Here are the calls from late yesterday and early this am
Upgrades:
NOVA Chemicals (NCX)= Buy
Enbridge Energy (EEP)= Outperform
Pacific Sunwear (PSUN)= Buy
Bank of America (BAC)= Buy
US Airways (LCC)= Neutral
CIGNA (CI)= Neutral
Downgrades:
Conventry Health (CVH)= Peer perform
US Steel (X)= Reduce
Hercules Offshore (HERO)= Hold
Best Buy (BBY) reports today, what should we expect? If we believe management, they predict fiscal 2008 earnings of $3.10 to $3.25 per diluted share on full-year sales of $39 billion (9% growth). Broken down, it will consist of an approximately 130 new stores and same-store sales growth of 3% to 5%.
For the current quarter, Q1 for 2008, the street is looking at 50 cents a share vs the 47 they posted last year. Been in a Best Buy lately? Still full of people, still busy and I see no reason they should not beat the expectations. With competition like Circuit City (CC) and Tweeter (who is now in bankruptcy) falling by the wayside so fast you would swear they were racing to get there, Best Buy clearly is the king of the hill.
The only serious competition for shopper’s value left is Costco (COST), Wal-Mart (WMT) and Sears (SHLD) but even they cannot hold a candle to Best Buy in term of selection. Best Buy is in a field of one here now. With the recent announcement that they will provide Apple (AAPL) a “store in store” concept soon, this gap only looks to widen.
Best Buy’s earnings become more important each quarter because if they are not doing well, the entire consumer electronics space is suffering. A word of caution, since they do not issue quarterly guidance, if they do miss, pay close attention to what they say for the rest of the year. If they miss and guide inline for the remainder of the year, don’t worry, it was the analyst who missed, not them.
Should they miss and guide lower? Watch for blood in the retail street today.
Interested? Well that is what shareholders of Apple (AAPL) are pricing a new battery at today. Previous estimates had the new iPhone having about 6 hours of talk time, new ones, 8. This was apparently a reason not to buy the phone?
According folks who have been emailing and commenting to my posts, the battery life has never been mentioned once, not once in the hundreds of comments and emails. It was not mentioned as an issue by those who would not buy it and those who said they would buy it, any potential battery issue was inconsequential. Those who will not buy it are going to do so because of price according to polls and those who are going to buy it would do so even if Steve Jobs stood at the door to the Apple store and assaulted them when they walked in. The battery was irrelevant.
So, how can we add $2.6 billion to the market cap of Apple today just because there is an improvement to the device that just makes it comparable to other makers devices? An improvement, it needs to be noted that has not been mentioned by detractors in discussions about the phone?
I guess the question is, why is this important and did anyone really think battery life would not be improved?
It is almost like the stock running up because they are going to put it out in red… who cares?
Things like this that do not make sense are signs… Why doesn’t it make sense? If it was any other battery in any other cell phone from RIMM (RIMM), Nokia (NOK)or Motorola (MOT)
would anyone care?
Upgrades:
Ingersoll-Rand (IR) =Outperform
PrivateBancorp (PVTB)= Strong Buy
Natl Instruments (NATI) = Overweight
Tektronix (TEK) = Overweight
Fairchild Semi (FCS) = Outperform
CheckFree (CKFR)= Sector Outperform
Downgrades:
Hercules Offshore (HERO) =Hold
Action Semi (ACTS) =Hold
Western Digital (WDC) =Neutral
ChoicePoint (CPS) =Sector Perform
“Why would I invest in a refinery when you’re trying to make 20 percent of the gasoline supply ethanol?” Sound familiar?
Just over a week ago an almost identical statement was made by the head of OPEC, Abdalla El-Badri. When asked about future refinery plans ge said, “If we are unable to see a security of demand…we may revisit investment in the long-term.” The first quote? None other than Chevron’s vice chairman Peter Robertson. Valero’s spokesman Bill Day apparently got his copy of the new playbook when he said “That’s not to say we’ve changed our plans, but it’s fair to say we’re taking a closer look at what the president is saying and what Congress is saying” about biofuels.
Okay… so we now have the US oil majors like Exxon (XOM), Chevron (CVX), Valero (VLO) and BP (BP) parroting the same sentiment as OPEC? This is just possibly one of the most simple minded acts I have seen in a long time. Just step back and look at it. Let’s put aside oil prices and resentment they always illicit towards big oil. Let’s also put aside whether of not gas prices are justified and assume they are. We also need to ignore the unfathomable profits oil companies make and just accept it is purely a function of scale and there is no market manipulation happening. Assuming all those things are true (they may or may not be, I am assuming they are for the point of the post). Why, why would any business ever align themselves philosophically with OPEC?
Are they just trying to make themselves hated even more than they are now? Is it some twisted masochistic urge the industry just cannot ignore? Why not put Bin Laden on their marketing materials? At a time when you have the Democrats, who hate oil companies only slightly more than they do Republican’s in charge in congress and the White House up for grabs, why would you give them more of a reason to vilify in the eyes of American’s?
Renewable fuels are being trumpeted as a national security issue. Whether or not you feel they are is irrelevant, the fact is that they are being market this way is what matters. The less we rely on OPEC for oil, the safer we are. Period.
So, now both OPEC and the US oil majors are going to take their ball and go home? After years of telling us biofuels were a pipe dream and would never amount to anything, they are suddenly so threatened that they are going to refuse to add refining capacity? This is their solution? To pout? Jesus, even my four year olds know that is not the way to get what you want.
This is a colossal mistake on the part of the oil companies and they are going to be doing some heavy damage control after this. Here is the question they will have to answer before congress, and yes they will end up there “Why are you and OPEC colluding to keep oil prices high by threatening to refuse to invest in more refining capacity, are you aware your actions are undermining the security of our nation?”
Can’t wait to hear the answer.
Lehman Brothers upgraded the chemicals giant last week and laid out three scenarios, a big purchase, significant sale or huge share repurchase, that could lift earnings next year. Do not buy DOW (DOW) shares because of this.
The analyst, Sergey Vasnetsov raised his recommendation on Dow Chemical’s shares to overweight from equal weight and lifted his price target to $55, or $15 higher than his previous projection.
He said the company’s large cash position and statements from executives over the past few months have made three outcomes possible that could add to earnings next
year. They include a big acquisition, such as the purchase of a company with sales topping $10 billion; a stock buyback worth up to $10 billion; and a $3 billion divesture of some of Dow’s commodity, or bulk, chemicals businesses.
Given the company’s strong free cash flow, Dow Chemical “could be quite an active
chemical company in M&A,” said Vasnetsov.
If not for those reasons, why buy Dow? Let’s put aside the stellar balance sheet, cash hoard and envious cash flow and look just at the business. Recently in an interview CEO Andrew Liveris said “The good news, though, is that volume is good, and I would tell you with the exception of housing, end-use markets are strong in North America, surprisingly strong, and the rest of the world is somewhere between dynamite and good,” said Liveris.
For proof of his statement? Look at recent pricing actions by the company.
Dow announced price increases for acrylic acid and esters, also known as acrylic monomers or acrylates, effective July 1, 2007, or as otherwise allowed by individual contract terms.
Dow will increase prices for glacial acrylic acid, butyl acrylate, ethyl acrylate, methyl acrylate and 2-ethylhexyl acrylate, as follows:
Butyl Acrylate/2-Ethylhexyl Acrylate
* In North America by US$0.05 per pound.
* In Asia Pacific by US$120.00 per metric ton.
* In Middle East/Africa by US$120.00 per metric ton.
* In Latin America by US$120.00 per metric ton.
* In Europe by 90 Euros per metric ton.
Ethyl Acrylate/Methyl Acrylate/Glacial Acrylic Acid
In North America by US$0.03 per pound. In Asia Pacific by US$70.00 per metric ton. In Middle East/Africa by US$70.00 per metric ton. In Latin America by US$70.00 per metric ton. In Europe by 50 Euros per metric ton.
“The need for these increases is driven by an industry-wide butanol and 2-ethylhexyl supply/demand imbalance,” explained Mark Bassett, global business director for the Acrylic Monomers business of The Dow Chemical Company. “This has reached such a critical point that production is not able to meet demand. This increase also attempts to recover increases in the cost of raw materials such as propylene and natural gas.”
They also announced recently they will raise list and off-list prices on a number of their Oxygenated Solvents products in North America effective June 1, 2007, or as contracts allow. This increase is primarily driven by the tight supply of butanol combined with the continued increased costs of propylene and natural gas.
“A tightening market for raw materials namely propylene and butanol are the primary drivers for this price increase,” says Martin Sutcliffe, global business director, Glycol Ethers. “The global butanol market has been steadily tightening this year, with supply now unable to keep up with demand.”
“Dow recognizes that we need to make exceptional efforts to meet the demand,” says Pat Gottschalk, global business director, Solvents & Intermediates. “However, when the industry is dealing with the need to maximize supply, we must raise our prices to continue to compete for raw materials and other resources.”
If you follow this link, you will see Dow’s 2007 pricing announcements. You will also notice that announcement after announcement has the words “price increase” in it. Demand and pricing are firming and that is never a bad thing.
Liveris said 2007 will be a good year for Dow, but it will definitely not outperform its 2006 earnings. He said earnings should be below $4.00 per share. The reason? Low cost production facilities are being built and Dow is still tied to the US energy market. That US dependence is being fixed but will take time and each year we will see a dramatic improvement.
In the meantime, Liveras does have Dow in a position to purchase more earnings and expand capacity without adding huge debt demonstrated by the recent announcement in five petrochemical projects in Thailand worth $2 billion… a win-win.
Okay, first 6 months almost finished. so, what are the best performing sectors to date?
Ranked by price performance of ALL stocks in the group.
Top 5
1- Chemicals / Fertilizers = 84% (13 stocks)
2- Trucks and Parts /Heavy = 48% (13 stocks)
3- Steel Producers = 30% (22 stocks)
4- Heavy construction= 36% (26 stocks)
5- Oil & Gas Machinery = 36% (31 stocks)
Bottom 5 (#5 in the worst)
1- Banks/Southeast = -8% (171 stocks)
2- Retail/Home furnishings = -4.6% (20 stocks)
3- Banks/Northeast= -9.4% (128 stocks)
4- Banks/Midwest= -10.2% (76 stocks)
5- Computer-Data Storage= -16% (20 stocks)
Peter Lynch once said, “there are a multitude of reasons insiders sell shares, but there is only one reason they buy, they think the stock is going up.” Here are the top 5 insider buys this week listed by size.
1- Celgene (CELG)= $5,582,000
2- Kapstone Paper (KPPC)= $4,022,000
3- Chesapeake Energy (CHK)= $3,605,000
4- Cardica (CRDC)= $2,530,000
5- General Growth Properties (GGP)= $1,925,000
The gang over at The StockMasters tell us why we should be picking Sears Holdings(SHLD), Yahoo! (YHOO), Ivanhoe Mines (IVN) and Hansen Naturals (HANS)
Please visit them and read the article here:
Here we go again.
The top month to date stories at Value Investing News
1. Remembering the Wisdom of Keynes and Twain– (via www.controlledgreed.com)
2. Finding Value With Joe Feshbach– (via www.fool.com)
3. Breakdown of HNR Financials- (via hcmthoughts.blogspot.com)
4. Sell Side Cliches (via marketprognosticator.blogspot.com)
5. CHEAP STOCKS: Value Investing Congress West 2007: ReCap(via stocksbelowncav.blogspot.com)
Enjoy the weekend!!
“Plaintiffs cannot state a cognizable claim consistent with the well-recognized parameters of the common-law tort of public nuisance. To find otherwise would be directly contrary to legislative pronouncements governing both lead paint abatement programs and products liability claims.” With that, the NJ Supreme court correctly ended the lead paint litigation in the Garden State. You can view the decision here.
The defendants, the deep pocketed crew of Sherwin Williams (SHW), Dupont (DD), NL Industries (NL) and others are savoring their second State Supreme Court victory in less than a week following Missouri’s earlier decision. It would appear Wall St. is finally catching on as shares of Sherwin rallied 2.3% during the day and another 1.4% after the close Friday.
Said defendant’s spokesperson Bonnie Campbell, “”With this long-awaited and significant ruling, the Supreme Court of New Jersey has taken an important step by joining Missouri, Illinois and other state courts in rejecting the distortion of public nuisance law.”
“Today the Court found that the plaintiffs’ nuisance claim is inconsistent with the well-recognized parameters of public nuisance law, and that to find otherwise would be directly contrary to the legislature’s pronouncements on both lead paint abatement programs and products liability law. These companies are not responsible for risks today from poorly maintained lead paint …”
So, what has to happen now to finally put this to bed? The Ohio Supremes are expected to rule soon on Senate Bill 117 that would have prohibited the use of public nuisance in lead paint litigation and by next summer. Expect them to rule in favor of the Senate that is bringing the case to block the veto. Next summer Rhode Island extricates itself from the near felonious behavior of AG Patrick Lynch and Judge Silverstein as it Supreme Court will now assuredly toss the verdict there on it’s ear. The only question in Rhode Island left to decide is whether or not Lynch or Silverstein are sanctioned for their actions during the trial.
So what were these cases really about? The court today summed it up when they said:
“less support exists for the notion that the Legislature intended to permit these plaintiffs to supplant an ordinary product liability claim with a separate cause of action as to which there are apparently no bounds. We cannot help but agree with the observation that,were we to find a cause of action here, “nuisance law” would become a monster that would devour in one gulp the entire law of tort.’”
Yes, money. Not poor folks, poisoned kids or “public good”. Just plain old money and another way the fleece business. Here is cheering the courts in NJ and MO this week. They got this one right. Maybe now the states can actually get around to stopping the onslaught of toys with lead paint that are being recalled almost daily?
I received an email about a site that that “ranks” the various stock market blogs out there, well, the “Top 100” anyway. They do it in a very democratic way also, which is always nice.
They are ranked by Technorati and Alexa rankings. The Technorati rankings I feel are more accurate because Alexa ranking do not take into account Firefox browser users as their software is not compatible with it and all browsers work with Technorati. This Alexa oddity causes a whole batch of visitors and page views on your site not to be recognized by it. Unless you have an Alexa toolbar downloaded to your computer, they do not see you.
So, according to the Instant Bull site, ValuePlays is the 29th ranked site (as of 6/15).After 5 months, I can live with that (for now) They update the rankings weekly so I guess on Monday we will have a different number.
It is a neat site in that they direct link to the blogs there and you can veiw them in the same window. Check it out.
Everyone probably knows my feelings (or ambivalence) about the upcoming iPhone. A poll was published today in the Wall St. Journal.
I will abstain from adding my two cents because I think the poll results speak for themselves.
It is a cell phone, price rules, not fancy features. Ok, just one cent.
You can read the whole article here
Here are the top individual stocks in term of money flow. A negative number means that as the stock rises, there is increased selling of shares, a positive number means that as shares sink, buyers come rushing in.
Inflows (buying on weakness):
Google (GOOG)= +$70 million
Citigroup (C) = +$66 million
CVS (CVS)= +$51 million
Ciena (CIEN) = +$35 million
Outflows (selling on strength):
Kraft (KFT) = -$137 million
Apple (AAPL) = -$119 million
AT&T (T) = -$99 million
Microsoft (MSFT) = -70 million