The Market Today

The winning streak was finally snapped! The S&P 500 had gone up for seven straight sessions, and 14 of the last 17. But another rally was not to be. The S&P 500 gave back 0.85%, and the Buy List lost 0.70%.
Let’s thank Thor Industries (THO) for saving us today. This was clearly our big winner. In fact, it was one of the top performers on the entire NYSE. The rest of our Buy List must have been busy shopping online. Only five of our stocks were up, and 20 stocks closed lower.
Frontier Airlines (FRNT) is now down to $8.89 a share. As I’ve said before, this is an unusually risky stock for our Buy List. Nevertheless, I think it’s a compelling bargain. In my opinion, it’s very likely that Frontier can make 80 cents a share next fiscal year. Considering that sales jumped 22% last quarter, you can see that Frontier has a lot of potential. But the stock is very volatile. It’s worth a shot only if you’re already well-diversified.
The big news today was Merck’s (MRK) restructuring. This is sad to see from a once-dominant company, but there is a lesson here. Do you ever notice that some companies never announce a “bold, new restructuring plan”? I couldn’t imagine Expeditors (EXPD) announcing “a major cost-cutting initiative.” The reason is that they’re always looking to cut costs. That’s what great companies do. It’s in their blood. They don’t have to announce it.
Hershey (HSY) also recently announced a reorganization. The Wall Street Journal began an article today with this: “Bank of America Corp. shares are up 9.2% since Sept. 8 — the day Alvaro G. de Molina took over as chief financial officer of the nation’s second-largest bank. A coincidence? Maybe not.” Actually, it is. My apologies to Mr. de Moline, but corporations don’t turn on a dime. Not even several thousand dimes. (Isn’t every bank up 9.2% since September 8?) Reorgs and restructurings and new business plans and new CFOs always start out optimistically. The stocks often respond. I wish them all well. And yes, some do work out, but most never do. I’m sorry, but it’s true.
On that cheery note, here’s today’s link o’the day: groovystocks.com. Check it out.

Posted by on November 28th, 2005 at 8:11 pm


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.