEO George Buckley, have been positive. 3M has started to reverse the slide in capital expenditures with some big time physical investments in new factories overseas. From a low of $677 million earlier this decade, capital spending is expected to ring in near $1.5 billion this year. This cash is buying some 19 plants around the world, including four in China, one in India and one in Russia.

The positioning is strategic, because as the U.S. economy continues to slow, emerging markets will continue at breakneck growth rates. More than 60% of the company's $24 billion in revenue will be generated internationally this year. Last year, 3M's Chinese revenues came in near one billion dollars, and they are currently growing at 30% a year. Over in India, revenues are growing 40% annually.

Other reasons why the stock is attractive:

• Innovative new products like Vikuiti (optical film used on LCD screens to boost contrast and enhance color)) brought to life in 3M's research labs by an army of PhDs.


• Acquisitions to expand the company's exposure into different businesses. For example, the $1.4 billion acquisition of CUNO in 2005, gave it exposure to the water and filtration business.


• A $7 billion two-year stock buy back program.

When you're leaving the office in the evening, do you shut down your PC or merely log off? Ever wonder how much energy is being wasted as you computer hums along during the twilight hours?

Check out "The Numbers Guy" blog at The Wall Street Journal online, for his interesting discussion about a recent report that projected American businesses could save $1.72 billion per year, if their employees shut down their computers when they left the office for the evening.

Boats, boats boats. We love 'em this year. Long ones, skinny ones, ones that carry oil and ones that carry grain. We like silver boats, white boats and boats with red stripes on top. If it floats and carries materials from ports in the Middle East to ports on the Gulf of Mexico, or from Brazil to Australia, or from Chile to Shanghai, we are there.

When they look back on this period a few years hence, they might call this the Summer of Shipping. Shipping stocks have been performing like champs, especially recently. One big reason for the success of ocean shippers is that, despite their advance lately, they are still really cheap. Take Overseas Shipholding (OSG), for example. It stormed to a new high last week.

OSG owns the second largest oil tanker fleet in the world, with 144 vessels under both U.S. and international flags. It operates out of offices as far afield as Athens, Manila, Newcastle, New York, Singapore and Tampa, and sends paychecks to 4,000 employees. This year, OSG has jumped 59% amid a surge in the price of crude oil. Yet, it remains remarkably undervalued, and I think that after a brief pause it should tag at least $110 or better over the next 12 months.

International Business Machines (IBM) put up one of its best quarters in years, with earnings per share of $1.50, excluding a special gain of five cents. That represented 15% year-over-year growth, which is amazing for a company this size. It was helped quite a bit by the company's aggressive new share buyback program, but that's OK -- we expected and hoped for that. We like it when the company is in there buying alongside us.

The company said that it saw improved U.S. demand in the second quarter and that it experienced remarkable growth in software, servers and services. IBM expressed unusual optimism about the rest of the year, considering that it usually downplays future results.

I still think it's attractive, because if the company can earn $10.50 per share in 2010, which is under its own $11 target, it could trade as high as $160 by the end of 2009 on a 15X multiple. I know that's a couple of "ifs" in a row, but that would be 20% price appreciation per year for the next two years, which would great for a low-risk machine like IBM.

I've talked a lot about the depressed state of financial services stocks in my Strategic Advantage service, and the picture does not appear to be getting any better. When a major company like Bear Stearns has the sort of risk-management failure that leads to the knockdown of billion-dollar funds devoted to mortgage backed securities, it just has to get your attention.

This type of failure just doesn't happen often. Companies like Bear Stearns (BSC) have entire departments devoted to risk control to prevent these types of mishaps from occurring. In contrast, many other fund-management firms have just one or two people, who are often the portfolio manager's brother-in-law or step-cousin's best friend's ex-wife. Risk management officers are just not very appreciated at funds because they don't make the firms money. They are usually considered to be nerdy, uptight types who are always trying to say "no" to the high-salaried risk-takers at a firm who have a gleam in their eyes. So, if type of risk management failure can happen at Bear, imagine how bad it must be at the smaller firms with the same positions.

The failure of Bear's two mortgage bond hedge funds will likely turn out to be largely the story of a company that strayed too far out on the edge to try to bring in marginal new dollars. They thought that they could use computers to model and control the risk of securities whose values were tied to sub-prime mortgages. But those models appear to have failed in the real world where bids are no longer theoretical. When push came to shove back in May and June, there was no one to buy bonds at the prices that the computer models projected. Bear tried to step in with its own money, throwing as much as half a billion dollars at the problem, but to no avail. When fear paralyzes a market, there are no bids. And if there are no bids, there is no worth. It's very simple.

It's endlessly fascinating to me that the stock market anticipated this problem. Even as stocks were broadly rising this year, I repeatedly called my subscribers attention to the fact that the financials were not participating. This was obviously a yellow flag, and, fortunately, we were able to avoid owning them. I hope you did, too.