Another New High

Today is another good day for the market. New highs abound! The morning got off on the right foot when the government reported that inflation was tame last month. Inflation was up just 0.1% last month, and the “core rate,” which excludes volatile food and energy prices was also up just 0.1%. You wouldn’t know this by listening to some corners, but the core rate of inflation has been trending slightly lower over the past year.
The latest word is that Bernanke & Co. will raise rates two more time, and then cool it. Our Buy List is having a decent day. Danaher (DHR) is up for the sixth straight day. This is such a cool little company. The stock is at a new all-time high. I’m also happy to see Bed Beth & Beyond (BBBY) hold onto its gains.
Here’s what Jon Markman had to say about Brown & Brown (BRO) a few weeks ago:

The company is scheduled to announce its 2006 first-quarter results in the third week of April, and I think they will show they’re on track to earn $1.28 in 2006, and $1.48 in 2007. At a much-deserved premium price/earnings multiple of 26, that would peg the stock for a move to around $38 over the next 12 months, which would be a 24% move.
The stock has a tendency to range trade for extended periods, and then move up briskly in the fourth quarter of each year. If you’re interested in starting a new position, you might consider deploying half of your allocation now between $28 and $30, and deploying another half toward the end of the summer, when it could very well be around the same price before its usual end-of-the-year bump up.
BRO is not totally without risk. It is highly exposed to the hurricane prone Gulf of Mexico region, with 40% of its revenues coming from Florida. Brown’s ability to continually acquire other insurance companies could be severely hindered if they have to write checks to settle customer claims from another brutal hurricane season instead. Yet as we all know by now, big short-term losses only mean one thing to insurance companies: They get to raise rates, keeping the cash machine flowing.
There’s one curiosity with BRO that I need to note, however. You have to wonder how a company with nearly $1 billion in revenues could have such a strange web site (www.bbinsurance.com). It’s very 1998, and marked by a penchant for zoo animals. Quotes at the top state gems like, “Lemurs eat an entirely vegetarian diet.” If anyone knows what this has to do with selling insurance, let me know.

He’s right. It is a strange site.
Fair Isaac (FIC) is rebounding some. Yesterday, the stock got as low as $36.36. It’s currently just a tad above $40. I think the panic has passed. On Tuesday and Wednesday the stock generated volume of 10 million shares, equal to what it did over the previous month. Now I see why the brokers have been making so much dough.
Next Tuesday, we’ll get earnings reports from Biomet (BMET) and FactSet Research Systems (FDS).
Outside our Buy List, I’m still having a hard time believing Intel (INTC) is below $20 a share. I’m not wild about the stock. I’ve always thought it was a bit overrated, but the stock is where it was nine years ago.

Posted by on March 16th, 2006 at 1:34 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.