Archive for 2006

  • Waiting for the Fed
    , June 29th, 2006 at 11:00 am

    We’re all standing by waiting for the Fed announcement. I think another 25 basis points is a foregone conclusion. There’s some talk of 50 basis points, which I doubt, but that could come at a future meeting. The long-end of the bond market has not been in a good mood for the past two weeks, and that’s the ultimate driver of Fed policy.
    I’ve been surprised by the resurgence of the energy sector lately. Every time I think the group is flat on its back, it comes to life again. The Dow Jones Oil and Gas Index (^DJUSEN) tried to break 500 three different times. I’m not a chart guy, but that may have been a warning sign. The index quickly fell to 420 around mid-June. Today, it’s back up to 470.
    I still like defensive stocks, like consumer staples and health care. Although I noticed that General Mills (GIS) lowered its forecast today. The company reported earnings that were in line with expectations.
    It looks to be another nice day on Wall Street. Almost all of our stocks are up. On our Buy List, Medtronic made some minor adjustments to its earnings report for last year. The adjustment reduced revenues by $11 million, and earnings by $6.6 million. This won’t have any impact on its future business.
    I’m starting to get annoyed with Home Depot (HD). The company made a big mistake with its recent shareholder conference, plus it stopped providing sales reports. Since its March high, the stock is down nearly 18%. Lowe’s (LOW), by comparison, is down about 8%.
    I still like HD a lot, and it had a very good earnings report last quarter. The stock is going for less than 12 times this year’s earnings, which is very cheap. But I’d like to see management be a bit more shareholder friendly.
    The mega-cap stocks are trailing the market again today. I noticed that of all the stocks will market values of $100 billion or more, Cisco (CSCO) had the highest P/E ratio, but it’s followed by General Electric (GE), Amgen (AMGN), Procter & Gamble (PG) and Coca-Cola (KO). That’s an odd mix. I wouldn’t have expected to see so many consumer names. This is a very weird market.

  • GDP Grew By 5.6%
    , June 29th, 2006 at 9:09 am

    The first-quarter saw the fastest growth in 2-1/2 years. In real terms, the economy has grown by 23.1% over the last 13 quarters.

  • Courier Corp.
    , June 28th, 2006 at 2:46 pm

    Here’s a cool little company that’s not widely known, Courier Corp. (CRRC) of North Chelmsford, MA. It has a market cap of just $450 million. It’s not even in the Russell 3000. Only one analyst covers it.
    The company is a speciality book publisher. They mostly publish niche market books like education and religion. Check out these financials:
    Date……….Sales…………EPS
    1995………$125.2………$0.24
    1997………$131.4………$0.42
    1998………$151.6………$0.70
    1999………$164.0………$0.75
    2000………$188.3………$0.93
    2001………$211.9………$1.13
    2002………$202.2………$1.35
    2003………$202.0………$1.58
    2004………$211.2………$1.67
    2005………$227.0………$1.77
    That’s not particularly fast, but it’s consistent. Here’s the stock chart:
    CRRC.bmp

  • J. Crew Goes Public
    , June 28th, 2006 at 1:19 pm

    Shares of J. Crew (JCG) had a fashionably understated but tasteful IPO. In 2004, the company lost over $100 milllion, but it eeked out a tiny gain last year. J. Crew netted $3.8 million on sales of $953 million.

  • Biomet’s Earnings
    , June 28th, 2006 at 9:33 am

    Biomet (BMET) reported earnings of 41 cents a share for their fourth quarter. Excluding a few charges, the company earned 46 cents a share which match Wall Street’s estimates. Sales rose 7.3% to $539.9 million, which was slightly above the Street’s forecast.

    Looking ahead, Biomet said it remains “comfortable” with analysts’ sales and earnings estimates of $513 million to $530 million and 43 cents to 45 cents per share for the first quarter of fiscal 2007, and $2.15 billion to $2.22 billion and $1.85 to $1.95 per share for fiscal 2007.
    The company’s guidance does not incorporate stock-based compensation costs. On average, Wall Street is looking for first-quarter profit of 45 cents per share on sales of $524.2 million, and fiscal 2007 earnings of $1.69 per share on sales of $2.02 billion.

    Biomet’s shares have been hit for the past two days but the stock is doing well this morning.
    Seeking Alpha has the conference call.

  • The Chief Investment Strategist Derby
    , June 27th, 2006 at 2:13 pm

    Who’s the best chief investment strategist on Wall Street? I decided to compare, but instead of the normal criteria, I looked at what they’re really supposed to do–get their name in the paper.
    Number of mentions this year in the Wall Street Journal:
    Richard Bernstein, Merrill Lynch: 12
    Jeffrey Saut, Raymond James: 11
    Henry McVey, Morgan Stanley: 9
    Joe Battipaglia, Ryan Beck: 4
    Sam Stovall, Standard & Poor: 3
    Abby Joseph Cohen, Goldman Sachs: 3
    Liz Ann Sonders, Charles Schwab: 3
    Francois Trahan, Bear Stearns: 2
    Art Hogan, Jefferies: 2
    Al Goldman, AG Edwards: 0
    Michael Metz, Oppenheimer: 0

  • The Dumbest Reason for a Stock to Fall
    , June 27th, 2006 at 1:53 pm

    FactSet‘s (FDS) stock is down because the co-founder, Charles Snyder, sold 1 million shares. Note tense. He already sold the shares. If anyone is keeping track, the company has about 49 million shares outstanding. Synder’s sale represents a tiny portion of the company.
    It was only a week ago that the stock jumped on its earnings news. There’s nothing wrong with Mr. Snyder cashing in. Afterall, there are a zillion reasons to sell a stock. Myabe he wants to diversify. It’s not necesarily because management thinks that the shares going to tank. Snyder still owns over 4 million shares.
    It’s very easy to draw the wrong conclusions from insider selling.

  • Take-Two Taken Down 20%
    , June 27th, 2006 at 12:02 pm

    These are hard times for the video game stocks. Electronic Arts(ERTS) is down about 30% in the past few weeks. The company had a rotten earnings report in May.
    Today we learn that Take-Two Interactive (TTWO) has been subpeonad. According to the New York Times, the grand jury is “seeking information about a range of its business practices dating back to 2001 and the inclusion of sexually explicit material in one of its games.” The shares are down about 20%.

  • Top 20 S&P 500 Stocks This Year
    , June 27th, 2006 at 11:50 am

    Ticker Company Name Industry YTD
    ATI Allegheny Technologies Steel & Iron 81.8%
    OMX OfficeMax Wholesale, Other 65.9%
    ADM Archer Daniels Midland Food – Major Diversified 62.0%
    KMG Kerr-McGee Independent Oil & Gas 57.8%
    NUE Nucor Steel & Iron 55.6%
    CIEN Ciena Processing Systems & Products 49.2%
    GM General Motors Auto Manufacturers – Major 42.9%
    X United States Steel Metal Fabrication 37.4%
    R Ryder System Rental & Leasing Services 37.3%
    BLI Big Lots Discount, Variety Stores 35.6%
    HPC Hercules Incorporated Synthetics 34.8%
    Q Qwest Communications Telecom Services – Domestic 34.5%
    SHLD Sears Holdings Department Stores 33.2%
    WFT Weatherford International Oil & Gas Equipment & Services 32.2%
    BLS BellSouth Telecom Services – Domestic 31.0%
    CTXS Citrix Systems Internet Software & Services 30.4%
    CSX CSX Corporation Railroads 30.1%
    MOLX Molex Diversified Electronics 28.8%
    NTAP Network Appliance Data Storage Devices 28.2%
    BHI Baker Hughes Oil & Gas Equipment & Services 26.5%

  • Rosneft Goes Public…Sort Of
    , June 27th, 2006 at 11:42 am

    From the WaPo:

    On sale now, for a limited time only: shares of a company whose secretive chairman is a former KGB member who steers clear of foreigners; whose crown jewel was, in effect, expropriated from another company; and whose future hinges on the power of Russian politicians scheduled to leave office in two years.
    Despite all that, investors are lining up to get in on the deal. And some of the biggest names in international banking — J.P. Morgan Chase, Morgan Stanley, ABN AMRO Rothschild, Dresdner Kleinwort Wasserstein and Goldman Sachs — are helping to bring it to market.
    The company is OAO Rosneft, a Russian state-owned oil and gas company with assets that have been estimated at more than $60 billion and which is chaired by Igor Sechin, deputy chief of staff to Russian President Vladimir Putin. Yesterday in Moscow, the company’s president, Sergei Bogdanchikov, met with investors and released details of a draft prospectus to raise $11.6 billion in an initial public offering on the London Stock Exchange.
    The offering would be the fourth-biggest ever, but its significance goes far beyond mere investment decisions. The sale of Rosneft marks another step in the evolution of Russia, which has gone from Communism to a period dominated by freewheeling corporate oligarchs to an era in which Putin has overseen a reconsolidation of state power over the economy, especially the oil sector.