Category: Articles

Monsanto (MON), the seed and fertilizer giant reports Thursday before the bell and analysts are looking for $1 a share vs. the $.61 cents they earned last year for a cool 64% growth.

With the explosion in ethanol production (and now corn plantings) Monsanto is seeing unprecedented demand for it’s seeds and fertilizers and shares have vaulted form $39 to $68 in the past 52 weeks. Competitors such as Potash (POT), Agrium (AGU) and Terra Industries (TRA) have participated in the bonanza with shares prices all up well over 100% in the past year.

Monsanto will set the bar for the group this week and a miss will cause shares of the smaller companies, several of whom sport PR ratios in the 70’s and 80’s to implode. Conversely, a beat and upward revision in full year guidance will cause the sector’s party to carry on. In short, when you have valuations this high, volatility will be the name of them game.

I would be shocked to see anything but a hit or beat for Monsanto. The Ag business, as the Agrium CEO recently said “is on fire” and does not look to be slowing down anytime soon. Monsanto is experiencing huge demand for it’s new disease resistant corn seeds that farmers will want to satisfy ethanol producers.

If you think the party may be over, I would avoid betting against this group now, to quote James Taylor “don’t tug on superman’s cape, don’t pee into the wind, you don’t pull the mask off the old long ranger…” and do not bet against the Ag sector now.

If you think there is more room to run, it will be a wild ride when valuations are this high. If you buy shares, buckle your seatbelt and hold on.

Here are some notable money flows from last week. Inflows signal buying on price drops and outflows means people are selling shares on strength.

Money Flows: Buying on Weakness

Company, Amounts in Millions

Proctor & Gamble (PG)= +$93

Merrill Lyn (MER)= +$60

General Motor (GM)= +$46

American Credit (ACF)= +$47

Chicago Mercantile (CME)= +$46

Nymex Holdings (NMX)= +$45

Ingersol Rand(IR)= + $44

Selling Into Strength, Amounts in Millions

Best BUy (BBY)= -$42

Applied Materials (AMAT)= – $31

Limited Brands (LTD)= – $29

Monsanto (MON)= -$23

UAL (UAUA)= -$15

BP (BP)= -$9

These are the buys from insiders for the week. As Peter Lynch said, “there are a multitude of reasons insider sell shares, but only one reason they buy, they think the stock is going up. Notice the big buying in the pharma sector.

Brookfield Homes (BHS)= $4,019,000

Ligand Pharmaceuticals (LGND)= $2,748,000

La Jolla Pharmaceuticals (LJPC)= $1,852,000

Mylan Labs (MYL)= $1,094,000

Terremark Worldwide (TMRK)= 720,000

Here are the picks for Monday

Macke likes Foot Locker (FL), $21.67 and Nike (NKE), %52.95.

Seymour BP (BP), $69.76.

Finerman Home Depot (HD), $39.36

Guy Adami says the market looks terrible and doesn’t have a trade.

The results of Friday’s recommendations:

Bolling- USEC Inc, (USU) $22.02
Close $21.67 = Loss $.35

Adami- Honeywell (HON) $56.38 Close $55.68 = Loss $.70

Najarian- Bristol Myers (BMY) $32.02 Close $31.40 = Loss $.62

Macke- Hasbro (HAS) $31.63 Close $31.30 = Loss $.33

Now, the market was down over 180 points so there were not many winners out there Friday, but, we need to track the good days and the bad.

Records:

Since my tracking began (1-1 means one up day and one down day)

Adami= 0-3
Bolling= 1-2
Najarian= 1-2
Macke= 1-2

Here are the payout boosts for last week

Sun Hydraulics (SNHY)= 35%

Center Financial Corp. (CLFC)= 25%

Ameron (AMN)= 25%

Winnebago Enterprises (WGO)= 20%

Bank of South Carolina (BKSC)= 14.3%

UPGRADES:

Darden Restaurants (DRI)= Buy

Newfield Exploration (NFX)= Buy

Agrium (AGU)= Buy

Terra Industries (TRA)= Buy

AES Corp (AES)= Buy

Kraft(KFT)= Neutral

DOWNGRADES:

Talbots (TLB)= Sell

Pier 1 (PIR)= Underperform

Southern Co (SO)= Underweight

Abercrombie (ANF)= Equal-weight

Canadian National Rail (CNI)= Sector Perform

Here are some new 52 week lows from the NYSE

Wachovia (WB)= $51.84

Sanofi Aventis (SNY)= $40.37

Pulte Homes (PHM)= $23.80

McClatchy Newspapers (MNI)= $25.07

Hovnanian Enterprises (HOV)= $18.20

Public Storage (PSAA)= $25.65

Leggett $ Platt (LEG)= $21.60

Gulf Power (GUI)= $22.71

Journal Register (JRC)= $4.67

The much awaited verdict is in in the lead paint case of The City of Milwaukee vs NL Industries (NL).

The jury said that lead paint in and of itself was a public nuisance BUT, NL was NOT responsible for the problems it is causing. This makes 4 victories now in the last two weeks for lead paint defendants.

On Questions two and three – Did NL Industries intentionally and unreasonably engage in conduct that was a cause of the public nuisance and Did NL Industries negligently engage in conduct that was a cause of the public nuisance – the jury voted NO.

Visit Jane Genova’s Law and More for interviews and updates.

ADM, already producing biodiesel in Brazil now wants to enter the ethanol market.

In an interview, ADM’s (ADM) senior vice president of strategy, Steve Mills,said the company hasn’t ruled out a purchase of Brazil’s largest ethanol producer, Cosan SA, in which ADM owns a small stake. A Cosan spokeswoman declined to comment.

Mr. Mills wouldn’t say how much money ADM is willing to invest in Brazilian ethanol, and it isn’t clear how soon they will move but based on recent history, when ADM finally talks about something, action soon follows. Mills said sugar-cane ethanol is now “a key component” of ADM’s immediate strategy. “We’re devoting a lot of time and energy to this area. We’re not talking about something 10 years down the road. It’s on the front burner,” he said.

Brazil is among the world’s lowest-cost producers of ethanol, at a cost of about 90 cents a gallon, roughly two-thirds that of corn ethanol, according to the Institute for Studies of Commerce and International Negotiations, a think tank in Sao Paulo. This is very interesting as it means corn based ethanol is made at a cost of about $1.20 a gallon. This really does squash the thought that ethanol is becoming unprofitable. It does mean that ADM will be able to make it 30% cheaper in Brazil toi export both to the US and the rest of the world.

ADM will have enough flexibility to sell it’s Brazilian production. They can funnel Brazilian ethanol through Caribbean countries (like Bunge (BG) and Cargil plan to do) who can export a limited amount to the U.S. duty-free and will also look to overseas markets, which are growing rapidly. “What ADM really understands is the global nature of green fuels,” said Dan Basse, president of AgResource Co., a Chicago commodity-advisory firm.

Coming off the heal of the hire of former DOE Head Todd Werpy and this weeks announced hire of Michael Pacheco, who served as the director of the National Renewable Energy Laboratory’s (NREL) National Bioenergy Center since 2003, ADM is gearing up for something big. Pacheco will lead ADM in the development of food and fuel processing technologies. At NREL, Pacheco was instrumental in the completion of the “Billion-Ton Report,” which confirmed the ability of U.S. biomass resources to meet the nation’s transportation fuel needs.

It looks like my biggest complaint about my RIMM (RIMM) Blackberry has been solved

Simply go to the site Empower from your Blackberry and download the beta version of the software. It takes 30 seconds. You can also sign up for free updates as they come out. I have downloaded it and it does work. For sites that you have set to send you text emails, you’ll need to change that the HTML to get the full functionality of the service.

The best part? It is FREE

Here are today’s picks from Bolling, Macke, Najarian and Adami

Picks For Today:

Bolling- USEC Inc, (USEC) $22.02

Adami- Honeywell (HON) $56.38

Najarian- Bristol Myers (BMY) $32.02

Macke- Hasbro (HAS) $31.63

Yesterday’s picks and the results:

Macke-Columbia Sportswear (COLM) $68.02 = $68.16 + $.14

Najarian- Terra Industries (TRA) $22.40 = $23.22 + $.82

Adami- “Short” Dow 30 Proshares ETF (DOG) $59.02 = $58.77 LOSS $.25

Bolling- NYMEX Holdings (NMX) $137 = $137.09 + $ .09

Looks like yesterday’s winner was Najarian and the sole loser was Adami.

Records:

Since my tracking began (1-1 means one up day and one down day)

Adami= 0-2
Bolling= 1-1
Najarian= 1-1
Macke= 1-1

The hits just keep on coming as the Ohio Supreme Court ruled municipalities cannot sue lead paint manufacturers unless they can prove “whose paint” is causing the “public nuisance”. For manufacturers like Sherwin Williams (SHW), NL Indusrtries (NL), DuPont (DD) and Berkshire Hathaway’s (BRK.A)Benjamin Moore, this ruling has now set the legal hurdle plaintiffs must cross and since the scientific community cannot “beyond all doubt” prove who manufactured the paint, this litigation is in it’s final hours.

From Law and More:

Another major blow for Motley Rice and other plaintiff firms suing Former Lead Paint Inc. – the Ohio Supreme Court on June 20th, ruled that product identification was necessary. Like the Missouri Supreme Court in the lead paint public nuisance St. Louis decision, the OH Supreme Court rejected a claim of market-share liabiity by the plaintiffs in Jackson v Glidden. The trial court had refused to allow the plaintiffs to sue former producers of lead pigment or their successors without identifying who made the paint. This ruling, of course, is in direct conflict with the jury instructions issued by Rhode Island Superior Judge Michael Silverstein in RI Lead Paint Trial II.

Former Iowa Attorney General Bonnie Campbell, who is spokesperson for the defendants, commented, “For nearly two decades of litigation, plaintiffs have moved from legal theory to legal theory, and venue to venue, in an attempt to place the responsibility for poorly maintained properties on the former manufacturers of lead paint. The market share theory is an attempt to evade the most basic requirements of a product liability suit – that the palintiffs show who made the product that allegedly caused harm.”

Motley Rice is a resourceful opponent. It will be fascinating to observe and deconstruct how it re-goups and re-positions itself in the media after three consecutive state supreme court losses in New Jersey, MO and now OH. We lead-paint watchers are still waiting for the ruling from the OH Supreme Court on SS 117 which would prohibit the state’s public nuisance law from being applied in product liability matters.