Wednesday, March 5, 2008
US Stock Lose Gains on Ambac Disappointment...
Shares turn lower as details of Ambac's big bailout plan disappoint. Several sectors have fall into the red, including financials and both consumer staples and discretionary. Dow falls 50 points after being up more than 100 points earlier.
Updating our Beats and Raises Portfolio...
Here is an updated list of companies that, since January 1, have Beat Earnings Expectations AND have Raised Guidance for 2008.
Potash (POT)
Terex (TEX)
Intuitive Surgical (ISRG)
Hewlett-Packard (HPQ)
Medco Health (MHS)
Buffalo Wild Wings (BWLD)
Gamestop (GME)
Mosanto (MON)
JC Penney (JCP)
Zimmer Holdings (ZMH)
Sohu (SOHU)
Dolby Labs (DLB)
Research in Motion (RIMM)
Express Scripts (ESRX)
Boeing (BA)
Chattem (CHTT)
Corning (GLW)
IBM (IBM)
Netflix (NFLX)
EOG Resources (EOG)
These stocks are all down over the last week, might be an opportunity to Buy quality...
Potash (POT)
Terex (TEX)
Intuitive Surgical (ISRG)
Hewlett-Packard (HPQ)
Medco Health (MHS)
Buffalo Wild Wings (BWLD)
Gamestop (GME)
Mosanto (MON)
JC Penney (JCP)
Zimmer Holdings (ZMH)
Sohu (SOHU)
Dolby Labs (DLB)
Research in Motion (RIMM)
Express Scripts (ESRX)
Boeing (BA)
Chattem (CHTT)
Corning (GLW)
IBM (IBM)
Netflix (NFLX)
EOG Resources (EOG)
These stocks are all down over the last week, might be an opportunity to Buy quality...
Earnings Due Today....
COMPANIES REPORTING EARNINGS
ADC (ADCT). Expected to report Q1 profit of $0.18 per share, according to analysts polled by Thomson Financial.
Brown Shoe Co. (BWS). Projected to report Q4 earnings of $0.37 a share.
Chico's FAS (CHS). Expected to report a Q4 loss of $0.15 a share.
Coldwater Creek (CWTR). Forecast to break even in Q4.
Comtech Telecommunications (CMTL). Likely to report Q2 earnings of $0.79 a share.
H&R Block (HRB). Estimated to post Q3 earnings of $0.06 a share, a decrease of 25% from the same quarter last year when the company earned $0.08.
PetSmart (PETM). Expected to post Q4 earnings of $0.62 a share, up 13.89% from the same quarter last year when the company earned $0.54.
Longs Drug Stores (LDG). Likely to report Q4 earnings of 40.97 a share.
Saks Inc. (SKS). Forecast to report Q4 earnings of $0.20 a share.
Tivo (TIVO). Likely to post a Q4 loss of $0.11 a share.
ADC (ADCT). Expected to report Q1 profit of $0.18 per share, according to analysts polled by Thomson Financial.
Brown Shoe Co. (BWS). Projected to report Q4 earnings of $0.37 a share.
Chico's FAS (CHS). Expected to report a Q4 loss of $0.15 a share.
Coldwater Creek (CWTR). Forecast to break even in Q4.
Comtech Telecommunications (CMTL). Likely to report Q2 earnings of $0.79 a share.
H&R Block (HRB). Estimated to post Q3 earnings of $0.06 a share, a decrease of 25% from the same quarter last year when the company earned $0.08.
PetSmart (PETM). Expected to post Q4 earnings of $0.62 a share, up 13.89% from the same quarter last year when the company earned $0.54.
Longs Drug Stores (LDG). Likely to report Q4 earnings of 40.97 a share.
Saks Inc. (SKS). Forecast to report Q4 earnings of $0.20 a share.
Tivo (TIVO). Likely to post a Q4 loss of $0.11 a share.
Yahoo in Talks with Time Warner..
The latest on Yahoo (YHOO) has it in talks with Time Warner (TWX) to take over its AOL unit, in exchange for which TWX would receive a sizeable minority stake in Yahoo. The combined company could save $1B annually. Oh, and Yahoo is still talking to News Corp. (NWS) to take over MySpace etc. for a stake in Yahoo.
With all these complex negotiations, it now seems likely Yahoo will push off a March 14 deadline by when Microsoft (MSFT) must make a push to take over the board, in order to get greater clarity on its defense stance. Many doubt a YHOO/AOL merger will float.
With all these complex negotiations, it now seems likely Yahoo will push off a March 14 deadline by when Microsoft (MSFT) must make a push to take over the board, in order to get greater clarity on its defense stance. Many doubt a YHOO/AOL merger will float.
Apple Has No Plans for Buyback or Dividend...
Apple says at its annual shareholder meeting that it has no plans for a stock buyback or dividend. Apple also said it plans to sell the iPhone in Asia this year, targeting India and China.
Costco Reports In-Line Earnings...
Costco Wholesale Corp. (COST) posted a 31% increase in fiscal second-quarter net income on strong international growth and continued consumer flight toward discount retailers.
For the period ended Feb. 17, net income was $327.9 million, or 74 cents a share, compared with $249.5 million, or 54 cents a share, a year earlier.
Last year's second quarter included $53.4 million in charges.
The wholesale-club giant's revenue increased 12% to $17 billion as same-store sales rose 7%.
Chief Financial Officer Richard Galanti said in December that a Wall Street forecast of 74 cents a share for the quarter "sounds good," saying the retailer had "gotten off to a good start" in the period.
The latest mean estimates of analysts polled by Thomson Financial were for earnings of 74 cents a share on revenue of $16.9 billion.
For the period ended Feb. 17, net income was $327.9 million, or 74 cents a share, compared with $249.5 million, or 54 cents a share, a year earlier.
Last year's second quarter included $53.4 million in charges.
The wholesale-club giant's revenue increased 12% to $17 billion as same-store sales rose 7%.
Chief Financial Officer Richard Galanti said in December that a Wall Street forecast of 74 cents a share for the quarter "sounds good," saying the retailer had "gotten off to a good start" in the period.
The latest mean estimates of analysts polled by Thomson Financial were for earnings of 74 cents a share on revenue of $16.9 billion.
Tuesday, March 4, 2008
Tuesday's Summary....
U.S. Markets
Dow -45.10 (-0.37%)
Nasdaq +1.68 (+0.07%)
S&P 500 -4.59 (-0.34%)
News That Moved the Market
Financial Rollercoaster Continues. The markets bounced back after strong selling in the first half of the session. Citigroup (C, -4.3%) was under pressure early after the head of Dubai International Capital said the bank needs more funds and Merrill Lynch (MER, +2.5%) lowered its earnings forecast for Citi. Shares of the mega bank hit a nine-year low before Citigroup responded to the news by saying it is comfortable with its capital levels and would not seek new funds. The markets rallied hard after Citi came out with the release and The Financial Times reported bond insurer Ambac (ABK, +7.2%) is close to an agreement to receive a capital infusion . The deal could announce the deal as early as Wednesday. Though there was a lot of other news, this market showed today that the financial headlines truly spark rallies and sell-offs.
Intel Decreases Profitability Forecast. Intel (INTC, +0.05%) lowered its gross profit-margin forecast for Q1, citing lower flash memory prices. The company now sees margins coming in between 53%-55%, down from 55%-57%.
Housing Still Troubled, Bernanke Wants Banks To Do More. Fed Chairman Ben Bernanke caused a sell-off early in the market when he said foreclosures in the troubled U.S. housing market were likely to continue. He suggested banks write down the principal amount on mortgage loans for home owners who are at risk of defaulting. "Principal reductions that restore some equity for the homeowner may be a relatively more effective means of avoiding delinquency and foreclosure," he explained.
Quick Tics:
Jackson Hewitt Tax Service Inc. (JTX, -32.6%) reported a 34% drop in fiscal Q3 earnings
Cisco's (CSCO, -0.5%) CEO John Chambers helped the rally by saying the difficulties in the market would likely be "short-lived and shallow".
Commodities sold-off on demand concerns.
Tomorrow Notable Earnings:
Chico's FAS, Inc. (CHS) Before Open
Saks Incorporated (SKS) Before Open
Economic Events:
8:15 AM: ADP Employment Report
8:30 AM: Productivity and Costs
10:00 AM: Factory Orders
10:00 AM: ISM Non-Mfg Survey
10:30 AM: Crude Inventories
2:00 PM: Beige Book
Dow -45.10 (-0.37%)
Nasdaq +1.68 (+0.07%)
S&P 500 -4.59 (-0.34%)
News That Moved the Market
Financial Rollercoaster Continues. The markets bounced back after strong selling in the first half of the session. Citigroup (C, -4.3%) was under pressure early after the head of Dubai International Capital said the bank needs more funds and Merrill Lynch (MER, +2.5%) lowered its earnings forecast for Citi. Shares of the mega bank hit a nine-year low before Citigroup responded to the news by saying it is comfortable with its capital levels and would not seek new funds. The markets rallied hard after Citi came out with the release and The Financial Times reported bond insurer Ambac (ABK, +7.2%) is close to an agreement to receive a capital infusion . The deal could announce the deal as early as Wednesday. Though there was a lot of other news, this market showed today that the financial headlines truly spark rallies and sell-offs.
Intel Decreases Profitability Forecast. Intel (INTC, +0.05%) lowered its gross profit-margin forecast for Q1, citing lower flash memory prices. The company now sees margins coming in between 53%-55%, down from 55%-57%.
Housing Still Troubled, Bernanke Wants Banks To Do More. Fed Chairman Ben Bernanke caused a sell-off early in the market when he said foreclosures in the troubled U.S. housing market were likely to continue. He suggested banks write down the principal amount on mortgage loans for home owners who are at risk of defaulting. "Principal reductions that restore some equity for the homeowner may be a relatively more effective means of avoiding delinquency and foreclosure," he explained.
Quick Tics:
Jackson Hewitt Tax Service Inc. (JTX, -32.6%) reported a 34% drop in fiscal Q3 earnings
Cisco's (CSCO, -0.5%) CEO John Chambers helped the rally by saying the difficulties in the market would likely be "short-lived and shallow".
Commodities sold-off on demand concerns.
Tomorrow Notable Earnings:
Chico's FAS, Inc. (CHS) Before Open
Saks Incorporated (SKS) Before Open
Economic Events:
8:15 AM: ADP Employment Report
8:30 AM: Productivity and Costs
10:00 AM: Factory Orders
10:00 AM: ISM Non-Mfg Survey
10:30 AM: Crude Inventories
2:00 PM: Beige Book
US Stocks Recover....
U.S. stocks recover from their lows as investors grow hopeful that a rescue package could be crafted for No. 2 bond insurer Ambac Financial. And technology stocks got a boost after Cisco Systems CEO John Chambers says he is "even more comfortable" with networking giant's revenue forecasts. Nasdaq turns positive, and the Dow trades down about 76 points.
Technical Alert: Dow nears January lows....
The Dow is currently down 200 points to 12,059.
On January 22 and 23, the Dow closed right at the 12,000 level. A close under 12000 would be very negative for the market.
The S&P is currently at 1310. That is exactly where it closed on January 22 and 23.
This is the Retest everyone has been waiting for....We need to hold up here.
On January 22 and 23, the Dow closed right at the 12,000 level. A close under 12000 would be very negative for the market.
The S&P is currently at 1310. That is exactly where it closed on January 22 and 23.
This is the Retest everyone has been waiting for....We need to hold up here.
The Bearish Victory.....
by Jeff Miller
The disparity between expectations and data continues. Those with a bearish bent argue that there is already a recession, it will be terrible, it is not priced into the market, earnings estimates must move much lower, and there will be a general calamity on the scale of the 70's stagflation or even the Great Depression. Wow!
When stocks move lower, it seems to prove the point. This is most interesting and worth some thought.
Anyone who claims to provide a market edge, almost by definition, must find occasions when the market is wrong and the analyst has a superior viewpoint. The most bearish economic pundits now get to claim victory -- even if the economy never enters a recession!
It is not necessary to be right on the facts to be right on the market. As the market moves lower, there is a building sentiment that it "must test the January lows." This advice is usually offered in a deep and stern voice. If enough people believe it, it happens. It is seen as proof of the economic forecasts.
We are now a few points away from those lows in the S&P 500 and even closer in the Nasdaq.
Exactly my thoughts....
The disparity between expectations and data continues. Those with a bearish bent argue that there is already a recession, it will be terrible, it is not priced into the market, earnings estimates must move much lower, and there will be a general calamity on the scale of the 70's stagflation or even the Great Depression. Wow!
When stocks move lower, it seems to prove the point. This is most interesting and worth some thought.
Anyone who claims to provide a market edge, almost by definition, must find occasions when the market is wrong and the analyst has a superior viewpoint. The most bearish economic pundits now get to claim victory -- even if the economy never enters a recession!
It is not necessary to be right on the facts to be right on the market. As the market moves lower, there is a building sentiment that it "must test the January lows." This advice is usually offered in a deep and stern voice. If enough people believe it, it happens. It is seen as proof of the economic forecasts.
We are now a few points away from those lows in the S&P 500 and even closer in the Nasdaq.
Exactly my thoughts....
Upgrades this morning...
Here is a list of stock Upgraded by Analysts this morning...
Leapfrog (LF) by BMO Capital Markets
Quiksilver (ZQK) by Caris & Company
Saks (SKS) by Bear Stearns
Dillard's (DDS) by Credit Suisse
Crosstex Energy (XTEX) by RBC Capital Mkts
Vonage (VG) by Bear Stearns
Limelight Networks (LLNW) by Jefferies & Co
Diebold (DBD) by Robert W. Baird
Leapfrog (LF) by BMO Capital Markets
Quiksilver (ZQK) by Caris & Company
Saks (SKS) by Bear Stearns
Dillard's (DDS) by Credit Suisse
Crosstex Energy (XTEX) by RBC Capital Mkts
Vonage (VG) by Bear Stearns
Limelight Networks (LLNW) by Jefferies & Co
Diebold (DBD) by Robert W. Baird
Downgrades this morning...
Stocks that have been Downgraded this morning...
W&T Offshore WTI) by BMO Capital Markets
Barnes & Noble (BKS) by Credit Suisse
Thornburg Mortg (TMA) by RBC Capital Mkts
Goodrich Petroleum (GDP) by BMO Capital Markets
Barnes & Noble (BKS) by JP Morgan
Novell (NOVL) by Jefferies & Co
EOG Resources (EOG) by Oppenheimer
Diebold (DBD) by Jefferies & Co
ConocoPhillips (COP) by Lehman Brothers
Best Buy (BBY) by Banc of America Sec
W&T Offshore WTI) by BMO Capital Markets
Barnes & Noble (BKS) by Credit Suisse
Thornburg Mortg (TMA) by RBC Capital Mkts
Goodrich Petroleum (GDP) by BMO Capital Markets
Barnes & Noble (BKS) by JP Morgan
Novell (NOVL) by Jefferies & Co
EOG Resources (EOG) by Oppenheimer
Diebold (DBD) by Jefferies & Co
ConocoPhillips (COP) by Lehman Brothers
Best Buy (BBY) by Banc of America Sec
Staples Down After Cutting 2008 Guidance
Shares of Staples Inc. (SPLS) fell 3.6% to $21.69 after the office-supplies retailer posted a drop in fiscal fourth-quarter net income and cut it 2008 guidance as it expects a "challenging" economic climate to continue.
The company reported fourth-quarter net income of $333.2 million, or 47 cents a share, compared with $336.5 million, or 46 cents a share a year earlier. The per-share earnings figure is higher because Staples' shares count fell 3.2%.
Revenue rose 0.7% to $5.32 billion. The latest mean per-share earnings estimate of analysts polled by Thomson Financial was 47 cents on revenue of $5.37 billion.
The company now expects a percentage gain in 2008 per-share earnings in the high-single digits on sales up in the mid-single digits. Analysts had projected per-share earnings growth of 11% to $1.42 on a 7% sales increase to $19.41 billion.
The company reported fourth-quarter net income of $333.2 million, or 47 cents a share, compared with $336.5 million, or 46 cents a share a year earlier. The per-share earnings figure is higher because Staples' shares count fell 3.2%.
Revenue rose 0.7% to $5.32 billion. The latest mean per-share earnings estimate of analysts polled by Thomson Financial was 47 cents on revenue of $5.37 billion.
The company now expects a percentage gain in 2008 per-share earnings in the high-single digits on sales up in the mid-single digits. Analysts had projected per-share earnings growth of 11% to $1.42 on a 7% sales increase to $19.41 billion.
Citi Down as Merrill Cuts Estimates...
Shares of Citigroup Inc. (C) fell 2.8% to $22.45 before the opening bell Tuesday after Merrill Lynch cut its 2008 earnings estimates for the banking giant and forecast another very large writedown of Citi's subprime-related exposures.
Citing "continued deterioration in U.S. residential and commercial mortgage markets, corporate dept markets and key investment-banking categories," Merrill reduced first-quarter estimates to a loss of $1.66 a share, from its previous forecast for profit of 55 cents. Full-year 2008 earnings were cut to 24 cents a shares from $2.74 a share.
"We remain concerned about loss provision potential, the direction of long-term strategy, and weak markets for the Capital Markets businesses," Merrill Lynch said in a note to clients.
Citing "continued deterioration in U.S. residential and commercial mortgage markets, corporate dept markets and key investment-banking categories," Merrill reduced first-quarter estimates to a loss of $1.66 a share, from its previous forecast for profit of 55 cents. Full-year 2008 earnings were cut to 24 cents a shares from $2.74 a share.
"We remain concerned about loss provision potential, the direction of long-term strategy, and weak markets for the Capital Markets businesses," Merrill Lynch said in a note to clients.
Intel Lowers Outlook...
Intel Corp. (INTC). The Santa Clara, Calif.-based chip maker said late Monday it is lowering its first-quarter gross margin forecast to 54%, plus or minus a point, from its previous forecast of 56%, plus or minus a couple of points, due to lower-than-expected prices for NAND flash memory chips. The company said all other expectations are consistent with the first-quarter outlook the company provided in January.
Will Verizon Make a Move on Sprint???
China Mobile Ready to Talk to Apple...
Municipal Bonds VERY Attractive....
Munis: Dislocation of a lifetime. Seasoned muni bond investors say current yields -- 16% higher than Treasurys in 30-year debt and 60% higher on two-year notes (!) -- present the opportunity of a lifetime; tax exempt munis usually trade at a 10-20% discount to Treasurys. Prices are being lower by hedge funds who are now forced to sell their holdings to unwind complex bets gone bad.
I heard this yesterday from a friend in the Bond Business...
I heard this yesterday from a friend in the Bond Business...
Monday, March 3, 2008
Monday's Trading Summary...
U.S. Markets:
Dow -7.49 (-0.06%)
Nasdaq -12.88 (-0.57%)
S&P 500 +0.71 (+0.05%)
News That Moved the Market:
Flat Day With Less Than Stellar Data. A late day rally left the markets mostly flat, but the S&P was able to eek out a gain for the first time in a week. The biggest piece of data released was the Institute for Supply Management's factory index, which fell to 48.3. The number represented a contraction, but was slightly better than expected. The Commerce Department also released data showing construction spending dropped by 1.7%, more than estimated by economists. Both numbers served as reminders that a recession may be coming if we are already not in one.
Diebold Rejects Takeover Bid. Diebold (DBD, +61.0%) announced that it has rejected United Technology's (UTX, -1.6%) $2.64 billion bid, saying the $40/share offer undervalued the company. Diebold has seen its stock price drop recently because the SEC is investigating its revenue recognition policies.
Fannie and Freddie Overhaul Appraisal Process. Fannie Mae (FNM, -4.4%) and Freddie Mac (FRE, -5.8%) agreed to only buy mortgages from lenders that used independent home appraisers. The deal was pushed by New York Attorney General Andrew Cuomo, and a new oversight group will be created to make sure the new standards are upheld. The rules should prevent inflated appraisals, which distort the value of mortgage-backed securities whose values are based on the homes.
Quick Tics:
GM (GM, -0.3%), Ford (F, -5.4%), and Toyota (TM, +0.5%) all reported declines in U.S. auto sales...
Warren Buffet announced he has withdrawn his offer to reinsure municipal bonds guaranteed by MBIA (MBI, -2.7%), Ambac (ABK, -10.8%) and FGIC.
Once again, gold and crude hit new highs in trading today.
Tomorrow Notable Earnings:
Staples, Inc. (STPL) Before Open
Economic Events:
9:00 AM: FOMC President Ben Bernanke Speaks (Oh, no...Not Again!!!)
Dow -7.49 (-0.06%)
Nasdaq -12.88 (-0.57%)
S&P 500 +0.71 (+0.05%)
News That Moved the Market:
Flat Day With Less Than Stellar Data. A late day rally left the markets mostly flat, but the S&P was able to eek out a gain for the first time in a week. The biggest piece of data released was the Institute for Supply Management's factory index, which fell to 48.3. The number represented a contraction, but was slightly better than expected. The Commerce Department also released data showing construction spending dropped by 1.7%, more than estimated by economists. Both numbers served as reminders that a recession may be coming if we are already not in one.
Diebold Rejects Takeover Bid. Diebold (DBD, +61.0%) announced that it has rejected United Technology's (UTX, -1.6%) $2.64 billion bid, saying the $40/share offer undervalued the company. Diebold has seen its stock price drop recently because the SEC is investigating its revenue recognition policies.
Fannie and Freddie Overhaul Appraisal Process. Fannie Mae (FNM, -4.4%) and Freddie Mac (FRE, -5.8%) agreed to only buy mortgages from lenders that used independent home appraisers. The deal was pushed by New York Attorney General Andrew Cuomo, and a new oversight group will be created to make sure the new standards are upheld. The rules should prevent inflated appraisals, which distort the value of mortgage-backed securities whose values are based on the homes.
Quick Tics:
GM (GM, -0.3%), Ford (F, -5.4%), and Toyota (TM, +0.5%) all reported declines in U.S. auto sales...
Warren Buffet announced he has withdrawn his offer to reinsure municipal bonds guaranteed by MBIA (MBI, -2.7%), Ambac (ABK, -10.8%) and FGIC.
Once again, gold and crude hit new highs in trading today.
Tomorrow Notable Earnings:
Staples, Inc. (STPL) Before Open
Economic Events:
9:00 AM: FOMC President Ben Bernanke Speaks (Oh, no...Not Again!!!)
Thornburg Getting Crushed...
Thornburg Mortgage (TMA) getting slammed, after company reported it's been hit with another wave of margin calls, worth about $270M, and is having trouble meeting them, seeing as it just met $300M worth of calls in February. "To date, we have not met the substantial majority of the most recent margins calls," company says in SEC filing.
TMA says it's working to meet the calls by either selling portfolio securities or raising debt or equity capital. Margin calls have been triggered by declines in the value of securities backed by Alt-A mortgage loans, company says. TMA down 54% at $4.12 on heavy volume.
TMA says it's working to meet the calls by either selling portfolio securities or raising debt or equity capital. Margin calls have been triggered by declines in the value of securities backed by Alt-A mortgage loans, company says. TMA down 54% at $4.12 on heavy volume.
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