Posts Tagged ‘CA’

• CWS Market Review – May 16, 2014
  Eddy Elfenbein, May 16th, 2014 at 7:09 am

  “If you would know the value of money, go and try to borrow some.”
  – Benjamin Franklin

  On Monday, for the first time in history, the S&P 500 cracked 1,900. The Dow Jones Industrials also reached an all-time record high. But what’s surprising, and perhaps a little disconcerting, is that the bond market is rallying as well. In fact, the bond market has been doing even better than the stock market. On Thursday, the yield on the 10-year Treasury dipped below 2.5% to hit a six-month low (see the chart below).

  These twin rallies seem to be the result of dueling hypotheses. If the stock market is rallying, that should mean that the economy is improving. At least, that’s the conventional wisdom. And when the bond market rallies, that’s often the omen of a recession. So what’s going on here?

  

  In this week’s CWS Market Review, I’ll delve into the numbers and try to untangle the market’s bipolar disorder. I’ll also tell you what to do now to take advantage of this confusing market. We’ll also look at the latest from DirecTV. Up until now, there was a lot of chatter about a possible deal with AT&T. Now a deal is a very real possibility, and it may happen soon.

  This week’s bad news was a sluggish outlook from Buy List member CA Technologies. I’ll have all the details in a bit. Plus, I’ll preview next week’s earnings reports from dividend champs Medtronic and Ross Stores. But first, let’s look at the market’s mixed message.

  Why Stocks and Bonds Are Rallying Together

  Wall Street seems terribly confused that stocks and bonds are rallying at the same time. For so long, we’ve assumed that they must always move in opposite directions. But that’s not necessarily the case.

  While stocks and bonds have often been polar opposites, that usually reflects diverging opinions on the economy. Now, however, I think they’re both rallying, but for different reasons.

  The stock market is easy. It’s up because investors see the economy doing well. Even though the GDP numbers for Q1 were pretty bad, a lot of the big banks on Wall Street think that growth for Q2 will come in over 3%. Maybe even higher.

  The jobs market also continues to improve. There are still a lot of people out there looking for work, and the long-term unemployed figures are frustratingly high. But just this week, we learned that initial jobless claims dropped down to 297,000. That’s the lowest number in seven years. The jobs report for April was quite good. In 89 days (Feb/Mar/Apr), the U.S. economy created 713,000 new jobs.

  Earnings aren’t bad either. For the first-quarter earnings season, 76% of the companies in the S&P 500 beat earnings expectations, while 53% beat sales expectations. What’s really telling for me is that cyclical stocks continue to do well. The Morgan Stanley Cyclical Index ($CYC) has outpaced the S&P 500 this year. The market’s recent pain has been centered on high-profile momentum stocks, but areas like Materials and Energy, the sectors most sensitive to the economy, have largely side-stepped the damage.

  In any market, it’s interesting to see where the current “axis” is. By that I mean that to look at the stocks that are the best or worst performers each day. Sometimes the split is between growth and value, or risk and safety. Lately, the big split is between large-cap and small-cap. That’s most likely a reflection of the currency market. Larger firms to be more internationally focused while smaller firms are more domestically oriented.

  This makes sense because outside of the U.S., the eurozone and Britain have been getting back on their feet. What’s interesting is that they’ve been helped by money running away from emerging markets. The euro recently hit a two-year high while the British pound touched a five-year high. Meanwhile, Janet Yellen and Fed have made it clear that interest rates need to stay low well after all the bond buying is done.

  The bond market is also being helped by Uncle Sam’s improved finances. There’s still a lot of red ink, but not nearly as much as before. The Congressional Budget Office now sees this year’s budget deficit coming in at a “mere” $492 billion. As big as that sounds, it’s the smallest by far in recent years. The smaller the deficit, the less borrowing there is. This year’s deficit is projected to be 2.8% of GDP which would be the fifth-straight reduction. It would also be less than the average deficit of the last 40 years.

  So these two rallies aren’t really a contradiction. Instead, the fight for capital has changed. Stock investors see an improved job market and more consumers. Bond investors see improved government finances and less borrowing. As long as short-term rates are low, the rational choice is to be invested in a diversified portfolio of high-quality stocks like our Buy List.

  CA Technologies Is a Buy up to $32 per Share

  On Thursday morning, CA Technologies ($CA) became our final Buy List stock to report earnings this season. For March, which ended their fiscal Q4, CA earned 61 cents per share. The good news is that this was three cents better than estimates. Their full-year forecast implied a range for Q4 of 57 to 64 cents per share.

  The bad news is that for the coming fiscal year, ending next March, CA gave us a range of $2.45 to $2.52 per share. That was below the Street’s estimate of $2.54 per share. Traders didn’t like that news at all, and the shares tanked 3.4% on Thursday, to close at $29.05. Frankly, I find that reaction pretty puzzling. While the guidance is indeed lower than expectations, that should be seen within the context of CA’s beating expectations by a roughly similar amount. Perhaps some traders just wanted out.

  Around here, we like to put our emotions aside and look at the numbers. Going by Thursday’s closing price, CA yields more than 3.4%, and the stock is going for about 12 times this year’s earnings. The company also said it’s going to buy back $1 billion worth of stock. CA isn’t a fast-growing company, but it has its strengths. I still like this stock, but I’m dropping our Buy Below down to $32 per share to reflect the recent selloff. Don’t let this guidance scare you. These quiet stocks have a way of pulling through.

  AT&T Could Buy DirecTV within Two Weeks

  Now let’s get to the fun stuff. In the last two issues of CWS Market Review, I’ve discussed the possibility of AT&T ($T) buying DirecTV ($DTV). There have been a lot of rumors about this, and the rumors gradually became whispers, and then the whispers became speculation. Now the speculation is officially news.

  After the closing bell on Monday, the Wall Street Journal reported that a DTV/AT&T deal could come within two weeks. They’re talking about a price somewhere in the low- to mid-90s for DTV. The deal will probably be a mix of cash and stock.

  I know this is exciting to see someone ready to buy out one of our stocks, but let me remind you that no deal has been made. Deals fall apart all the time. There are still financing and regulatory issues, plus the possibility of shareholder objections. I’m not saying any of these will happen, but I’m reminding you that problems can arise.

  About the deal. All things being equal, companies would prefer to make acquisitions using their stock. It’s like having a currency you can print for free. Well, almost free. The issue with AT&T is that it pays a generous dividend (5% currently), so issuing more shares means sending out more dividend checks.

  If a deal comes about, for track-record purposes, I’ll assume any cash from the deal will go directly into AT&T stock. That way, we’ll still have 20 stocks on our Buy List. AT&T will simply replace DirecTV. As always, I’ll provide complete details when and if this ever happens. Either way, DirecTV remains a very good buy up to $89 per share.

  Expect a Small Earnings Beat from Medtronic

  We have two Buy List stocks, Medtronic and Ross Stores, that are on the April, July, October, January reporting cycle. Both are due to report next week. Medtronic ($MDT) will report its fiscal fourth-quarter earnings on Tuesday morning, May 20. In February, they hit estimates on the nose. The medical-devices company also gave Q4 guidance of $1.11 to $1.13 per share. Wall Street has chosen the middle and expects $1.12 per share.

  Interestingly, Bernstein thinks they’ll slightly beat expectations (but not on the top line). I think that’s probably right. They have a $70 price target. Medtronic has done well for us as it’s rallied in fits and starts over the last two years (see below). Last month, MDT finally surpassed its all-time intra-day high set more than 13 years ago.

  

  I also expect that Medtronic will increase its dividend next month. That’s not much of a prediction on my part, since Medtronic has increased its dividend every year for the last 36 years. Medtronic is a good buy up to $65 per share.

  Expect Strong Earnings from Ross Stores

  Ross Stores ($ROST) continues to be one of my favorite retailers. They’re due to report earnings after the bell on Thursday, May 22.

  At the start of last year’s holiday shopping season, Ross warned investors that business was coming in light. The stock got hit pretty hard, but when the results came in, it really wasn’t that bad. Wall Street had been expecting $1.09 per share. Ross said it would be between 97 cents and $1.01 per share. Ultimately, they made $1.02 per share. That’s really a microcosm of the last earnings season: companies warned that profits would be below expectations, then beat those lowered expectations.

  Make no mistake, Ross is still doing quite well. For all of 2013, Ross earned $3.88 per share, which was a nice increase over the $3.53 from 2012. The fiscal year for 2012 was 53 weeks, which added 10 cents per share to that year’s earnings.

  The best news was that Ross recently bumped up their dividend by 17.6%. The quarterly payout rose from 17 to 20 cents per share. That marked the 20th year in a row that Ross has increased its dividend. Not many retailers can say that.

  For Q1, Ross sees earnings coming in between $1.11 and $1.15 per share. I think they have a very good shot of beating that. For all of 2014, Ross has a range of $4.05 to $4.21 per share. I think they can beat that as well, but it’s still early. The shares have been trending downward lately and are a very good buy here. Ross Stores remains a buy up to $76 per share.

  I want to briefly comment on a few of our other Buy List stocks. McDonald’s ($MCD) has been doing very well lately. The burger giant recently hit a new all-time high. I noticed that UBS raised their price target on MCD from $107 to $120 per share. I’m raising our Buy Below on McDonald’s to $106 per share.

  I want to reiterate what I said last week about Bed Bath & Beyond ($BBBY) being an outstanding buy. The home-furnishings store will report earnings again in another month, and I’m expecting good news. BBBY remains a very good buy below $66 per share.

  While the rest of the market was getting hit hard on Thursday, shares of Oracle ($ORCL) rallied to a new 14-year high. This one took a while to pay off for us, but the shares are up more than 40% from last summer’s low. Once again, we see that being patient is a very good strategy. The only downside is, it takes time. Oracle is a solid buy up to $44 per share.

  That’s all for now. There won’t be a newsletter next week. I’m going to get an early jump on the Memorial Day weekend. Don’t worry. I’ll cover our two Buy List earnings reports on the blog. Also, on Wednesday, the Fed will release the minutes from their last meeting. Expect traders to carefully scrutinize it for any clues about when interest rates will rise. I’ll be back in two weeks with more market analysis for you in the next issue of CWS Market Review!

  – Eddy

• CWS Market Review – May 9, 2014
  Eddy Elfenbein, May 9th, 2014 at 7:09 am

  “It never was my thinking that made the big money for me. It always was my sitting.” – Jesse Livermore

  Welcome to the Revenge of the Boring Stocks. The stock market’s rotation continues, as former high-flyers have been getting punished, while boring old dividend-payers are suddenly popular. What’s happening is that there’s been a resurgence of rationalism, sobriety and prudent investing. No one saw this coming.

  Last week, I said that Friday’s jobs report could be a big one, and I was right. The economy created 288,000 jobs in April. That’s the biggest gain in more than two years. But here’s the odd part: the bond market has rallied ever since. The yield on the 10-year Treasury finally broke below 2.6% this week and touched its lowest point since October. Despite many predictions of its imminent demise, the boring T-bond market is well ahead of the stock market this year.

  

  The big news for our Buy List is that DirecTV officially said they’re looking at a possible merger with AT&T. On Wednesday, shares of DTV gapped up 8% to hit a new all-time high. I think they’re in a position of strength in any merger negotiation. We’re now sitting on a 23.2% gain YTD. I’ll have all the details on DTV in a bit.

  In addition to a good earnings report from DirecTV, we also saw good earnings from Cognizant Technology, although traders took the shares down. Not to worry. I’ll explain why CTSH is as strong as ever. I’ll also preview next week’s earnings report from CA Technologies (which now yields 3.4%). But first, let’s look at the market’s rotation and why the cool stocks are finally getting their comeuppance.

  The Revenge of Boring Stocks

  On the surface, the stock market seems to be pretty tame, and there’s not a lot of volatility. But just below the surface, there’s been a major correction unfolding that’s manifested itself in several different ways.

  The best way I can describe this phenomenon is that boring stocks have suddenly become popular, while formerly popular stocks are now hated. I described last year’s market as a massive chilling out. It was a reaction against the earlier flight to ultra-conservative investments. In 2013, investors cautiously moved into riskier assets. That was good for us, but what we’re seeing this year is a reaction against the excesses of last year’s rotation.

  As a result, we’re seeing a market that’s frustrated a lot of folks. The guys at Bespoke Investment Group point out that in the last two months, the stocks that analysts like the most are down the most, while the stocks they hate the most are up the most. Goldman Sachs notes that “nearly 90% of large-cap growth mutual funds and 90% of value funds were underperforming their benchmarks year-to-date.”

  Let’s look at some examples. On Thursday, shares of Tesla, the electronic-car stock, dropped 11.3% after the company said it beat earnings estimates by 20%. Analysts are worried about rising costs, but my point is that in this market, an earnings beat isn’t enough to help a stock that’s zoomed in the past year. Look at Twitter which lost 18% after its “lock-up” period expired. The company recently reported Q1 earnings of $183,000. That’s about one-thirtieth of a penny per share. That’s not enough to buy even one share of Berkshire Hathaway. Or look at Amazon which is now 30% off its high. It’s all the way down to 489 times last year’s earnings. And it’s not just tech stocks; it’s any hi-flier that’s richly valued. Whole Foods Market is now 40% off its high. The P/E Ratio of the Nasdaq is twice that of the rest of the market.

  Check out this chart which shows the Nasdaq Composite divided by the S&P 500. You can see how the Nasdaq creamed the S&P 500 last year but has been flattened by it lately.

  

  This anti-pricey-stock sell-off has distorted market perceptions because it’s affected the stocks that individual investors love so much. The boring stocks have been doing just fine, especially if they pay a dividend.
  
  James Saft at Reuters notes that “according to Societe Generale data, the single most important characteristic driving equity returns in the past month has been dividend yields.” That makes sense. Utilities, for example, have been doing very well this year. The Utility ETF ($XLU) is up 13% YTD, and the Vanguard REIT ETF ($VNQ) is up 15% this year. Bespoke gives us another great factoid: The 300 stocks in the Russell 1000 that don’t pay a dividend are down 7.21% since March 5, while the 300 highest-yielding stocks are up 2.11%. The dividend is the difference.

  What’s also interesting is that the market’s breadth has badly deteriorated. At recent market peaks, the number of stocks making new 52-week highs has gradually fallen. In other words, a smaller and smaller group of stocks is doing the heavy lifting. If you glance at a list of stocks reaching new 52-week highs, it’s likely to be almost entirely oil stocks, with DirecTV and Apple thrown in. The average stock in the Russell 1000 is now down 11.4% from its 52-week high, even though the entire index is down 1.5% from its high.

  Another area where we can see the rotation is in small-caps, which have badly underperformed. On Tuesday, traders were rattled when the Russell 2000 closed below its 200-day moving average. That hasn’t happened in more than 17 months. Half of the stocks in the Russell 2000 are more than 20% off their highs. In contrast, the mega-caps in the Dow 30 have barely budged.

  This rotation isn’t done yet. Investors should make sure they have high-quality dividend stocks in their portfolios. Some of our Buy List stocks with rich yields include Microsoft (2.8%), CA Technologies (3.4%), McDonald’s (3.2%) and Ford (3.2%). Now let’s look at our star stock of the week.

  DirecTV Soars on Possible Merger News

  In last week’s CWS Market Review, I mentioned how shares of DirecTV ($DTV) jumped on news that AT&T had been talking with DTV about a possible merger. This week, it got much more serious. Shortly before the closing bell on Wednesday, news broke that DirecTV is working with Goldman Sachs to look at such a deal. If Goldie’s involved, you can be sure it’s serious.

  Ever since the Comcast/Time Warner Cable deal was announced, a response deal between AT&T and DirecTV has made a lot of sense. I suspect that until now, DTV hasn’t been terribly interested in a merger. In business, of course, everyone has a price. I won’t predict whether something will come about, but I’ll add that a deal would certainly help out AT&T at a crucial time for them. The good news for us is that DirecTV is in the position of strength. The only worry is that they don’t get too greedy as regards price because DISH is waiting in the wings.

  On Tuesday, DirecTV reported another solid quarter. The satellite-TV operator earned $1.63 per share for Q1. That beat estimates by 15 cents per share. The company added 361,000 subscribers in Latin America, which was far more than analysts’ estimates of 227,000. DirecTV now has 20.3 million subscribers in the U.S. (You can see why AT&T wants that.)

  DirecTV has been our top-performing stock this year, up 23.2% YTD. This week, I’m raising our Buy Below on DirecTV to $89 per share. What a great stock.

  Cognizant Technology Raises Full-Year Guidance

  On Wednesday, Cognizant Technology Solutions ($CTSH) reported Q1 earnings of 62 cents per share. That’s pretty good. Three months ago, the IT-services company told us to expect earnings of 59 cents per share. Quarterly revenue rose 19.9% to $2.42 billion.

  For Q2, Cognizant sees revenues coming in between $2.50 billion and $2.53 billion, and EPS of 62 cents. The Street had been expecting 63 cents per share. For all of 2014, Cognizant projects revenue of at least $10.3 billion and earnings of at least $2.54 per share. Three months ago, CTSH had disappointed investors when they projected 2014 earnings of at least $2.51 per share, while the Street had expected $2.54 per share. In other words, the estimate is back where we started.

  Gordon Coburn, Cognizant’s president, said, “We remain confident in the overall demand environment and in our ability to deliver our previously stated revenue guidance of at least $10.3 billion for 2014, up at least 16.5% over 2013.”

  Even though these numbers were pretty good, the stock dropped 4.4% after the earnings report. That’s partly a reflection of the turn against growth companies (CTSH doesn’t pay a dividend). Fortunately, on Thursday, CTSH made back about half of Wednesday’s loss. Granted, it’s a pricey stock. The current price is about 19 times earnings, but their business is growing rapidly. Cognizant remains a very good buy up to $52 per share.

  CA Technologies Is a Buy up to $34 per Share

  CA Technologies ($CA) reported blow-out earnings in January. The company earned 84 cents per share for their fiscal Q3, which was 14 cents better than estimates. CA said they see full-year earnings ranging between $3.05 and $3.12 per share. Since they’ve already made $2.48 for the first three quarters, that forecast implies 57 to 64 cents per share for Q4. Wall Street expects 58 cents per share.

  As I highlighted earlier, CA pays a generous quarterly dividend of 25 cents per share. In fact, I think they could afford to bump that up to 30 cents per share. The stock has been meandering lower recently. On Wednesday, CA touched its lowest point since mid-October. Thanks to the lower share price, CA’s yield is up to 3.4%, going by Thursday’s close. Earnings are due to come out on Thursday morning, May 15. This is an excellent stock for income-oriented investors. CA Technologies remains a good buy up to $34 per share.

  Buy List Updates

  Before I go, I want to update you on some of our Buy List stocks. I’m ready to pound the tables for Bed Bath & Beyond ($BBBY). The stock has sunk down to a very attractive price. The last earnings report and guidance for fiscal Q2 have convinced me that they can bounce back. The store has a solid balance sheet, and earnings of $5 per share are very doable. I’m lowering my Buy Below to $66 per share, but if you’re able to get BBBY below $61, then you got a very good deal.

  Another retailer I like here is Ross Stores ($ROST), which will be reporting fiscal Q1 earnings on May 22. Wall Street’s consensus is for $1.15 per share. The discount retailer also said that Barbara Rentler will become their new CEO on June 1. She’ll become the 25th female CEO in the Fortune 500. I’m keeping my Buy Below on ROST at $76 per share.

  In January, shares of Moog ($MOG-A) got hit hard after they lowered their full-year guidance. At the time, I wrote, “While this news is disappointing, it doesn’t change my fundamental opinion of the company.”

  This is why we like high-quality stocks. They bend but rarely break. I’m happy to say that Moog has bounced back. Yesterday, the stock got as high as $69.57 per share, which is a 22% gain from its February low. Last week, I raised our Buy Below to $69, and this week, I’m upping it to $72 per share. Moog is a solid, boring stock. Last year, that was an insult. This year, it’s a compliment.

  At this week’s Ford ($F) shareholder meeting, CEO Alan Mulally got a standing ovation. Not many corporate executives get that nowadays, but Mulally has delivered the goods. In the last five years, Ford has made $42.3 billion.

  The automaker just announced a $1.8 billion share-buyback program. The goal is to reduce share count by 3%. Ford also reported that sales in China were up 29% in April and are up 41% YTD. Ford is a still a very good buy up to $18 per share.

  That’s all for now. Next week, we get important economic reports on retail sales and industrial production. The government will also report on consumer and wholesale inflation. So far, inflation has been tame, but I’ll be curious to see if there’s any indication of higher prices. Also, stay tuned for earnings from CA Technologies, which will come out Thursday morning, May 15. Be sure to keep checking the blog for daily updates. I’ll have more market analysis for you in the next issue of CWS Market Review!

  – Eddy

• CWS Market Review – January 24, 2014
  Eddy Elfenbein, January 24th, 2014 at 9:21 am

  “Successful investing is anticipating the anticipations of others.” – JM Keynes

  The stock market has been getting bumped around lately, and it hasn’t had much direction at all. Since December 23rd, the S&P 500 has closed every day but one between 1,826 and 1,849. That’s a fairly narrow range, although we are starting to see some behind-the-scenes rotations. For example, healthcare stocks are outperforming as consumer discretionary issues are lagging. The bond market has quietly improved, and the 10-year yield just hit a six-week low.

  

  Of course, the major focus this week has been earnings, earnings and more earnings. The theme so far is that not even good earnings are enough. Investors want to see big earnings beats plus higher guidance. If you don’t have both, you’re in trouble.

  We’re still fairly early in the Q4 earnings season. Some 109 of the 500 stocks in the S&P 500 have reported so far. Of those, 74% have beaten their earnings estimates, while 67% have beaten their sales estimates. Unfortunately, those numbers sound better than they are when we consider that going into earnings, many companies had rolled back expectations. Essentially, they lowered the bar to the ground and now expect applause from investors for stepping over it. Well, that hasn’t been happening.

  Fortunately, our Buy List stocks have reported very good earnings results so far. Again, it’s early, but all six stocks have beaten expectations. A few beat them by a lot. However, the stocks haven’t been richly rewarded by the market. It’s not just our stocks; no one’s getting any earnings love, and this really shows the market’s ornery temperament.

  Make no mistake: I still like the environment for stocks, but we have to come to terms with the reality that the market’s easy gains have already been made. This year won’t be as easy and stress-free as last year was. We’ll still see gains, but we need to be patient and have some humility.

  In this week’s CWS Market Review, I’ll run through our Buy List earnings reports. We had especially strong results from CA Technologies and Microsoft. The report from IBM, however, was rather weak, though I wasn’t expecting much.

  Later on, I’ll highlight our earnings reports for the coming week. Also, our friends at the Federal Reserve meet on Tuesday and Wednesday. It will be Mr. Bernanke’s swan song, and I expect to see another taper announcement. But first, let’s look at why everyone hates IBM (but me).

  IBM Beats Earnings but Falls

  On Tuesday, International Business Machines ($IBM) reported Q4 earnings of $6.13 per share. That was 14 cents more than Wall Street’s consensus. That’s the good news. The bad news is that much of that earnings beat was driven by cost-cutting. IBM’s top line numbers were pretty weak. Quarterly revenues fell 5.5% to $27.7 billion. That was $600 million below forecast, and it was the seventh-straight quarter of falling sales.

  We know that much of the tech world is shifting to cloud-based networks, but Big Blue isn’t exactly sitting still. The company is aggressively moving toward cloud services, and they’re ditching their lower-margin businesses. They just sold their server business to Lenovo for $2.3 billion. The company also realizes the situation it’s in; the entire senior team has foregone bonuses. On the positive end, I was impressed to hear IBM say that it sees earnings for 2014 of at least $18 per share. They also reiterated their earnings target of $20 per share for 2015.

  Simply put, IBM isn’t popular on Wall Street at the moment. The stock got clipped by more than 3% on Wednesday, the day after the earnings report came out. I’m not saying that IBM doesn’t face a difficult environment. It does. Its systems and tech revenue fell 26% last quarter. But IBM has transformed itself many times in its history. Remember that their cloud revenue rose by 69% in Q4 to $4.4 billion.

  I think IBM is in a position similar to where Microsoft was one year ago. Bears have been having a field day beating them up, but the stock is cheap now. It’s going for about 10 times earnings, which is far less than the rest of the market. My take: IBM will require some patience, but it’s a solid stock. I rate IBM a buy up to $195 per share.

  CA Technologies Is a Buy up to $36 per Share

  Also on Tuesday, CA Technologies ($CA) reported earnings of 84 cents per share, which easily beat Wall Street’s forecast of 71 cents per share. Last week, I said the Street’s consensus was “a wee bit too low.” Shows you what I know! Interestingly, this was the third time in the last four quarters that CA has beaten earnings by 13 cents per share.

  CA also guided Wall Street higher for the rest of the year. The December quarter is the third quarter of its fiscal year. So for 2014, CA now sees earnings ranging between $3.05 and $3.12 per share, compared with Wall Street’s estimate of $3.02 per share. The company also sees full-year revenues ranging between $4.52 and $4.57 billion, versus the consensus of $4.50 billion. This is what we like to see: beat and raise.

  CEO Mike Gregoire said, “Based on our results so far this year, we expect our fiscal year 2015 revenue growth rate and non-GAAP operating margin to be similar to fiscal year 2014.” That sounds good to me. So what did the market do with this good news? On Wednesday, shares of CA rallied by…four cents! Then on Thursday, they dropped by 65 cents. No, it doesn’t make any sense, but you can never argue with traders. Instead, we look at the facts. Going by Thursday’s closing price, CA’s dividend yields 3%. This week, I’m raising our Buy Below on CA to $36 per share. This is one of the good ones.

  Both Stryker and eBay Beat by a Penny per Share

  On Wednesday, both Stryker and eBay reported earnings that beat expectations by one penny per share. Let’s break down the results.

  For Q4, Stryker ($SYK) earned $1.23 per share, compared with Wall Street’s consensus of $1.22 per share. Honestly, I wasn’t too concerned with Stryker’s earnings report. They usually come very close to expectations. But I wanted to hear what the orthopedic outfit had to say about 2014.

  For this year, Stryker said they see organic revenue growth of 4.5% to 6%, and earnings ranging between $4.75 and $4.90 per share. That’s a very good number, and it’s well above where the Street was at $4.63 per share. For all of 2013, Stryker earned $4.23 per share.

  So with all this good news, what did the stock do on Thursday? It dropped 1%. I don’t get this one either. Stryker remains an excellent buy. I’m raising our Buy Below on Stryker to $81 per share.

  eBay ($EBAY), one of our new stocks this year, turned out to be the most newsworthy company this week. For Q4, the online-auction house reported earnings of 81 cents per share, one penny more than consensus. The company also authorized another $5 billion for its share-buyback program.

  But the big news came when multi-gazillionaire Carl Ichan said that he wanted to see eBay spin off its PayPal business. Icahn said that he’s going to nominate two of his people for the eBay board. Spinning off PayPal isn’t a new idea, but this is the first time someone so prominent has endorsed it. The board doesn’t like the idea, and they told Icahn so. But the market seems favorable for a spin off. On Wednesday afternoon, shares of eBay were trading up 8% in the after-hours market. On Thursday, however, eBay rallied for a 1% gain.

  Frankly, I doubt we’ll see a PayPal spin-off. It’s too integrated into eBay’s business. But I like seeing Carl Icahn advocate on behalf of shareholders. He didn’t get to where he is by being a shrinking violet. eBay had a solid quarter, and it continues to be a very good buy up to $58 per share.

  A Tough Quarter at McDonald’s, but Give Them Time

  On Thursday morning, McDonald’s ($MCD) reported Q4 earnings of $1.40 per share. That made the company our third earnings report in a row that beat estimates by one penny per share. Sales at the hamburger giant rose by 2% to $7.09 billion. But the details were pretty ugly. Comparable-store sales dropped by 0.1%, and in the U.S., comparable-store sales fell by 1.4%. Ouch.

  McDonald’s faces a number of challenges. The new CEO, Donald Thompson, hasn’t been as effective as I would have hoped. They’ve played around with the menu, but nothing has really taken off. The menu has probably grown too complicated and could use some paring down.

  The situation at McDonald’s is somewhat similar to that at IBM. The current environment is rough, but the stock is going for a good value. Ultimately, I think the problems are very fixable, but it will take a little time and effort. McDonald’s made about the same profit as one year ago, but thanks to share buybacks, there are fewer shares outstanding, so EPS rose by two cents. The dividend currently yields us 3.4%, which is a nice buffer for us. MCD is a buy up to $102 per share.

  Impressive Earnings Beat from Microsoft

  After the bell on Thursday, Microsoft ($MSFT) had a very strong earnings report. It turns out that Xbox had a great holiday season. The software giant had a net income of $6.56 billion, or 78 cents per share. That was a full dime more than Wall Street’s forecast. At the top line, revenue rose 14% to $24.52 billion. The Street had been expecting sales of $23.68 billion. The best news is that Surface revenue more than doubled to $893 million.

  While Xbox continues to be a great profit center for Microsoft, the Surface is still small potatoes. One big piece of missing news is that Microsoft still hasn’t yet announced who its next CEO will be. Ballmer is out soon. If you recall, there was some speculation that Ford’s Alan Mulally would jump ship and take over at Microsoft. Fortunately, that won’t happen.

  Microsoft jumped up more than 3% in Thursday’s after-hours market, but we’ll have to see how it trades from here. Microsoft was a great buy for us last year when it was under $27 per share. MSFT isn’t a screaming buy like it was a few months ago, but it’s still a good value. We also had a very nice dividend increase recently. Microsoft is a good buy up to $40 per share.

  Upcoming Buy List Earnings

  Still more earnings come in next week. Ford is due to report on Tuesday, January 28. Qualcomm follows on Wednesday, January 29, and CR Bard on Thursday, January 30. These dates may change, so please check our website for the latest. Also, Moog ($MOG-A) is due to report later today.

  I’m most looking forward to Ford’s ($F) earnings report. The automaker recently threw a damper on expectations for 2014. The short version of the story is that North America is doing well, but Europe is not. Ford has made it clear they’re playing the long game, so we probably won’t see a turnaround in Europe until 2015 or 2016. Wall Street currently expects Q4 earnings of 29 cents per share, which is down two cents from a year ago. That would be disappointing, but Ford is clearly moving in the right direction. The 25% dividend boost was a great vote of confidence.

  Qualcomm ($QCOM), another new stock on our Buy List, will be an interesting earnings report to see. The last report was a dud, and the stock’s subdued performance last year led me to add it to this year’s Buy List. The sentiment is beginning to shift here. If Qualcomm beats and offers impressive guidance, the shares could break out.

  Three months ago, CR Bard ($BCR) told us to expect Q4 earnings to range between $1.34 and $1.39 per share. That would put full-year 2013 earnings between $5.70 and $5.75 per share. They should hit that range without much difficulty. Bard is a buy up to $142 per share.

  That’s all for now. Next week will be the final trading week for January. The Federal Reserve meets on Tuesday and Wednesday. This will be Ben Bernanke’s final meeting as Fed chair. I expect to see another round of tapering. We have a few more Buy List earnings reports coming our way. On Thursday, we’ll also get our first look at Q4 GDP. The last three GDP reports have all seen increased growth rates, meaning economic acceleration. Let’s see if that continues. Be sure to keep checking the blog for daily updates. I’ll have more market analysis for you in the next issue of CWS Market Review!

  – Eddy

• CWS Market Review – July 26, 2013
  Eddy Elfenbein, July 26th, 2013 at 7:38 am

  “The investor of today does not profit from yesterday’s growth.” – Warren Buffett

  Second-quarter earnings season has been a big winner for us so far (although we had one major dud with Microsoft). In last week’s CWS Market Review, I told you that Ford Motor would easily beat its earnings estimate, and sure enough, that’s exactly what happened. Thanks to the great earnings report, Ford’s stock gapped up to another 52-week high, and it’s nearly doubled for us in the last year.

  

  We also had strong earnings reports this week from CR Bard ($BCR) and CA Technologies ($CA). In this week’s CWS Market Review, I’ll highlight our recent Buy List earnings news, and I’ll preview what’s ahead next week (be sure to check out our Earnings Calendar). We have some important reports coming our way from Buy List stalwarts like AFLAC ($AFL), WEX Inc. ($WEX) and Fiserv ($FISV). Also next week, the Federal Reserve has a meeting, the government will provide its initial estimate of Q2 GDP on Wednesday and the big jobs report is on Friday. But first, let’s look at Ford’s blow-out earnings report.

  Ford Smashes the Street—Again

  In last week’s newsletter, I wrote:

  Of all the companies reporting next week, I’m the most optimistic about Ford Motor (F). In April, the automaker earned 41 cents per share, which was four cents more than consensus. This time around, Wall Street again expects 37 cents per share. I think Ford will easily beat that.

  I was right. Ford ($F) earned 45 cents per share, which was eight cents more than Wall Street’s consensus, and the stock surged as high as $17.68 per share. I’d like to say that this was due to magical predictive powers on my part. Alas, that’s not the case. Truthfully, it was nothing more than simple math. Yet it’s surprising how often that skill set is a major advantage in investing.

  The facts are clear. Ford’s business is strong, and most of it is due to truck buyers in North America. Fusion has also been a key area of strength. Let’s run through some of the numbers. Ford’s net earnings surged 19% last quarter to $1.2 billion. Their revenues rose 15% to $38.1 billion. This was Ford’s 16th-straight profitable quarter. Furthermore, unlike some other American car companies I could name, Ford was not bailed out by Uncle Sam.

  Ford made a cool $2.3 billion in North America. Sales of their F-Series trucks rose 26% to 198,643. I think this is closely tied to a lot of the emerging manufacturing rebound we’ve seen in some economic statistics. (By the way, the durable-goods report on Thursday was quite strong).

  The problem child is still Europe. Ford had a pre-tax loss of $348 million in the Old World. Of course, a loss was expected. We know that Europe has been a drag on Ford, but they’re quickly working to economize their European operations. I think we’re going to see much better results in Europe in future quarters.

  I was very pleased to hear that Ford offered improved guidance for the rest of the year. They now see pre-tax earnings clearing $8 billion for 2013. Before, they said they had expected to hit $8 billion. So far, they’ve made $4.7 billion in the first half of the year, so the new guidance seems quite reasonable. In Europe, Ford said they expect to lose $1.8 billion instead of the earlier projected $2 billion. That’s ugly, but not as ugly.

  Ford also had a blow-out quarter in Asia. The company makes a big deal about this, but Asia is a very small part of their business. That could change. Ford plans to introduce 15 new vehicles in China by 2015. I’d like to see Ford raise its dividend by 20% to 25%. They can easily afford it. Ford remains an excellent buy up to $18 per share.

  Strong Earnings from CR Bard and CA Technologies

  After the closing bell on Tuesday, CR Bard ($BCR) announced Q2 earnings of $1.42 per share for Q2 which was four cents more than expectations. The medical-equipment company saw revenues rise by 2.3% to $759.9 million, beating expectations by $9.8 million. I was impressed by the turnaround in their oncology and surgery divisions.

  Bard’s CEO said, “Our operating results this quarter exceeded our expectations. We continue to focus on the execution of our investment plan, which we believe will shift the mix of our portfolio to faster-growing products and geographies and contribute to long-term sustainable leadership positions in our markets.”

  For Q3, Bard sees earnings between $1.37 and $1.41 per share. This is a quiet, steady winner. Bard may not make the headlines, but they do deliver results. Bard remains a solid buy up to $115 per share.

  After the bell on Wednesday, CA Technologies ($CA) reported Q2 earnings of 78 cents per share, which was also four cents better than Wall Street’s consensus. I was really impressed by this report. CA’s results are a nice improvement from the 63 cents per share they earned a year ago (technically, the June quarter is their fiscal first quarter).

  CA’s CEO said, “We did better than expected on the revenue line and were able to capitalize on organizational efficiencies, expense management and a tax benefit to drive earnings growth. Our cash flow from operations was down, but that was expected and we are confident in meeting our full-year outlook in all areas.”

  For the full year, CA expects earnings to range between $2.90 and $3.00 per share. Wall Street had been expecting $2.99 per share. On Thursday, the stock got as high as $30.30 per share, which is a new 52-week high. CA is now a 35% winner on the year for us. CA Technologies is a very good buy up to $31 per share.

  More Earnings Coming Next Week

  We have five more earnings reports due next week. We may have a sixth in Nicholas Financial ($NICK), but I haven’t heard back from them yet. Last year, NICK’s earnings report came on August 2nd, so I expect it around then this year.

  NICK’s last earnings report was a bit low, but I’m not at all worried. I’m expecting earnings to range somewhere between 40 and 45 cents per share. If there’s any news about the buyout offer, I expect that it’s been rejected. In August, NICK will hold its annual meeting, and I think there’s a good chance we’ll get another dividend increase. I think the board can go as high as 15 cents per share, which would most likely give the stock a nice shot in the arm. Nicholas Financial is a great buy up to $16 per share.

  On Tuesday, AFLAC ($AFL), Fiserv ($FISV) and Harris ($HRS) are due to report. AFLAC has been heating up recently. The stock broke $61 per share. The last earnings report was very good. AFLAC earned $1.69 per share, which was seven cents better than estimates. The stock has rallied more than 17% since then. For Q2, AFLAC said it expect earnings to range between $1.41 and $1.56 per share. While the falling yen has cramped some of AFLAC’s earnings, much of the yen’s damage has receded. The company may update its full-year guidance as well. AFLAC is still going for less than 10 times this year’s expected earnings. AFLAC remains a very good buy up to $63 per share.

  Fiserv’s ($FISV) earnings are like clockwork. In fact, the last earnings report was a big surprise because they missed expectations by a single penny per share. The stock gapped since the news was so unexpected. Nevertheless, Fiserv made up everything it lost and this week hit a new 52-week high. Fiserv’s most recent full-year guidance was for EPS growth of 15% to 19%, which translates to a range between $5.84 and $6.03. FISV is a buy up to $95 per share.

  Business at Harris ($HRS) has been impacted by the government sequester, but overall business is still strong. The Street expects $1.15 for Q2. In April, Harris said to expect full-year earnings between $4.60 and $4.70 per share. Harris is boring, which is why I like it. HRS is a good buy up to $53. The stock has trended above my Buy Below price recently, so don’t chase it.

  On Wednesday, WEX Inc. ($WEX) is due to report. Three months ago, WEX beat estimates by two cents per share, but the full-year guidance was well below the Street. The stock got clobbered for a 10% loss that day. The lower guidance caught me off guard, but not as much as what happened next—WEX went on a furious rally! Measuring from the post-earnings crush to Thursday’s close, WEX has jumped more than 30%. Three months ago, the company said to expect 98 cents to $1.04 per share for Q2. Don’t chase WEX. It’s a good buy up to $86 per share.

  On Thursday, DirecTV ($DTV) will report. The satellite-TV company had great reports for Q1 and Q4 before that, and the stock has responded very well. I’m not expecting a huge beat like before, but I think DTV can top Wall Street’s current estimate of $1.33 per share. The secret here is that Latam business. DirecTV is a buy anytime you see it below $67 per share.

  Before I go, I want to lower my Buy Below price on Microsoft ($MSFT) to $35 per share. I still like MSFT, but we have to face facts that last week’s earnings report was a major dud. But remember how quickly high-quality stocks can bounce back. We’ve seen that many times with our Buy List stocks, most recently Cognizant Technology ($CTSH) and WEX Inc. ($WEX) I also think we’ll see a nice dividend increase from Microsoft later this year.

  That’s all for now. Next week will be a very busy news week. Of course, there are still more earnings coming our way. Also, the Fed meets again, and the policy statement will come out Wednesday afternoon. That morning, the government will give us their first estimate of Q2 GDP growth. Plus, the government plans to completely revise all the historical GDP numbers. If that’s not enough, Friday is the big jobs report. Expect jittery traders to be even more jittery. Be sure to keep checking the blog for daily updates. I’ll have more market analysis for you in the next issue of CWS Market Review!

  – Eddy

• CA Technologies Beats Earnings
  Eddy Elfenbein, July 24th, 2013 at 4:41 pm

  After the bell, CA Technologies ($CA) reported earnings of 78 cents per share, four cents better than Wall Street’s consensus. That’s up from 63 cents per share in the same quarter one year ago (the first quarter of their fiscal year).

  “I am pleased with our performance in the first quarter and the start we made to fiscal year 2014,” said CA Technologies Chief Executive Officer Mike Gregoire. “We did better than expected on the revenue line and were able to capitalize on organizational efficiencies, expense management and a tax benefit to drive earnings growth. Our cash flow from operations was down, but that was expected and we are confident in meeting our full year outlook in all areas.

  “We are beginning to make progress in driving efficiencies across our business, getting traction in SaaS, Mobility and new customer acquisition, as well as improving the overall competitiveness of our products,” Gregoire said.

  For the full-year, CA expects earnings to range between $2.90 and $3.00 per share. Wall Street had been expecting $2.99 per share. The stock got as high as $30.30 per share today which is a new 52-week high.

• CA Technologies Breaks Out
  Eddy Elfenbein, June 7th, 2013 at 12:00 pm

  CA Technologies ($CA), one of our quieter stocks, is breaking out today:

  

  The stock cracked $28 yesterday and suddenly ran as high as $29.83 today.

• Strong Earnings at CA Technologies
  Eddy Elfenbein, May 7th, 2013 at 10:44 pm

  For the first time ever, the Dow closed above 15,000. This was the 17th-straight Tuesday rally for the index. The Dow closed today at 15,056.20. The S&P 500 rose 0.52% to close at 1,625.96. This was also another all-time high close.

  The cyclicals once again led today’s rally. Interestingly, the tech-heavy Nasdaq was only up 0.11% today while the Nasdaq 100 was slightly negative.

  Our Buy List did well today thanks largely to DirecTV ($DTV). The good earnings report propelled the shares to a 6.9% gain today. Bed Bath & Beyond ($BBBY) finally broke through $70 per share today. That hasn’t happened since September.

  After the bell, CA Technologies ($CA) reported fiscal fourth-quarter earnings of 68 cents per share. This was well above Wall Street’s forecast of 55 cents per share.

  “While we were able to achieve GAAP and non-GAAP diluted earnings growth for the year, we know we can do better to drive new sales and revenue performance,” said Mike Gregoire, CA Technologies chief executive officer. “When I look at the significant assets at CA Technologies, I believe there is an opportunity for us to improve our performance by stronger focus on product innovation, leveraging customer relationships and better execution in new customer adoption.

  “The traditional ways we’ve looked at systems, data, applications and security are being challenged by disruptive technologies like Mobility, Cloud, SaaS and Big Data. Businesses have higher expectations from IT, demanding far greater speed and agility and anytime, anywhere secure connectivity. These are areas where CA has expertise and can help,” he continued. “To better meet this customer demand, today we announced a plan and corresponding charge of approximately $150 million for fiscal year 2014 that will enable us to rebalance our resources to drive greater innovation and collaboration in product development and greater efficiency and better sales execution.”

  For 2014, the company expects to earn between $2.35 and $2.43 per share. Wall Street had been expecting $2.53 per share, and the stock is down after-hours. However, I’m not sure if CA’s forecast includes the $150 million charge mentioned above. By my calculation, that’s 33 cents per share pre-tax.

• CWS Market Review – January 25, 2013
  Eddy Elfenbein, January 25th, 2013 at 8:18 am

  “Most investors want to do today what they should have done yesterday.”
  – Larry Summers

  In the CWS Market Review from two months ago, I wrote: “But with the election behind us, the clouds have cleared, and I see a strong year-end rally ahead of us. In fact, I think the S&P 500 can break 1,500 by the early part of 2013.” Well, it took the index just 24 days into 2013 to vindicate our prediction.

  On Thursday, the S&P 500 indeed broke through the 1,500 barrier for the first time since December 12, 2007. The index has now risen for seven days in a row, which is its longest winning streak since 2006. The Dow is off to its best start in more than a quarter of a century.

  

  In this week’s CWS Market Review, I want to focus on the Q4 earnings parade which continues to help our Buy List beat the market. Through Thursday, we’re up 6.62% for the year, which is 1.81% ahead of the S&P 500. All 20 of our stocks are up for the year, and five have already logged double-digit gains.

  But I have to warn you: I think the market’s rally is starting to look a bit tired in the near-term. I don’t see any major problems on the horizon, but I don’t want investors thinking the last few weeks are “normal.” They’re not. There’s still a lot of trouble out there for stocks that can’t deliver. An example would be Apple’s $250 plunge since September. Our Buy List is doing well, and it’s not due to luck: it’s due to quality.

  Buy CA Technologies up to $27 per Share

  Last week, I said that CA Technologies ($CA) should be able to beat Wall Street’s earnings forecast, and that’s exactly what happened. On Tuesday, CA reported fiscal Q3 earnings of 63 cents per share, which was two cents better than Wall Street’s forecast. Quarterly revenue came in at $1.2 billion, which was also ahead of the Street at $1.17 billion.

  This is considered to be a rather dull company, and some people think it’s behind the times. But I see a good value. The day after the earnings report, the shares responded by rallying as high as $25.57 before pulling back some. If you recall from last week’s issue, I raised the Buy Below price from $24 to $27. This is a solid stock, and it pays a generous dividend, but I don’t want you chasing it if it continues to rally. I’m keeping my Buy Below price where it is. CA Technologies remains a good buy up to $27 per share.

  We got more good news on Tuesday when Wells Fargo ($WFC) announced that it’s increasing its dividend by 14% (I also saw this coming). The bank is raising the quarterly payout from 22 cents to 25 cents per share. Bear in mind that the Federal Reserve still has many of these banks on double-secret probation, so any dividend increase must be approved by Bernanke and Friends. Earlier this month, Wells reported record quarterly earnings, and it beat Wall Street’s forecast. Wells Fargo currently yields 2.84% and is a solid buy up to $37.

  Stryker ($SYK), the orthopedic implant maker, reported very good quarterly earnings on Wednesday. To be fair, the company had already told us to expect good news, yet the market continues to reward shares of SYK. With a 15.74% YTD gain, it’s the #1-performing stock on our Buy List. Consider this fact: Shares of Stryker have lost ground only twice in the last 17 trading days.

  For Q4, Stryker earned $1.14 per share, which was two cents more than Wall Street’s estimate. For all of 2012, the company made $4.06 per share, which is a healthy increase over the $3.72 per share from 2011. That’s very good growth for a sluggish economy.

  I was particularly impressed that Stryker reiterated its full-year forecast for earnings to range between $4.25 and $4.40 per share. Frankly, that’s probably too conservative, but it’s smart to play it safe so early on in the year. Don’t be surprised to see higher guidance from Stryker later this year.

  Two weeks ago, I raised my Buy Below on Stryker to $62 per share. Even though the stock has run beyond that, I’m going to hold my Buy Below here. Again, I don’t want investors to chase after good stocks. As always, our investment strategy involves discipline.

  Microsoft Isn’t the Disaster Everyone Thinks

  After the closing bell on Thursday, Microsoft ($MSFT) reported fiscal Q2 earnings of 76 cents per share, which was a penny ahead of expectations. I think these results were decent despite widespread claims that Windows 8 has been a bust.

  For the quarter, Microsoft’s profits dropped by 4% compared with last year. Quarterly revenue rose 3% to $21.46 billion, which was just shy of Wall Street’s forecast of $21.53 billion. The Windows division makes up about one-quarter of Microsoft’s overall business, and sales there rose by 11%. However, the company is getting slammed in its entertainment and office divisions.

  To be sure, Microsoft has its share of problems. The online division is a financial black hole, and Xbox revenue is falling rapidly. On the plus side, Microsoft is doing better with business customers. That’s often been a tough nut for MSFT to crack. They were able to sign up more customers to long-term contracts, which bodes well for future business.

  The problems Microsoft is having are plaguing the entire PC sector, and that’s one of the reasons why the company has joined a possible deal to take Dell ($DELL) private. I think one analyst summed it up well when he said, “Microsoft is evolving really into an enterprise software company.”

  The bottom line is that Microsoft is a company with a lot of problems. But the share price is well beneath the fair value. The stock is currently going for less than 10 times this fiscal year’s earnings. Microsoft remains a good buy up to $30.

  More Buy List Earnings Next Week

  We had some more good news this week from other Buy List stocks. I was pleased to see Bed Bath & Beyond ($BBBY) get a 4.4% lift on Thursday thanks to an upgrade from Oppenheimer. BBBY is still a good buy up to $60 per share.

  Ross Stores ($ROST) got a 3.5% boost on Thursday after it was upgraded to outperform by Credit Suisse. They raised their price target on ROST from $60 to $68. Ross Stores is an excellent buy up to $62.

  I’m writing this early Friday, and later today Moog ($MOG-A) will report earnings. In the CWS Market Review from November 16, when Moog was going for $34, I said it could “be a $45 stock within a year.” Try within ten weeks. Moog just broke $45, but don’t chase it if it crosses $46.

  Next week, we get earnings reports from Ford ($F), Harris ($HRS) and CR Bard ($BCR). I’m especially looking forward to strong results from Ford. The consensus on Wall Street is for earnings of 26 cents per share, and Ford should beat that by a lot. I haven’t heard details yet from Nicholas Financial ($NICK), but it’s very likely they’ll also report next week.

  That’s all for now. Earnings season continues next week. The government will also give us a first look at Q4 GDP report. Next Friday will be the important jobs report. The jobless claims reports have been quite good recently, so that may be a harbinger of a strong jobs number. Be sure to keep checking the blog for daily updates. I’ll have more market analysis for you in the next issue of CWS Market Review!

  – Eddy

• CA Technologies Rallies 3.6%
  Eddy Elfenbein, January 23rd, 2013 at 11:18 am

  Yesterday, the Russell 2000, Dow Transports, S&P Mid-Cap 400 and S&P Small-Cap 600 made all-time high closes. Also, the S&P 500 Healthcare and Consumer Discretionary Sectors made all-time highs.

  The market is about flat today. Earnings reports continue to pour in. Two standouts were IBM ($IBM) and Google ($GOOG), and both stocks are doing well today. Due to its high price, IBM has the largest weighting of any Dow stock (about 11%), so the Dow is ahead of the broader indexes today.

  CA Technologies ($CA) is also doing well thanks to yesterday’s good earnings report. The shares have been as high as $25.57 today. Right now, the stock is up 90 cents or about 3.6%. For the year, CA is a 15.5%. Not bad for a dull stock.

  We’re going to get Stryker’s ($SYK) earnings after the close, but the company already told us to expect good news so most of the pop is gone.

  The strength from tech earnings has helped push Oracle ($ORCL) to a new 52-week high. The stock got as high as $35.20 today. It had a lot of trouble breaking through $35.

  Our Buy List now has four stocks (ORCL, CA, MOG-A, SYK) that are up double-digits on the year. Ross Stores and Ford aren’t far behind.

• CA Technologies Earns 63 Cents Per Share
  Eddy Elfenbein, January 22nd, 2013 at 7:24 pm

  One of our more boring Buy List stocks, CA Technologies ($CA), is having a very good year so far. Through Tuesday’s trading the stock is up 11.69% on the year. After the close, the company reported better-than-expected earnings and reiterated its full-year forecast.

  For the three months ending in December, CA Technologies earned 63 cents per share which was two cents better than the Street’s consensus. Quarterly revenue came in at $1.2 billion which was also ahead of the Street at $1.17 billion.

  “I am very pleased to be a part of the CA Technologies team,” said CA Technologies CEO Mike Gregoire. “While we are encouraged by improvements we saw in the business during our third quarter, including increased demand for our Nimsoft, Infrastructure Management and Service Virtualization offerings, we know that we need to do more to accelerate innovation, gain market share and better differentiate our solutions in the marketplace.

  “We also know there is room for improvement in our cost of sales and in the speed and intensity with which we pursue our objectives,” he continued. “Over the next few months we will perform a detailed diagnostic of where we are, and lay out a plan on how to achieve our strategic and financial goals.”

  CA Technologies is currently sitting on a cash horde of just over $2.5 billion, which is more than $5.50 per share. The company reaffirmed its fiscal-year earnings-per-share forecast of $2.36 to $2.44. CA’s fiscal year ends in March.

  The stock is up 25 cents in the after-hours market.