The Noonday Market

I was all set to give this market a yellow card, but things are looking somewhat better today, at least our stocks are. My advice is, don’t be overly impressive with Thursday’s rally. It was quite nice, yes. But we gained back what we had just lost. The key is watching the behavior of long-term interest rates. Whenever long-term bonds and the stock market part company, the odds greatly increase that something big is about to happen.
The best news is the energy stocks keep falling. The Dow Oil and Gas Index (^DJUSEN) is down again today. When I set the Buy List for this year, I avoided all energy stocks. I thought that the sector was overpriced. Naturally, it went even higher. If you want to beat the S&P 500, I think all an investor needs to do is stay away from basic materials and energy. I just don’t see how those prices can hold up.
The Buy List is beating the broader market again today. Our biggest gainer is Fair Isaac (FIC), which is up nearly 4%. We have three earnings reports coming. FactSet (FDS) reports tomorrow. Bed Bath & Beyond (BBBY) reports on Wednesday, and Biomet (BMET) comes the Wednesday after. And don’t forget that Expeditors (EXPD) will be splitting 2-for-1 soon.
I think Bed Bath & Beyond is very a good buy right (full disclosure, I do own it). The Street’s current earnings estimate is for 35 cents a share, which the company will almost certainly beat. One small side note, since BBBY does a large percentage of its business during the holidays, the company ends its fiscal year in February (hence the unusual reporting date). This earnings report will be for its first quarter, so the totals will be a lot less than it had for the fourth quarter. Nothing is wrong, that’s perfectly normal for them.
The stock is trading at less than 17 times this year’s earnings. Plus, I wouldn’t be surprised to see the company guide higher after the earnings report.

Posted by on June 19th, 2006 at 11:32 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.