The Morning Market

The markets are reacting somewhat favorably to this morning’s GDP report. Stocks and bonds are up; gold and oil are down. Thanks to Frontier Airlines (FRNT), our Buy List is on its way to another strong day. Frontier opened at $9.50 a share this morning, although it has slipped some since then. The stock was upgraded today by Calyon Securities. Shares of Frontier are currently up 10% today.
The theme this quarter seems to be strong earnings and weak forecasts. That’s what we heard from Microsoft (MSFT) yesterday and Bristol-Myers (BMY) today. Another good example is the orthopedics business. Melissa Davis at TheStreet.com looks at the pricing pressures facing Zimmer Holdings (ZMH).

Anticipating future price cuts, Zimmer went ahead and scaled back expectations for revenue and profit growth next year. The company now hopes to grow revenue by 8% to 9% and profits by about twice that much in 2006.

I think it’s clear that Wall Street doesn’t pay enough attention to good small-cap stocks. At the Motley Fool, Rich Smith pointed out that Quality Systems (QSII) is followed by just four analysts. Wall Street is still ignoring it even though its shares are up 15-fold in the last five years.
The China Construction Bank just went public on the Hong Kong exchange. This is one the largest IPOs in years. To continue to grow economically, China will have to modernize its banking sector. The China Construction Bank has a market value of $70 billion, which is more than Morgan Stanley (MWD). Also from China, China National Petroleum has completed its acquisition of PetroKazakhstan (PKZ).
Authorities in Beijing have allowed the yuan to climb 0.32% since it was “floated.” That may not seem like a big deal, but at the time of the announcement Beijing said it would keep the yuan to a strict 0.3% trading range. The yuan is supposed to be tied to a basket of currencies, but only two major currencies are rallying–the yuan and the dollar. I think the dollar must feel pretty lonely in that basket.
And finally, Hershey (HSY) is suing a California company called Milkdudz over patent infringement. The company makes clothing to make breast-feeding easier.

Posted by on October 28th, 2005 at 11:14 am


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.