Author Archive

  • JPMorgan Chase Raises Dividend to 30 Cents
    , March 13th, 2012 at 3:16 pm

    In last week’s CWS Market Review, I wrote:

    Jamie Dimon can easily afford to raise JPMorgan’s ($JPM) dividend from the current 25 cents to, say, 30 cents per share. Jamie has said that he’d prefer to ditch the dividend altogether but he understands that shareholders like it. The dividend increase last year was announced on March 18th, so another increase may come soon.

    Sure enough, look at what just happened:

    JPMorgan Chase & Co. (JPM) said it boosted its common stock quarterly dividend by 5 cents to 30 cents a share.

    The lender also authorized a new $15 billion stock buyback program, of which up to $12 billion is approved for this year and up to an additional $3 billion is approved through the end of the first quarter of 2013. JPMorgan said the Federal Reserve raised no objections to the proposed capital distributions.

    The shares are currently up about 6% today. Going by this afternoon’s price, JPM yields 2.8%.

    BTW, have you signed up for our free newsletter? Well…what are you waiting for??

  • Raven’s Blowout Quarter
    , March 13th, 2012 at 2:42 pm

    Last year, I called Raven Industries ($RAVN) “the best company you’ve never heard of.” The company makes reinforced plastic, electronics, flow control devices, and balloons. I noted that shares of Raven were up more than 210-fold in 30 years.

    Raven just reported earnings of 60 cents per share, 12 cents more than expectations. The stock has been up by as much as 6% today.

    Raven said in today’s earnings report: “For the company overall, while quarterly growth in every division could be difficult to sustain in the year ahead, we believe that meeting our long-term target of at least 10 percent growth in earnings is possible.”

    Look for the 26th-straight dividend increase sometime soon.

  • Tour of Ancient Rome
    , March 13th, 2012 at 2:30 pm

    Rome Reborn 2.2: A Tour of Ancient Rome in 320 CE from Bernard Frischer on Vimeo.

  • Today’s FOMC Satement
    , March 13th, 2012 at 2:17 pm

    Here it is:

    Information received since the Federal Open Market Committee met in January suggests that the economy has been expanding moderately. Labor market conditions have improved further; the unemployment rate has declined notably in recent months but remains elevated. Household spending and business fixed investment have continued to advance. The housing sector remains depressed. Inflation has been subdued in recent months, although prices of crude oil and gasoline have increased lately. Longer-term inflation expectations have remained stable.

    Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects moderate economic growth over coming quarters and consequently anticipates that the unemployment rate will decline gradually toward levels that the Committee judges to be consistent with its dual mandate. Strains in global financial markets have eased, though they continue to pose significant downside risks to the economic outlook. The recent increase in oil and gasoline prices will push up inflation temporarily, but the Committee anticipates that subsequently inflation will run at or below the rate that it judges most consistent with its dual mandate.

    To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee expects to maintain a highly accommodative stance for monetary policy. In particular, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions–including low rates of resource utilization and a subdued outlook for inflation over the medium run–are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.

    The Committee also decided to continue its program to extend the average maturity of its holdings of securities as announced in September. The Committee is maintaining its existing policies of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate to promote a stronger economic recovery in a context of price stability.

    Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Dennis P. Lockhart; Sandra Pianalto; Sarah Bloom Raskin; Daniel K. Tarullo; John C. Williams; and Janet L. Yellen. Voting against the action was Jeffrey M. Lacker, who does not anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate through late 2014.

  • Stock Market at All-Time High
    , March 13th, 2012 at 1:10 pm

    Today looks to be the day. The Wilshire 5000 Total Market Full Cap Index is on pace to close at an all-time high today.

    This is the broadest measure of the stock market and it includes dividends. If the current market holds up, we’ll exceed the peak from October 7, 2007.

    On our Buy List, we had three new 52-week highs; Nicholas Financial ($NICK) got to $14.09, CA Technologies ($CA) hit $27.50 and Fiserv ($FISV) traded at $68.50.

  • The VIX Nears Five-Year Low
    , March 13th, 2012 at 12:59 pm

    This morning, the Volatility Index ($VIX) traded below 14 for the first time since June 2007.

  • 10 Best Stocks of the Last 20 Years
    , March 13th, 2012 at 11:28 am

    Here’s the list courtesy of Smart Money:

    1. Kansas City Southern
    2. Middleby
    3. II-VI
    4. Qualcomm
    5. EMC
    6. Oracle
    7. Diodes
    8. Biogen Idec
    9. Celgene
    10. Astronics

  • More Good News: Retails Sales Up 1.1%
    , March 13th, 2012 at 9:44 am

    The Federal Reserve meets again today in Washington and we got more good economic news this morning. The Commerce Department said that retail sales rose by 1.1% in February. That’s the strongest growth in five months. Retail sales rose by 0.6% in January.

    Details of the report were fairly upbeat and its tenor was also boosted by upward revisions to the prior months’ data, suggesting recent solid gains in employment were helping to cushion consumers against steep rises in gasoline prices.

    “The big thing for the consumer is that the labor market has improved and there’s income growth. Things look better than six months ago,” said Stephen Stanley, chief economist at Pierpont Securities in Stamford, Connecticut.

    …

    Sales last month were buoyed by a 1.6 percent rise in sales of motor vehicles, reflecting pent-up demand by households and growing confidence in the economy as job creation speeds up.

    A devastating earthquake and tsunami in Japan caused disruptions to auto production last year and left dealers without models that consumers wanted to buy.

    Excluding autos, retail sales advanced 0.9 percent last month, adding to January’s upwardly revised 1.1 percent gain.

    Consumers bought motor vehicles even as they paid more for gasoline at the pump. Gas prices rose 20 cents last month, according to government data.

    Sales at gasoline stations surged 3.3 percent, the biggest gain since March last year, after rising 1.9 percent in January. Excluding autos and gasoline, sales rose 0.6 percent in February after increasing 1.0 percent the prior month. Gasoline accounted for 11.5 percent of retail sales in February.

  • How Much Is Apple Worth?
    , March 13th, 2012 at 8:55 am

    Apple‘s ($AAPL) stock just hit another all-time high yesterday. The shares have been going up, up and up, yet they’re still under-priced.

    Today, let’s take a cold look at Apple’s valuation. For this, I’m just going to use a dispassionate analysis of the numbers. No fancy New Age metrics. First, I have to say that Apple is a ridiculously profitable company. The firm generates cash flow to a mind-boggling extent. Think about this: Apple earned more money last quarter than the company was worth eight years ago. They have nearly $100 billion sitting in their bank account (which is causing a chorus demanding a dividend).

    In January, Apple reported earnings for its fiscal first quarter (October, November and December) of $13.87 per share. That demolished Wall Street’s estimate of $10.16 per share.

    The chart below shows Apple’s stock along with its trailing four-quarter earnings-per-share. The future part of the line is Wall Street’s consensus. As you can see, the consensus is very conservative compared with the recent earnings trend. Apple is notorious for low-balling its estimates.

    The company is now worth more than half-a-trillion dollars and there’s talk that it could soon be worth $1,000 per share. (The board has so far shot down the idea of a stock split.)

    Let’s break down the numbers. Over the last two years, Apple’s stock has traded at an average of 16 times earnings. Thanks to the great earnings report, the earnings multiple has actually gone down. If the stock were to trade at 16 times earnings today, Apple would be worth $600.36 per share. That’s an 8.8% jump from here.

    While the odds are that Apple will exceed Wall Street’s conservative earnings estimates, it’s best not to spend that much just yet. Instead, let’s make Apple continue to prove its value.

    I think the board will eventually concede to a stock split. It’s true that splits by themselves don’t add value but shareholders seem to like them. I doubt Apple could get away with trying to build a Berkshire-like share price. Warren Buffett can do that because he’s Warren Buffett. Tim Cook can’t. Plus, Apple has already split its stock three times before so they’re not holding to some long-held tradition.

    I also doubt a dividend will be coming soon despite the large cash position. Apple is playing the long game so its good to have that money there. The firm will also have tax issues if they repatriate much of their foreign-held money. For now, that money isn’t doing any harm.

  • Morning News: March 13, 2012
    , March 13th, 2012 at 5:51 am

    Tainted Libor Rate Guessing Games Face Replacement by Verified Bank Trades

    Bailout Can Make Greek Debt Sustainable, But Risks Remain: EU/IMF

    Spain Faces EU Call for Deeper Deficit Cuts in Euro Rules Test

    Trade Issues With China Flare Anew

    Trade Fight Flares on China Minerals

    China Talks of More Lending but Less Currency Growth

    Yen Pares Losses as BOJ Keeps Rates, Asset-Purchase Program Unchanged

    Fed Bond-Buying Seen Less Likely After Best Six-Month Job Gains Since 2006

    Milk Price Slumping as Record Profit Spurs Expansion of Herds

    Solyndra Is Blamed as Clean-Energy Loan Program Stalls

    Youku Will Buy China Video Rival Tudou in $1 Billion Swap

    India Biotech Giant Biocon Plunges After Ending Pfizer Insulin Distribution Pact

    MF Global Customers Said to Get Offers for Their Claims

    Pepsi Chief Shuffles Management to Soothe Investors

    James Altucher: The Spanx Woman is Worth A Billion!? My Key Takeaways

    Paul Kedrosky: Investor Inattention During FIFA World Cup Matches

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