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Investing in the Lottery
Posted by Eddy Elfenbein on August 3rd, 2011 at 9:22 amFascinating article from the Boston Globe:
UNDERLAND – Billy’s Beer and Wine sold exactly $47 worth of lottery tickets the day before Marjorie Selbee arrived, just another sleepy day for the liquor store in this tiny Western Massachusetts town. But from the moment the 70-something woman from Michigan entered the store early July 12, Billy’s wasn’t sleepy anymore.
Over the next three days, Selbee bought $307,000 worth of $2 tickets for a relatively obscure game called Cash WinFall, tying up the machine that spits out the pink tickets for hours at a time. Down the road at Jerry’s Place, a coffee shop in South Deerfield, Selbee’s husband, Gerald, was also spending $307,000 on Cash WinFall. Together, the couple bought more than 300,000 tickets for a game whose biggest prize – about $2 million – has been claimed exactly once in the game’s seven-year history.
But the Selbees, who run a gambling company called GS Investment Strategies, know a secret about the Massachusetts State Lottery: For a few days about every three months, Cash WinFall may be the most reliably lucrative lottery game in the country. Because of a quirk in the rules, when the jackpot reaches roughly $2 million and no one wins, payoffs for smaller prizes swell dramatically, which statisticians say practically assures a profit to anyone who buys at least $100,000 worth of tickets.
Read the whole thing.
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Wright Express Earns 91 Cents Per Share
Posted by Eddy Elfenbein on August 3rd, 2011 at 8:55 amStocks continue to plunge yet earnings for our Buy List stocks have been pretty strong. This morning, Wright Express ($WXS) announced adjusted second-quarter earnings of 91 cents per share. That’s four cents more than Wall Street was expecting. In May, Wright told us to expect Q2 earnings between 83 and 89 cents per share so they even topped their internal forecasts.
Here are some details about the quarter:
Total revenue for the second quarter of 2011 increased 55% to $141.3 million from $91.4 million for the second quarter of 2010. Net income to common shareholders on a GAAP basis was $40.6 million, or $1.04 per diluted share, compared with $30.0 million, or $0.77 per diluted share, for the second quarter last year.
On a non-GAAP basis, the Company’s adjusted net income for the second quarter of 2011 increased 33% to $35.5 million, or $0.91 per diluted share, from $26.8 million, or $0.68 per diluted share, for the same period a year ago.
Wright Express uses fuel-price derivative instruments to mitigate financial risks associated with the variability in fuel prices in North America. For the second quarter of 2011, the Company’s GAAP financial results include an unrealized $13.9 million dollar pre-tax, non-cash, mark-to-market gain on these instruments. See Exhibit 1 for a full reconciliation of adjusted net income.
“The second quarter was another great quarter for Wright Express. We once again reported robust growth in our other payments solutions segment, and benefited from strong fleet transaction and vehicle growth, as well as higher fuel prices in our fleet segment, relative to the prior year. On the international front, we continued to perform well with the successful launch and implementation of BP’s portfolio in Australia and we are seeing solid execution in our Australian fleet business. Wright Express remains well-positioned for sustained growth as we further expand our fleet business in North America and diversify our revenues by leveraging new opportunities on the horizon,” said Michael Dubyak, Chairman, President and Chief Executive Officer.
Wright is also updating its 2011 guidance for the second time this year. In May, the company increased its full-year EPS guidance range from $3.17 – $3.37 to $3.40 – $3.60. The new range is $3.50 – $3.62.
“We are updating our full-year 2011 guidance as we believe that our business will experience continued solid performance through the last two quarters of 2011 in spite of the uncertainty that exists in the broader economic landscape. We expect our second half performance will continue to be driven by exceptional growth in our other payments solutions segment, organic growth in our fleet business and investments in our international opportunities,” said Steve Elder, Senior Vice President and Chief Financial Officer.
* For the third quarter of 2011, Wright Express expects revenue in the range of $145 million to $150 million and adjusted net income in the range of $35 million to $37 million, or $0.89 to $0.95 per diluted share.
* For the full year 2011, the Company expects revenue in the range of $550 million to $560 million and adjusted net income to be in the range of $136 million to $141 million, or $3.50 to $3.62 per diluted share.
Third quarter 2011 guidance is based on an assumed average U.S. retail fuel price of $3.72 per gallon, and approximately 39.0 million shares outstanding. Full-year 2011 guidance is based on an assumed average U.S. retail fuel price of $3.64 per gallon and approximately 39.0 million shares outstanding. In addition, the fuel prices referenced above are based on the applicable NYMEX futures price. We are assuming the exchange rate of the Australian dollar will remain at a premium to the US dollar for the remainder of the year.
The Company’s guidance also assumes that third quarter 2011 domestic fleet credit loss will range from 18 to 23 basis points, and that domestic fleet credit loss for full year 2011 will range from 15 to 19 basis points
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Morning News: August 3, 2011
Posted by Eddy Elfenbein on August 3rd, 2011 at 7:34 amWorld’s Private Sector Stumbles as Debt Crisis Bites
Japan Economy Minister: Up To BOJ Whether It Takes Further Steps
China Joins Russia in Blasting U.S. Borrowing
Worries Rise Over Spain and Italy Debt
Gold Rallies to Record for Second Day as Signs of Slowdown Fire Up Demand
Moody’s Affirms U.S. Rating, Warns of Downgrades
AAA Rating Is a Rarity in Business
Rep. Paul Introduces Bill to Cancel $1.6T in Debt Held by Federal Reserve
British Banker Standard Chartered Forecasts Record Income
French Banker Societe Generale Warns on 2012 Profit as Greece Scars Q2
GM July US Sales Up 7.6% On Higher Car, Crossover Sales
Dunkin Brands 2Q Net Falls 1% On Expenses
Comcast Profit Up on Web Subscribers, NBCU Ad Sales
James Altucher: The 10 Commandments of the American Religion
Epicurean Dealmaker: I Think I’ve Said This Before
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S&P 500 = 1254.05
Posted by Eddy Elfenbein on August 2nd, 2011 at 5:14 pmThere’s no other way to say it — today was a wipe-out for stocks. The S&P 500 plunged 32.89 points to close at 1,254.05.
That’s a loss of 2.56% which is the index’s worst loss since August 11th of last year. The market has lost all of its gain for the year. The S&P 500 is currently 0.29% lower than where it was on December 31st. The market has now fallen for seven sessions in a row.
Once again, it was the cyclicals that bore most of the pain. The Morgan Stanley Cyclicals Index (^CYC) dropped by 3.72%. The CYC is now below 1,000 and the index has shed 12.8% since July 7th.
Despite the new loss among cyclicals, that group has been suffering for a while. The losses today seemed fairly evenly distributed. I didn’t see many stocks down more than 5%. Trading volume on the Nasdaq ran 17-to-1 negative.
So what did well? That’s easy. Gold, for one. The yellow metal jumped to $1,644.50 an ounce. It wasn’t that long ago that the S&P 500 and gold were tracking each other. Gold is up even more after hours.
Bonds also had a field day. The five-year Treasury yield dropped to 1.23% and the 10-year yield is down to 2.62%. Both are the lowest readings since November.
The 30-year yield is down to 3.92% which is the lowest yield since last October.
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Send Me a Question!
Posted by Eddy Elfenbein on August 2nd, 2011 at 11:54 amCalling all readers: I want to try a Q&A post.
Although this blog doesn’t have comments, I try to respond to all the emails I get. (I apologize that I can’t answer them all.)
Sometime in the next week, I hope to post a round-up of the best email questions. Feel free to send me an email about any investing topic or stocks on the Buy List. (Don’t worry, I won’t post your name.)
I’ll try to respond to everyone, but I may not be able to. You can email me at eddy@crossingwallstreet.com.
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Q2 Earnings Summary for the S&P 500
Posted by Eddy Elfenbein on August 2nd, 2011 at 11:40 amAccording to the latest numbers from Bloomberg, 360 of the 500 companies have reported. Earnings are up 18.5% and are tracking to hit $24.89 which would be an all-time record.
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Update Q2 Buy List Earnings Calendar
Posted by Eddy Elfenbein on August 2nd, 2011 at 10:25 am
Eddy Elfenbein is a Washington, DC-based speaker, portfolio manager and editor of the blog Crossing Wall Street. His 