One of the world’s leading financial service firms, JP Morgan Chase & Co. (JPM), confirmed reports today that the company has put into place actions that will alleviate any new homes from falling into foreclosure for the next 90 days. Under the plan, JPMorgan Chase will offer troubled homeowners the opportunity to refinance their mortgages as the company in the process of adding 300 loan counselors and an additional 150 to review current mortgages before a foreclosure has been assessed.
Current totals have been estimated that nearly $70B in loans are on the verge of foreclosure, and with the recent acquisition of Washington Mutual, the JPMorgan Chase program could benefit some 400,000 households. With Case acquiring Bear Stearns earlier this year as well, JPMorgan inherited mortgages that were either in default or soon to be, and since 2007, the combined company has helped some 250,000 households with restructured mortgages to the tune of $40B.
With the purchase of Washington Mutual, JPMorgan acquired countless portfolios that contained “option adjustable-rate” mortgages. These mortgages entailed that the borrower could choose which payment plan they want to participate in. Most of the participants chose the plan in which the payment was less than the interest owned on the loan, which in turn, increased the borrowers’ outstanding balance. JPMorgan Chase, as part of their restructuring plan, is still in deliberation on whether or not to modify these mortgage agreements. To learn more about the JPMorgan Chase mortgage program, go to Yahoo! Finance
So where does that leave JPMorgan? With the housing industry in utter chaos, mortgages will inevitably fall into foreclosures at some point or another. In fact, just a week or so ago, RealtyTrac reported in their findings that the foreclosure rate for the 3rd quarter skyrocketed more than 70% from this time last year. (Read more here). Although lawmakers are putting fail-safes into place to curtail the explosion of foreclosures, there is a limit on what can be done in order to save the American home.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Friday, October 31, 2008
BetterTrades looks at Sony's Battery Recall - October 31, 2008
One of the world’s largest developers and manufacturers of consumer and industrial electronic equipment, Sony Corporation (SNE), confirmed reports late Thursday evening that the company has voluntarily agreed to recall nearly 100,000 computers worldwide due to a faulty battery pack in notebook computers.
According to the U.S. Consumer Product Safety Commission, Sony has complied with the commission in retrieving certain laptops that contain the Sony made lithium-ion cell battery packs that were used by Hewlett-Packard Co. (HPQ), Dell Inc. (DELL), and Toshiba Corporation. For more information about Sony’s battery recall, check out Google
The recall will affect some 35,000 computers within the U.S., as 32,000 of them are Hewlett-Packard laptops including the Pavillion and Compaq brands, while 3,000 are from Toshiba, which include the Satellite and Tecra brands, along with nearly 200 being Dell computers. The remainders of the recalls come from computers sold outside the United States. Thus far, there have been 19 reports of Sony’s battery packs overheating, while 17 of those complaints involving the batteries actually caught fire.
Sony has commented on the issue and has cited two different scenarios for how the problem could have occurred. One being that there could be a flaw within the metal foil used for the electrodes, while the second possibility comes from the company’s manufacturing process, which changed their practices in late 2004 that could have led to the decreased quality of the produced battery cells.
This is not the first time Sony has had to recall battery packs. In fact, just last month, the company recalled more than 440,000 batteries in their Vaio laptops, and back in 2006, the company recalled some 10 million battery packs which set Sony back nearly $500M.
As the markets rallied into Thursday close, shares of Sony added $1.52 to close the session at $22.65. However, Friday’s session, on the heels of the recall, saw shares of Sony slip in early morning trading, giving up $0.10 at $22.55 per share.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
According to the U.S. Consumer Product Safety Commission, Sony has complied with the commission in retrieving certain laptops that contain the Sony made lithium-ion cell battery packs that were used by Hewlett-Packard Co. (HPQ), Dell Inc. (DELL), and Toshiba Corporation. For more information about Sony’s battery recall, check out Google
The recall will affect some 35,000 computers within the U.S., as 32,000 of them are Hewlett-Packard laptops including the Pavillion and Compaq brands, while 3,000 are from Toshiba, which include the Satellite and Tecra brands, along with nearly 200 being Dell computers. The remainders of the recalls come from computers sold outside the United States. Thus far, there have been 19 reports of Sony’s battery packs overheating, while 17 of those complaints involving the batteries actually caught fire.
Sony has commented on the issue and has cited two different scenarios for how the problem could have occurred. One being that there could be a flaw within the metal foil used for the electrodes, while the second possibility comes from the company’s manufacturing process, which changed their practices in late 2004 that could have led to the decreased quality of the produced battery cells.
This is not the first time Sony has had to recall battery packs. In fact, just last month, the company recalled more than 440,000 batteries in their Vaio laptops, and back in 2006, the company recalled some 10 million battery packs which set Sony back nearly $500M.
As the markets rallied into Thursday close, shares of Sony added $1.52 to close the session at $22.65. However, Friday’s session, on the heels of the recall, saw shares of Sony slip in early morning trading, giving up $0.10 at $22.55 per share.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Thursday, October 30, 2008
BetterTrades looks at American Express Job Cuts - October 30, 2008
Announced earlier today, the country’s fourth-largest credit card company, American Express Co. (AXP), confirmed reports that they will eliminate some 7,000 jobs by the end of the 4th quarter. In an attempt to save nearly $2B next year, AmEx is planning to reduce company expenses and investments, as the company has taken huge hits regarding bad business decisions. The layoffs will equate to nearly 10% of the company’s workforce and will cost AmEx between $370M and $440M in relation to severance packages and other related charges.
Additional actions taken by American Express include the postponement of salary increases for upper management for all of 2009, along with the suspension of new hires for positions unfilled. Moreover, the company also stated that they plan to reduce their expenditures for investments related to their research in technology, marketing and business development. These reductions will amount to potential savings of $700M and $1B individually.
Due to the credit crunch, American Express has done something they never would normally allow, permitting more customers to carry a higher balance on their credit cards. Most times than not, AmEx would only allow customers with an excellent credit rating to carry balances.
On top of feeling the affects of the financial crisis, the housing debacle has also taken its toll on the company as well. During the 3rd quarter, which just concluded, American Express set aside $1.4B to safeguard against potential losses, up more than 50% from last year’s reserves of $905M. Resulting from an increase in reserves, when AmEx reported quarterly earnings, net income declined nearly 35% from the previous year’s results.
American Express is not the only company to feel the crunch of the financial crisis. Just recently, Goldman Sachs cut 3,200 jobs, while UBS plans to cut nearly 9,000 jobs, and Morgan Stanley has already decreased their workforce by 4,800 jobs. For more information on various company’s job cuts, look at Yahoo! News
With the markets posting modest gains today, and the impact of the key interest rate cut not yet taking effect, shares of American Express were up in mid-day trading. Trading in a 52-week range between $20 and $62 a share, the company’s current price, $25.65, remains relatively low as AmEx’s fundamentals continue to show strength. For well-educated investors, this could be an opportune time to get in on bargain buys for the company better known for their motto “Don’t leave home without it.”
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Additional actions taken by American Express include the postponement of salary increases for upper management for all of 2009, along with the suspension of new hires for positions unfilled. Moreover, the company also stated that they plan to reduce their expenditures for investments related to their research in technology, marketing and business development. These reductions will amount to potential savings of $700M and $1B individually.
Due to the credit crunch, American Express has done something they never would normally allow, permitting more customers to carry a higher balance on their credit cards. Most times than not, AmEx would only allow customers with an excellent credit rating to carry balances.
On top of feeling the affects of the financial crisis, the housing debacle has also taken its toll on the company as well. During the 3rd quarter, which just concluded, American Express set aside $1.4B to safeguard against potential losses, up more than 50% from last year’s reserves of $905M. Resulting from an increase in reserves, when AmEx reported quarterly earnings, net income declined nearly 35% from the previous year’s results.
American Express is not the only company to feel the crunch of the financial crisis. Just recently, Goldman Sachs cut 3,200 jobs, while UBS plans to cut nearly 9,000 jobs, and Morgan Stanley has already decreased their workforce by 4,800 jobs. For more information on various company’s job cuts, look at Yahoo! News
With the markets posting modest gains today, and the impact of the key interest rate cut not yet taking effect, shares of American Express were up in mid-day trading. Trading in a 52-week range between $20 and $62 a share, the company’s current price, $25.65, remains relatively low as AmEx’s fundamentals continue to show strength. For well-educated investors, this could be an opportune time to get in on bargain buys for the company better known for their motto “Don’t leave home without it.”
For more information on the stock and options markets check out the wealth of information at BetterTrades.
BetterTrades looks at "Black Friday" - October 30, 2008
Referred to as “Black Friday,” the day after Thanksgiving Day is the busiest retail day of the year as shoppers flock to stores to get the best deals leading into the holiday shopping season. Earlier today, numerous ads, set to release on Black Friday, made it to the internet as retailers try to lure buyers into their stores earlier than usual, due in large part to a weakened economy and the lack of consumer spending.
Black Friday is November 28th and with massive deals offered retailers rely on bargain hunters to fill their stores as this day accounts for nearly half of a stores’ annual sales and profits. Retailers know that with the economy in the state that it is, well-above average deals are needed in order to entice cash-strapped consumers.
BlackFriday.info, is an online source that provides customers with direct information pertaining to a company’s ads set for the start of the shopping season. On their site today, Sears posted deals that are set to discount high-end merchandise such as flat screens, washers, dryers, and clothing, which could run 50% to 60% below the retail price.
As more and more Black Friday ads are leaked to the public, shoppers are waiting to hear what the other major retailers are proposing to get them into their stores. Within the next few weeks, the likes of Best Buy, Circuit City, Wal-Mart and Target all plan to reveal which items will be have the greatest discounts.
With consumer spending accounting for nearly two-thirds of the nation’s economic activity, shoppers are the key to the success of the holiday season. If retailers cannot get those customers in and spending money, stores will definitely be feeling the affects when it comes time to report earnings next year. Therefore, for those of you looking for huge bargains at your favorite stores, check online for additional information and make plans to get up early on Black Friday to get the best available deals.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Black Friday is November 28th and with massive deals offered retailers rely on bargain hunters to fill their stores as this day accounts for nearly half of a stores’ annual sales and profits. Retailers know that with the economy in the state that it is, well-above average deals are needed in order to entice cash-strapped consumers.
BlackFriday.info, is an online source that provides customers with direct information pertaining to a company’s ads set for the start of the shopping season. On their site today, Sears posted deals that are set to discount high-end merchandise such as flat screens, washers, dryers, and clothing, which could run 50% to 60% below the retail price.
As more and more Black Friday ads are leaked to the public, shoppers are waiting to hear what the other major retailers are proposing to get them into their stores. Within the next few weeks, the likes of Best Buy, Circuit City, Wal-Mart and Target all plan to reveal which items will be have the greatest discounts.
With consumer spending accounting for nearly two-thirds of the nation’s economic activity, shoppers are the key to the success of the holiday season. If retailers cannot get those customers in and spending money, stores will definitely be feeling the affects when it comes time to report earnings next year. Therefore, for those of you looking for huge bargains at your favorite stores, check online for additional information and make plans to get up early on Black Friday to get the best available deals.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Wednesday, October 29, 2008
BetterTrades looks at Consumer Confidence - October 29, 2008
Just when you think the worst has happened, the government releases information pertaining to the economy that just makes you shake your head in disbelief. In a monthly release, the Conference Board confirmed that Consumer Confidence for October plummeted to its lowest reading ever on record, as many remain concerned about their current employment status along with what the future brings.
With workers being laid-off and the markets falling hard at the start of the month, the report revealed that the confidence index dropped to 38.0 from September’s reading of 61.4. Economists were looking for the reading to come in at 52.0, while at this time last year, the index reading stood at 95.2. For more information about this economic report, check out Yahoo! Finance
Yesterday’s reading comes in as the lowest ever since the index was introduced in 1967, and marks the third largest decline in history. The largest decline came in the October-December 1973 period, when the index dropped nearly 37 points. The second steepest came in the December 1969 - February 1970 time frame when the index plunged 24.3 points.
Not to be left out, the report also revealed that the consumer’s sentiment of their present condition declined to 41.9, down from September’s reading of 61.1, and its lowest level since December 1992. This time last year, the reading stood at 118.0. As for inflation expectations, consumers have become ever-increasingly concerned with the problems inflation brings, as October’s reading came in at 6.9%, up from September’s reading of 6.2%, and is the highest it has been since July.
Directly tied to confidence is Consumer Spending. Accounting for two-third of the country’s economic activity, the consumer spending report is due to be released this coming Friday, and analysts are certain that the number will fall below market expectations. The current projections stand at a decline of 0.2% for September, while August’s reading was flat.
Also due out this week is the preliminary reading for the nation’s Gross Domestic Product, GDP, for the 3rd quarter. Economists are anticipating that Thursday’s reading will show a 0.5% contraction in the health of the economy. Coming off the previous quarter’s expansion of 2.8%, the upcoming reading should post its biggest decline since 2001, when the country was once again in the midst of a recession. Furthermore, the forecast for the 4th quarter is even more dismal, as economists have inclinations that economic growth could slip to an 18-year low.
As so many economic indicators are linked, in some fashion or another, to each other, the lack of confidence and spending in turn affects retailers and business owners alike as sales dwindle with the lack of discretionary funds. With countless people losing their jobs and homes as well, more and more Americans are losing their individual wealth.
In an announcement due out sometime today, the Fed is poised to make another cut in the interest rate in order to stimulate spending from both the consumer and businesses alike. The current rate stands at 1.50%, as many economists predict that the rate cut will be, on average, 0.50%, while other are anticipating cuts of either 0.75% or 0.25%. No matter which percentage is taken into effect, the Fed knows that any cut made, will more than likely not show any noticeable effect until six months later.
With numerous financial and economic releases revealed on a weekly basis, it goes without saying just how much one or more positive, or negative, reports can influence a markets’ direction. On top of that, these reports weigh heavily on the average American trying to trudge through the massive amounts of news regarding the health of the economy and nation as a whole. The biggest concern at this moment is the uncertainty of how long, and to what extent, this so-called “recession” will last.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
With workers being laid-off and the markets falling hard at the start of the month, the report revealed that the confidence index dropped to 38.0 from September’s reading of 61.4. Economists were looking for the reading to come in at 52.0, while at this time last year, the index reading stood at 95.2. For more information about this economic report, check out Yahoo! Finance
Yesterday’s reading comes in as the lowest ever since the index was introduced in 1967, and marks the third largest decline in history. The largest decline came in the October-December 1973 period, when the index dropped nearly 37 points. The second steepest came in the December 1969 - February 1970 time frame when the index plunged 24.3 points.
Not to be left out, the report also revealed that the consumer’s sentiment of their present condition declined to 41.9, down from September’s reading of 61.1, and its lowest level since December 1992. This time last year, the reading stood at 118.0. As for inflation expectations, consumers have become ever-increasingly concerned with the problems inflation brings, as October’s reading came in at 6.9%, up from September’s reading of 6.2%, and is the highest it has been since July.
Directly tied to confidence is Consumer Spending. Accounting for two-third of the country’s economic activity, the consumer spending report is due to be released this coming Friday, and analysts are certain that the number will fall below market expectations. The current projections stand at a decline of 0.2% for September, while August’s reading was flat.
Also due out this week is the preliminary reading for the nation’s Gross Domestic Product, GDP, for the 3rd quarter. Economists are anticipating that Thursday’s reading will show a 0.5% contraction in the health of the economy. Coming off the previous quarter’s expansion of 2.8%, the upcoming reading should post its biggest decline since 2001, when the country was once again in the midst of a recession. Furthermore, the forecast for the 4th quarter is even more dismal, as economists have inclinations that economic growth could slip to an 18-year low.
As so many economic indicators are linked, in some fashion or another, to each other, the lack of confidence and spending in turn affects retailers and business owners alike as sales dwindle with the lack of discretionary funds. With countless people losing their jobs and homes as well, more and more Americans are losing their individual wealth.
In an announcement due out sometime today, the Fed is poised to make another cut in the interest rate in order to stimulate spending from both the consumer and businesses alike. The current rate stands at 1.50%, as many economists predict that the rate cut will be, on average, 0.50%, while other are anticipating cuts of either 0.75% or 0.25%. No matter which percentage is taken into effect, the Fed knows that any cut made, will more than likely not show any noticeable effect until six months later.
With numerous financial and economic releases revealed on a weekly basis, it goes without saying just how much one or more positive, or negative, reports can influence a markets’ direction. On top of that, these reports weigh heavily on the average American trying to trudge through the massive amounts of news regarding the health of the economy and nation as a whole. The biggest concern at this moment is the uncertainty of how long, and to what extent, this so-called “recession” will last.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Tuesday, October 28, 2008
Tuesday's Trading Tuturial from BetterTrades - October 28, 2008
With the economy in obvious peril, more and more people are looking for answers to get through these tough times. Some have taken on additional jobs, while others have started looking towards trading the stock market to make some additional cash. There are many types of trading vehicles, and one of the most overlooked is options trading.
When trading options you use an option “contract”. An option contract gives you the right, but not the obligation, to buy (for a call option) or sell (for a put option) a specific amount of a given stock, commodity, currency, index, or debt, at a specified price (referred to as the strike price) during a specified time. For stock options, the contract typically represents 100 shares. Each option transaction has a buyer, called the holder, and a seller, known as the writer.
For the buyer of a call option, the upside is unlimited. The option typically gains value when the underlying security gains value. It does not gain dollar for dollar however, and that topic will be addressed in a future posting. The potential loss for the buyer is limited to the price paid to acquire the option. If an option is not exercised or sold prior to its expiration date, then no shares change hands and the money spent to purchase the option is lost.
For the writer, or seller, of an option contract the loss is potentially unlimited unless the contract is “covered”. When an option contract is covered, it means that the writer already owns the security underlying the option and can fulfill their obligation should the contract be exercised. Historically options were frequently used as either leverage or protection, but more and more they have been used as trading vehicles.
Options allow the holder to control a small portion of the stock in a limited capacity for a fraction of what the shares would normally cost. For instance, if one was to buy one options contract, which expires on every third Friday of the month, in IBM, for those few weeks the buyer would technically control 100 shares of the company’s stock. As for the cost, more than likely, those 100 shares would cost above $80 per share, totaling $8000, whereas in an options contract, the buyer could pay $10 per contract, which is multiplied by 100, and could expect to pay $1000.
Consequently, with options, an investor is poised to spend less money to obtain the same amount of shares, albeit for a shorter period of time, than one would be if they were to purchase individual shares of the company. Check back in next week for more in-depth information pertaining to the pros and cons of buying options vs. stocks.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
When trading options you use an option “contract”. An option contract gives you the right, but not the obligation, to buy (for a call option) or sell (for a put option) a specific amount of a given stock, commodity, currency, index, or debt, at a specified price (referred to as the strike price) during a specified time. For stock options, the contract typically represents 100 shares. Each option transaction has a buyer, called the holder, and a seller, known as the writer.
For the buyer of a call option, the upside is unlimited. The option typically gains value when the underlying security gains value. It does not gain dollar for dollar however, and that topic will be addressed in a future posting. The potential loss for the buyer is limited to the price paid to acquire the option. If an option is not exercised or sold prior to its expiration date, then no shares change hands and the money spent to purchase the option is lost.
For the writer, or seller, of an option contract the loss is potentially unlimited unless the contract is “covered”. When an option contract is covered, it means that the writer already owns the security underlying the option and can fulfill their obligation should the contract be exercised. Historically options were frequently used as either leverage or protection, but more and more they have been used as trading vehicles.
Options allow the holder to control a small portion of the stock in a limited capacity for a fraction of what the shares would normally cost. For instance, if one was to buy one options contract, which expires on every third Friday of the month, in IBM, for those few weeks the buyer would technically control 100 shares of the company’s stock. As for the cost, more than likely, those 100 shares would cost above $80 per share, totaling $8000, whereas in an options contract, the buyer could pay $10 per contract, which is multiplied by 100, and could expect to pay $1000.
Consequently, with options, an investor is poised to spend less money to obtain the same amount of shares, albeit for a shorter period of time, than one would be if they were to purchase individual shares of the company. Check back in next week for more in-depth information pertaining to the pros and cons of buying options vs. stocks.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Monday, October 27, 2008
BetterTrades looks at Global Markets - October 27, 2008
After last weeks’ trading, the Dow Jones, the S&P 500 and the NASDAQ all lost substantial amounts of value due largely to the country’s financial standing. The by-product of those results translated into the international markets taking huge losses as well. Case in point, earlier today, Japan’s Nikkei 225 Index closed down more than 6% on the day, giving back 486 points. This marked the lowest level in the Nikkei since October 1982.
In order to offset these colossal losses, Japan’s finance minister, Shoichi Nakagawa confirmed that the country is closely watching currency exchange rates. An increase in massive moves within the currency trade could potentially devastate their financial markets and the economy as a whole. Not only has the finance minister cited concerns with the country’s currency, but also with massive amounts of short-selling and that Nakagawa will institute tighter controls on these trading practices.
In a combined statement from the G7, which are the world’s seven richest nations, representatives cited that a 12% increase in the value of the yen against the Dollar could potentially weaken exports from the world’s second largest economy as Japan looks head on into a possible recession.
With the yen trading at 93.08 against the U.S. Dollar, the major banking stocks in Japan, Mitsubishi UFJ, Mizuho Financial and Sumitomo Mitsui Financial dropped 14.6%, 14.8% and 11.5% respectfully. Outside of the country’s banking industry, Japan’s major companies were hit hard today as well, as Sony (SNE) lost 7%, Toyota (TM) fell 8.1%, and Honda (HMC) lost nearly 9%.
There appears to be two contributing factors to the yen’s ascent. One being, like the U.S. Dollar, many investors tend to buy the currency in times of uncertainty, and secondly, the yen has been strengthened by what is known as “carry trade”. This practice is when traders borrow the yen to back investments of higher-yielding currencies, and when the purchased currencies weaken, investors are forced to buy back the yen at a higher price, thus increasing its value.
Beside the troubles in Japan, other stock markets throughout the world were pummeled today, as the Australian markets closed at a new 4-year low losing 1.56%, while China’s Shanghai Composite lost more than 6%, and Hong Kong’s Hang Seng Index lost nearly 13% by its close. Two other Asian markets, Taiwan’s and Indonesia’s, lost 4.65% and 6.3% independently.
One of the few international markets to post a positive day was the South Korean Composite Stock Price Index, which closed higher by 7 points at 946.65. After posting four consecutive down days the Korean market dipped below the 900 mark for the first time in more than 3 years during today’s trade before closing up.
The mood in the world’s financial markets continue to be littered with uncertainty, as many still ponder the overall impact, length and scale of the economic downturn, domestically and globally. Not only are investors looking for answers within the American markets, but they are also looking for steadiness within the global markets as well.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
In order to offset these colossal losses, Japan’s finance minister, Shoichi Nakagawa confirmed that the country is closely watching currency exchange rates. An increase in massive moves within the currency trade could potentially devastate their financial markets and the economy as a whole. Not only has the finance minister cited concerns with the country’s currency, but also with massive amounts of short-selling and that Nakagawa will institute tighter controls on these trading practices.
In a combined statement from the G7, which are the world’s seven richest nations, representatives cited that a 12% increase in the value of the yen against the Dollar could potentially weaken exports from the world’s second largest economy as Japan looks head on into a possible recession.
With the yen trading at 93.08 against the U.S. Dollar, the major banking stocks in Japan, Mitsubishi UFJ, Mizuho Financial and Sumitomo Mitsui Financial dropped 14.6%, 14.8% and 11.5% respectfully. Outside of the country’s banking industry, Japan’s major companies were hit hard today as well, as Sony (SNE) lost 7%, Toyota (TM) fell 8.1%, and Honda (HMC) lost nearly 9%.
There appears to be two contributing factors to the yen’s ascent. One being, like the U.S. Dollar, many investors tend to buy the currency in times of uncertainty, and secondly, the yen has been strengthened by what is known as “carry trade”. This practice is when traders borrow the yen to back investments of higher-yielding currencies, and when the purchased currencies weaken, investors are forced to buy back the yen at a higher price, thus increasing its value.
Beside the troubles in Japan, other stock markets throughout the world were pummeled today, as the Australian markets closed at a new 4-year low losing 1.56%, while China’s Shanghai Composite lost more than 6%, and Hong Kong’s Hang Seng Index lost nearly 13% by its close. Two other Asian markets, Taiwan’s and Indonesia’s, lost 4.65% and 6.3% independently.
One of the few international markets to post a positive day was the South Korean Composite Stock Price Index, which closed higher by 7 points at 946.65. After posting four consecutive down days the Korean market dipped below the 900 mark for the first time in more than 3 years during today’s trade before closing up.
The mood in the world’s financial markets continue to be littered with uncertainty, as many still ponder the overall impact, length and scale of the economic downturn, domestically and globally. Not only are investors looking for answers within the American markets, but they are also looking for steadiness within the global markets as well.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Friday, October 24, 2008
BetterTrades takes a look at "Circuit Breakers" - October 24, 2008
Today marks the inauspicious anniversary of the day known as “Black Thursday”, which triggered the great stock market crash of 1929. There have been a number of protections implemented today to help curtail that event from happening again, but fears abounded this morning before the markets opened. The fear was driven by halted trading in the Dow futures due to a massive drop in the index. The huge declines triggered what is known as a “circuit breaker” which stops trading when a particular percentage drop (or rise) is reached within the trading day.
With these drastic measures in place, it prevents panic selling from occurring, which hasn’t happened since 1997. Enacted in 1989, these failsafe measures restrict all brokerage houses from their automated trading programs, which in the blink of an eye, can place enormous amounts of buy/sell orders, which could potentially devastate the markets. The pre-market triggers were activated when futures trading declined the maximum 60 points on the S&P and the 85-point mark was reached on the NASDAQ. The Dow’s threshold came when the futures dropped its limit of 550 points. At that time, selling could not take place until regular trading resumed at 9:30am EDT, but buyers could still get in to purchase stocks and potentially push the markets higher.
For trading to stop during regular hours, the Dow Jones would have to plummet 10%, 20%, and 30% of the overall value of the index, based on the where it stood at the beginning of the current quarter. At the beginning of the 4th quarter, the Dow was over 11,000, thus taking a percentage of that you can calculate what it would take to shut trading down. Before 1pm, in the trading day, if the Dow were to drop 1,100 points, trading would stop for an hour. A 2,200-point drop would halt it for 2 hours, and 3,350-point drop would close it for the day. If the declines came between 1pm and 2pm, the only difference from above would be that the 2,200-point decline would trigger the markets to close for only an hour, not two. Between 2pm and 2:30pm, a 1,100-point decline would close trading for 30 minutes, while the 2,200- and the 3,350-point drops would cause trading to stop for the day. After 2:30, the 10% drop would have no affect on trading, while the 20% and 30% declines would close trading for the remainder of the day.
Driving the dread of the markets today was the global panic as well. Overseas, Japan’s Nikkei 225 plunged nearly 10% by their close, hitting a 5½-year low, as Sony (SNE) revised earnings downward for the second time this year. Across the pond, the U.K.’s economic productivity, GDP, decreased 0.5% for their 3rd quarter, marking the first contraction in more than 16 years, along with the Euro continuing to recede and has lost almost 20% of its value against the Dollar in the past month.
Although the Crash of ’29 occurred nearly 80 years ago, there still remain subconscious fears of that day which propelled the U.S. into the Great Depression. As many may not know, the Depression and the Crash of ’29 were two entirely separate events. The failure of the stock markets was attributed to financial fears, while the Depression was primarily an economic failure. The Crash of 1929 began on this day in history, while the Great Depression didn’t start until a year later. In 1929, the Dow plummeted 39% between Oct. 23rd and Nov. 13th, but replenished nearly three-quarters of those losses by March of 1930. As the economy began to falter, that’s when the country slipped into a depression and would last until July of 1932. If not for World War II, when in 1940, the government increased military spending and capital was infused into the economy. If not for those extenuating circumstances, who knows how long the depression would have lasted.
The greatest benefit from the Great Depression was the implementation of the Glass-Steagall Act of 1933, which enacted the Federal Deposit Insurance Corp. (FDIC), which later branched out to form the Securities and Exchange Commission (SEC). With the formation of the SEC, the government distinguished separate functions between investment banks and commercial banks. The Glass- Steagall Act remained active until its repeal in 1999, when the government reinstated banks to perform both activities under one establishment.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
With these drastic measures in place, it prevents panic selling from occurring, which hasn’t happened since 1997. Enacted in 1989, these failsafe measures restrict all brokerage houses from their automated trading programs, which in the blink of an eye, can place enormous amounts of buy/sell orders, which could potentially devastate the markets. The pre-market triggers were activated when futures trading declined the maximum 60 points on the S&P and the 85-point mark was reached on the NASDAQ. The Dow’s threshold came when the futures dropped its limit of 550 points. At that time, selling could not take place until regular trading resumed at 9:30am EDT, but buyers could still get in to purchase stocks and potentially push the markets higher.
For trading to stop during regular hours, the Dow Jones would have to plummet 10%, 20%, and 30% of the overall value of the index, based on the where it stood at the beginning of the current quarter. At the beginning of the 4th quarter, the Dow was over 11,000, thus taking a percentage of that you can calculate what it would take to shut trading down. Before 1pm, in the trading day, if the Dow were to drop 1,100 points, trading would stop for an hour. A 2,200-point drop would halt it for 2 hours, and 3,350-point drop would close it for the day. If the declines came between 1pm and 2pm, the only difference from above would be that the 2,200-point decline would trigger the markets to close for only an hour, not two. Between 2pm and 2:30pm, a 1,100-point decline would close trading for 30 minutes, while the 2,200- and the 3,350-point drops would cause trading to stop for the day. After 2:30, the 10% drop would have no affect on trading, while the 20% and 30% declines would close trading for the remainder of the day.
Driving the dread of the markets today was the global panic as well. Overseas, Japan’s Nikkei 225 plunged nearly 10% by their close, hitting a 5½-year low, as Sony (SNE) revised earnings downward for the second time this year. Across the pond, the U.K.’s economic productivity, GDP, decreased 0.5% for their 3rd quarter, marking the first contraction in more than 16 years, along with the Euro continuing to recede and has lost almost 20% of its value against the Dollar in the past month.
Although the Crash of ’29 occurred nearly 80 years ago, there still remain subconscious fears of that day which propelled the U.S. into the Great Depression. As many may not know, the Depression and the Crash of ’29 were two entirely separate events. The failure of the stock markets was attributed to financial fears, while the Depression was primarily an economic failure. The Crash of 1929 began on this day in history, while the Great Depression didn’t start until a year later. In 1929, the Dow plummeted 39% between Oct. 23rd and Nov. 13th, but replenished nearly three-quarters of those losses by March of 1930. As the economy began to falter, that’s when the country slipped into a depression and would last until July of 1932. If not for World War II, when in 1940, the government increased military spending and capital was infused into the economy. If not for those extenuating circumstances, who knows how long the depression would have lasted.
The greatest benefit from the Great Depression was the implementation of the Glass-Steagall Act of 1933, which enacted the Federal Deposit Insurance Corp. (FDIC), which later branched out to form the Securities and Exchange Commission (SEC). With the formation of the SEC, the government distinguished separate functions between investment banks and commercial banks. The Glass- Steagall Act remained active until its repeal in 1999, when the government reinstated banks to perform both activities under one establishment.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Thursday, October 23, 2008
BetterTrades looks at America's Foreclosure Crisis - October 23, 2008
With the housing sector still in turmoil, data released today showed that foreclosures during the 3rd quarter increased by more than 70% over last year’s figures, as more than 760,000 homeowners received at least one foreclosure notice between July and September. RealtyTrac, which released today’s findings, believes that by the end of the year, the number of foreclosures will eclipse the one-million mark. Just like the 2nd quarter, California, Nevada, Arizona, Ohio, Florida and Michigan lead the nation in foreclosures, accounting for more than 60% of all filings with California amassing 25% of all U.S. filings.
Within those figures, one in every 475 households received a foreclosure notice in September, as Nevada led the way with an 11% increase last month, which equates to one in every 82 homes having received notices. Florida was next with one in every 178, and California was third with one in every 189 homes owned. Not surprisingly, California was the forerunner in total number of properties in foreclosure with nearly 211,000 units, a 122% increase from this time last year.
In addition to the surge in notices handed out, the foreclosure epidemic has additional ill effects on the housing market as well. Property values are the innocent casualty by the influx of foreclosures as home prices have decreased nearly 6% from last year’s average price. With many homes throughout countless neighborhoods beginning to be auctioned, and the economy the way it is, if home prices continue to purge themselves, homeowners will have significantly less net worth and will be unable to borrow against their equity.
In an effort to curtail the massive foreclosure rates, the federal government is in the process of putting together a $40B proposal as the FDIC and the U.S. Treasury Department are working in conjunction with one another to give banks a monetary incentive in order to change defaulted loans into more manageable mortgages. Noted within the fine print, the government would be apart of any future losses the banks would incur in regards to newly expedited loans. Prior to today’s news, the Federal Housing Administration had already enacted a plan to swap mortgages for loans, but the overall scope of the deal would only affect some 400,000 households.
If there is an unseen benefit to the massive foreclosure scene of late, it is that buying these properties at auction can become very lucrative for those with extra capital to invest. With the markets continuing their dismal trek downwards and interest rates at all-time lows, now is a good time to get in and snatch up any properties that still have perceived value. In order to get the best buys, an investor must take precautionary steps in order to benefit from their potential purchase. These steps should include searching public records to look for any liens on the property along with neighboring values and selling prices of those homes nearest to you.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Within those figures, one in every 475 households received a foreclosure notice in September, as Nevada led the way with an 11% increase last month, which equates to one in every 82 homes having received notices. Florida was next with one in every 178, and California was third with one in every 189 homes owned. Not surprisingly, California was the forerunner in total number of properties in foreclosure with nearly 211,000 units, a 122% increase from this time last year.
In addition to the surge in notices handed out, the foreclosure epidemic has additional ill effects on the housing market as well. Property values are the innocent casualty by the influx of foreclosures as home prices have decreased nearly 6% from last year’s average price. With many homes throughout countless neighborhoods beginning to be auctioned, and the economy the way it is, if home prices continue to purge themselves, homeowners will have significantly less net worth and will be unable to borrow against their equity.
In an effort to curtail the massive foreclosure rates, the federal government is in the process of putting together a $40B proposal as the FDIC and the U.S. Treasury Department are working in conjunction with one another to give banks a monetary incentive in order to change defaulted loans into more manageable mortgages. Noted within the fine print, the government would be apart of any future losses the banks would incur in regards to newly expedited loans. Prior to today’s news, the Federal Housing Administration had already enacted a plan to swap mortgages for loans, but the overall scope of the deal would only affect some 400,000 households.
If there is an unseen benefit to the massive foreclosure scene of late, it is that buying these properties at auction can become very lucrative for those with extra capital to invest. With the markets continuing their dismal trek downwards and interest rates at all-time lows, now is a good time to get in and snatch up any properties that still have perceived value. In order to get the best buys, an investor must take precautionary steps in order to benefit from their potential purchase. These steps should include searching public records to look for any liens on the property along with neighboring values and selling prices of those homes nearest to you.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Wednesday, October 22, 2008
BetterTrades looks at Allegheny Technologies Inc. - October 22, 2008
Allegheny Technologies Inc. (ATI), one of the nation’s leading metals processors, affirmed early Wednesday morning that the company’s 3Q performance dropped dramatically due to lower demand and a strike at Boeing’s aircraft plant. Allegheny is one of the largest and most diversified producers of specialty materials in the world. The company's talented people use innovative technologies to offer growing global markets a wide range of specialty materials including stainless steel, nickel-based and cobalt-based alloys and super-alloys, titanium and titanium alloys, specialty steel alloys, zirconium and related alloys, and tungsten-based specialty materials. The goal is to be the low cost, high quality supplier to global markets.
In their release, ATI reported net income of $144.1M, or $1.45 per share, compared to last year’s tally of $193.9M, or $1.88 per share, nearly a 26% decrease from last year’s performance. Despite the drop in earnings, sales increased over last year’s count, climbing from $1.33B to $1.39B this year. Analysts, on average, were anticipating that ATI post earnings of $1.38 per share on $1.33B in overall revenues. Looking ahead, the company is expecting 4Q earnings per share of $1.05 and full-year EPS of $5.56. As the stock has traded drastically over the past year, shares hit a high of $104.80 last October, and hit its low of $18.42 earlier this month. Today’s trading pushed the stock closer to its yearly low, as shares of ATI lost $1.92, or 7.8%, to conclude the session at $22.81 per share.
Recently, ATI has benefited from the ongoing transformation within the company, and that their product, market, and geographic diversifications have been changing as well. In addition, the company’s enterprise risk management program is reducing the impact of volatile input costs on their earnings results. The firm’s transformation and diversification strategies are designed to position ATI for growth and improve earnings, as well as providing stability of earnings and cash flows throughout market cycles.
Just a few weeks ago, the company also unveiled a new steel armor designed to protect military vehicles, ships and aircraft from armor-piercing rounds and explosions. The company stated that the plate steel, distinguished by its flatness, consistent hardness and other properties, is the first of its kind to be developed in the U.S. since the Vietnam War. The introduction of the ATI 500-MIL armor steel comes in the midst of strong demand from the defense industry, and it has been designed for a range of applications, including the protection of medium- and heavyweight tactical vehicles, armored patrol cars, and above-deck structures on ships and aircraft.
However, there is a positive swing for the company. With the recent drop in steel prices, this can in no way be seen to have a long lasting affect on the company, in that there is increasing opportunities within the scrap and raw material markets. This would in turn result in more advances in the commodities pricing throughout the remainder of the year and into much of next year, garnering more gains for the companies within this industry.
Most of the commentary of late from analysts has been generally cautious in tone. The predominant rating on Allegheny on the Street is a Moderate Buy or Hold, while in early June, a JPMorgan analyst downgraded Allegheny to Neutral from Outperform, as it was believed that estimates were too high on the Street and that sentiment was overly positive. Additionally, other analysts have recently reduced their 2008 outlook for Allegheny to reflect some additional weakening of spot titanium pricing, as well as delays in achieving base price increases in stainless steel products.
Since the analysts’ rankings, shares of Allegheny have slipped nearly 60% to its closing price as of today. Trading as low as $18, this stock price has bounced 20% over the past several trading sessions. However, ATI is still experiencing a record year in sales, due to high demand in specialty metals, even if it has not met the target expectations set by market analysts. In fact, titanium metal is in such high demand that Allegheny has a production backlog worth over $1B. Even if this growth rate is lower than a year ago, the absolute measurement of orders is through the roof for the company.
If investors are willing to hang onto this stock, there is a strong possibility that they will see this stock come back in price, and possibly then some. However, with any cyclical stock, investors need to be aware of the risk of trading this stock, and if things line up as well as they could, we could see ATI back into the $60 to $100 range, the stock’s trading range of a year ago.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
In their release, ATI reported net income of $144.1M, or $1.45 per share, compared to last year’s tally of $193.9M, or $1.88 per share, nearly a 26% decrease from last year’s performance. Despite the drop in earnings, sales increased over last year’s count, climbing from $1.33B to $1.39B this year. Analysts, on average, were anticipating that ATI post earnings of $1.38 per share on $1.33B in overall revenues. Looking ahead, the company is expecting 4Q earnings per share of $1.05 and full-year EPS of $5.56. As the stock has traded drastically over the past year, shares hit a high of $104.80 last October, and hit its low of $18.42 earlier this month. Today’s trading pushed the stock closer to its yearly low, as shares of ATI lost $1.92, or 7.8%, to conclude the session at $22.81 per share.
Recently, ATI has benefited from the ongoing transformation within the company, and that their product, market, and geographic diversifications have been changing as well. In addition, the company’s enterprise risk management program is reducing the impact of volatile input costs on their earnings results. The firm’s transformation and diversification strategies are designed to position ATI for growth and improve earnings, as well as providing stability of earnings and cash flows throughout market cycles.
Just a few weeks ago, the company also unveiled a new steel armor designed to protect military vehicles, ships and aircraft from armor-piercing rounds and explosions. The company stated that the plate steel, distinguished by its flatness, consistent hardness and other properties, is the first of its kind to be developed in the U.S. since the Vietnam War. The introduction of the ATI 500-MIL armor steel comes in the midst of strong demand from the defense industry, and it has been designed for a range of applications, including the protection of medium- and heavyweight tactical vehicles, armored patrol cars, and above-deck structures on ships and aircraft.
However, there is a positive swing for the company. With the recent drop in steel prices, this can in no way be seen to have a long lasting affect on the company, in that there is increasing opportunities within the scrap and raw material markets. This would in turn result in more advances in the commodities pricing throughout the remainder of the year and into much of next year, garnering more gains for the companies within this industry.
Most of the commentary of late from analysts has been generally cautious in tone. The predominant rating on Allegheny on the Street is a Moderate Buy or Hold, while in early June, a JPMorgan analyst downgraded Allegheny to Neutral from Outperform, as it was believed that estimates were too high on the Street and that sentiment was overly positive. Additionally, other analysts have recently reduced their 2008 outlook for Allegheny to reflect some additional weakening of spot titanium pricing, as well as delays in achieving base price increases in stainless steel products.
Since the analysts’ rankings, shares of Allegheny have slipped nearly 60% to its closing price as of today. Trading as low as $18, this stock price has bounced 20% over the past several trading sessions. However, ATI is still experiencing a record year in sales, due to high demand in specialty metals, even if it has not met the target expectations set by market analysts. In fact, titanium metal is in such high demand that Allegheny has a production backlog worth over $1B. Even if this growth rate is lower than a year ago, the absolute measurement of orders is through the roof for the company.
If investors are willing to hang onto this stock, there is a strong possibility that they will see this stock come back in price, and possibly then some. However, with any cyclical stock, investors need to be aware of the risk of trading this stock, and if things line up as well as they could, we could see ATI back into the $60 to $100 range, the stock’s trading range of a year ago.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Tuesday, October 21, 2008
BetterTrades looks at Arbitron Inc. - October 21, 2008
In a recent announcement, Arbitron Inc. (ARB) stated that for the company’s 3Q, results came in slightly lower than last year’s performance as the cost for the company’s portable people meter service increased. A portable people meter (PPM) is a device that was developed by the company that measures how many people are listening, or at least exposed, to individual radio and television stations. The device is used much like a pager and detects specialized audio tones within those stations and then records them and takes in data as to which station is being listened.
Arbitron Inc. is an international media and marketing research firm serving radio broadcasters, cable companies, advertisers, advertising agencies and outdoor advertising companies in the United States, Mexico and Europe. Arbitron's core businesses are measuring network and local market radio audiences across the United States; surveying the retail, media and product patterns of local market consumers; and providing application software used for analyzing media audience and marketing information data.
With that, the company reported that for the quarter, net income came in at $17M, or $0.63 per share, compared to last year’s tally of $17.2M, or $0.58 per share. Overall sales throughout the quarter increased almost 10% year-over-year, from $93.3M to $102.5M. Analysts, in the meantime, were anticipating that the company post earnings of $0.58 per share on $103.95 in total sales. By the close of the trading session today, shares of Arbitron were hit hard, falling nearly 9%, or $3.28, to end the day at $33.72 per share.
Although many people may think that television is the way to go with advertising, but do not overlook radio. On average, radio reaches some 235 million Americans each week, which equates to be approximately 78% of the total U.S. population. Within those numbers, Arbitron reports show that 95% of adults, ages between 19 and 49 listen to the radio several times throughout the week, while the radio reaches out to 95% of the Hispanic population and 94% of the African-American population. In a recent FCC report, the number of licensed radio stations has skyrocketed to nearly 14,000, more than 1,200 more than 10 years ago. Of those, there are nearly 6,500 FM stations and 5,000 AM stations that are commercial driven stations dependent on their listeners to help pay the bills.
As for revenues themselves, in a report of combined revenue findings from both local and national radio stations, Miller, Kaplan, Arase & Co. released their findings that showed that the leading categories that were the highest revenue drivers came from three specific areas. The first was from the Insurance industry, which has contributed $232M worth of sales during the 2Q of 2008 and $422M over the first six months of the year. The second comes from Department and Discount Store advertising, which amounted for $159M for the 2Q and $283M for the first half of the year. Finally, advertisements from Professional Services rounds out the top three, generating nearly $85M during the 2Q and $265M from the first six months for the radio stations.
An additional and relatively new way to generate revenues comes from off-air sales. Off-air revenues come from experimental advertising and from online activity in which the radio stations sponsor themselves. In a report from the Radio Advertising Bureau, analysts expect off-air revenues to eclipse the $2B mark by the end of 2008, and to reach upwards of $2.15B by the end of 2009. Over the past year, off-air sales have increased more than 12% from 2007, and many project that that rate of increase will continued for several more years to come.
Looking towards the end of fiscal 2008, Arbitron anticipates revenues to increase between 8% and 10% over last year’s results, along with earnings per share to come in between $1.30 and $1.44 with the company expecting to post EPS towards the lower end of estimates. Analysts, in the meantime, are looking for full-year performance from Arbitron to be $1.42 per share on revenues of $367.2M.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Arbitron Inc. is an international media and marketing research firm serving radio broadcasters, cable companies, advertisers, advertising agencies and outdoor advertising companies in the United States, Mexico and Europe. Arbitron's core businesses are measuring network and local market radio audiences across the United States; surveying the retail, media and product patterns of local market consumers; and providing application software used for analyzing media audience and marketing information data.
With that, the company reported that for the quarter, net income came in at $17M, or $0.63 per share, compared to last year’s tally of $17.2M, or $0.58 per share. Overall sales throughout the quarter increased almost 10% year-over-year, from $93.3M to $102.5M. Analysts, in the meantime, were anticipating that the company post earnings of $0.58 per share on $103.95 in total sales. By the close of the trading session today, shares of Arbitron were hit hard, falling nearly 9%, or $3.28, to end the day at $33.72 per share.
Although many people may think that television is the way to go with advertising, but do not overlook radio. On average, radio reaches some 235 million Americans each week, which equates to be approximately 78% of the total U.S. population. Within those numbers, Arbitron reports show that 95% of adults, ages between 19 and 49 listen to the radio several times throughout the week, while the radio reaches out to 95% of the Hispanic population and 94% of the African-American population. In a recent FCC report, the number of licensed radio stations has skyrocketed to nearly 14,000, more than 1,200 more than 10 years ago. Of those, there are nearly 6,500 FM stations and 5,000 AM stations that are commercial driven stations dependent on their listeners to help pay the bills.
As for revenues themselves, in a report of combined revenue findings from both local and national radio stations, Miller, Kaplan, Arase & Co. released their findings that showed that the leading categories that were the highest revenue drivers came from three specific areas. The first was from the Insurance industry, which has contributed $232M worth of sales during the 2Q of 2008 and $422M over the first six months of the year. The second comes from Department and Discount Store advertising, which amounted for $159M for the 2Q and $283M for the first half of the year. Finally, advertisements from Professional Services rounds out the top three, generating nearly $85M during the 2Q and $265M from the first six months for the radio stations.
An additional and relatively new way to generate revenues comes from off-air sales. Off-air revenues come from experimental advertising and from online activity in which the radio stations sponsor themselves. In a report from the Radio Advertising Bureau, analysts expect off-air revenues to eclipse the $2B mark by the end of 2008, and to reach upwards of $2.15B by the end of 2009. Over the past year, off-air sales have increased more than 12% from 2007, and many project that that rate of increase will continued for several more years to come.
Looking towards the end of fiscal 2008, Arbitron anticipates revenues to increase between 8% and 10% over last year’s results, along with earnings per share to come in between $1.30 and $1.44 with the company expecting to post EPS towards the lower end of estimates. Analysts, in the meantime, are looking for full-year performance from Arbitron to be $1.42 per share on revenues of $367.2M.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Monday, October 20, 2008
BetterTrades looks at PedMed Express Inc. - October 20, 2008
If one owns a pet, then many customers probably either have already used or have at least heard of the following company. PetMed Express Inc. (PETS) announced early this morning that the company’s profits for the 2Q increased as reorders increased by double digits. PetMed Express, Inc. doing business as 1-800-PetMeds, engages in the marketing and sale of prescription and non-prescription pet medications and other health products for dogs, cats, and horses. Its prescription medications include heartworm preventatives, thyroid and arthritis medications, antibiotics, and other specialty medications, as well as generic substitutes.
The company’s non-prescription medications include flea and tick control products, bone and joint care products, vitamins and nutritional supplements, and hygiene products. PetMed Express sells its products primarily to retail customers, as well as its non-prescription medications to various businesses, including pet stores, groomers, and traditional retailers in the United States. It markets its products through Internet, toll-free number, and direct mail/print through the 1-800-PetMeds catalog and postcards. The company was founded in 1996, currently employs more than 250 people and is headquartered in Pompano Beach, Florida.
For their 2Q, PETS posted net income of $5.82M, or $0.25 per share, compared to last year’s tally of $4.53M, or $0.18 per share, a 28% increase year-over-year. Quarterly sales also advanced, from the prior year’s $51.54M to this year’s $59.6M, a 16% increase. Analysts, in the meantime, were looking for the company to record net earnings of $0.20 per share on overall sales of $58.7M. The biggest boost for the company during the quarter was the increase in reorder sales, which increased 18% from last year, while new order sales increased 11%. With a strong showing in today’s earnings release, shares of PetMed closed the session in the green today, adding $1.59, or 11.2%, to end the day at $15.79 a share.
In an article released in late summer by Businessweek, in was made known that over the previous year, there were some $41B worth spent on pets in America. It is also estimated that over the next few years, that figure could increase as high as $52B annually. Within those numbers, people are spending more and more on their pets than movies, music and video games combined. With that, PetMed is the largest pet pharmacy and is the leading discount mail-order pharmacy for pets. With pets becoming more and more an integral part of a family’s home life, pharmaceutical companies have begun to infuse more capital into developing more drugs related to our four-legged family members.
As for the company’s stock, its current trading price is only 12% from its 52-week high of $17 per share. With absolutely no debt on the company’s books, PETS can afford to continue to buy back shares, thus increasing their price and standing within the industry. In fact, during the recent quarter, PetMed bought back more than 90,000 shares. With an operating margin of 14.82%, the company also had $40.6M of its $360M market cap, on hand at the end of September. The company is currently at a fair value price, with a P/E ratio under 18 and a P/S ratio currently at 1.7.
One advantage the company has in this economic environment is that despite the weakening economy, people are still dedicated and devout to their pets, thus not thinking twice about spending money in order to maintain their pets’ health. Additionally, PetMed provides the same products that the local veterinary provides, but at a much lower cost. On top of all that, a survey conducted back in 2004, revealed that 93% of all pet owners would risk their own lives to save the life of their pet, according to the American Animal Hospital Association.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
The company’s non-prescription medications include flea and tick control products, bone and joint care products, vitamins and nutritional supplements, and hygiene products. PetMed Express sells its products primarily to retail customers, as well as its non-prescription medications to various businesses, including pet stores, groomers, and traditional retailers in the United States. It markets its products through Internet, toll-free number, and direct mail/print through the 1-800-PetMeds catalog and postcards. The company was founded in 1996, currently employs more than 250 people and is headquartered in Pompano Beach, Florida.
For their 2Q, PETS posted net income of $5.82M, or $0.25 per share, compared to last year’s tally of $4.53M, or $0.18 per share, a 28% increase year-over-year. Quarterly sales also advanced, from the prior year’s $51.54M to this year’s $59.6M, a 16% increase. Analysts, in the meantime, were looking for the company to record net earnings of $0.20 per share on overall sales of $58.7M. The biggest boost for the company during the quarter was the increase in reorder sales, which increased 18% from last year, while new order sales increased 11%. With a strong showing in today’s earnings release, shares of PetMed closed the session in the green today, adding $1.59, or 11.2%, to end the day at $15.79 a share.
In an article released in late summer by Businessweek, in was made known that over the previous year, there were some $41B worth spent on pets in America. It is also estimated that over the next few years, that figure could increase as high as $52B annually. Within those numbers, people are spending more and more on their pets than movies, music and video games combined. With that, PetMed is the largest pet pharmacy and is the leading discount mail-order pharmacy for pets. With pets becoming more and more an integral part of a family’s home life, pharmaceutical companies have begun to infuse more capital into developing more drugs related to our four-legged family members.
As for the company’s stock, its current trading price is only 12% from its 52-week high of $17 per share. With absolutely no debt on the company’s books, PETS can afford to continue to buy back shares, thus increasing their price and standing within the industry. In fact, during the recent quarter, PetMed bought back more than 90,000 shares. With an operating margin of 14.82%, the company also had $40.6M of its $360M market cap, on hand at the end of September. The company is currently at a fair value price, with a P/E ratio under 18 and a P/S ratio currently at 1.7.
One advantage the company has in this economic environment is that despite the weakening economy, people are still dedicated and devout to their pets, thus not thinking twice about spending money in order to maintain their pets’ health. Additionally, PetMed provides the same products that the local veterinary provides, but at a much lower cost. On top of all that, a survey conducted back in 2004, revealed that 93% of all pet owners would risk their own lives to save the life of their pet, according to the American Animal Hospital Association.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Friday, October 17, 2008
BetterTrades looks at American Public Education Inc. - October 17, 2008
A short while back, American Public Education Inc. (APEI) released their company’s earnings report for the 2Q in which the company posted better-than-expected profits. For the recent quarter, APEI recorded net income of $3.9M, or $0.21 per share, up 95% from last year’s earnings of $2M, or $0.17 per share. Revenues, meanwhile, jumped as well, surging nearly 55%, from $16.2M last year, to $25M this year. Much of the increase can be attributed to the company posting higher registrations. During the recent quarter, total net course registrations climbed almost 60% to 33K students and registrations from new, incoming students advanced to nearly 9K students.
During the same time frame, analysts were looking for APEI to book earnings per share of $0.15, based upon total revenues of $24.7M. All the while, the company’s current enrollment jumped to 39.5K students, an increase of 57% year-over-year. in light of such a strong earnings report, one analyst from Stifel Nicolaus & Co., stated that the results from APEI’s release was a “strong quarter all around,” and thus, has maintained his “buy” rating on the stock along with increasing his price target to $54, from $42 previously stated. This increase equates to a 28.5% increase over the earlier target price.
American Public Education, and its subsidiaries, provides online postsecondary education to the military and public service communities in the United States. It operates through two universities, American Military University and American Public University. The company's universities offer a common faculty and curriculum, which includes 57 degree programs and 49 certificate programs in various disciplines related to national security, military studies, intelligence, homeland security, criminal justice, technology, business administration, and liberal arts.
Despite the company being relatively new to the trading scene, it has drawn new examinations since the company went public back in November of 2007. During the company’s IPO, shares were offered at $15 to $17, and within moments of their first trade, the stock had climbed as high as $38.36 a share, and reached almost $47 a share a little over a month later. However, the impressive gains within the company and the stock itself have put tremendous strains on the company internally and yet they have still been able to manage revenue growth by an average of 40% year-over-year since 2002.
Other impressive fundamental stats that will make investors look at this company more intensely include average quarterly earnings per share growth rate of 294% over the past eight quarters along with yearly EPS for 2008 and 2009 to increase 33% and 47% respectfully. Amazingly, APEI possesses yearly earnings per share growth rate of 86% over the past five years, which equates to the company being a special growth stock. In addition to earnings, the company continues to increase their sales volume quarter-over-quarter, and over the past eight, APEI has grown sales on average more than 62%, which also gives the company a Return on Equity (ROE) of 38.9%, quite impressive.
So, while the company carries absolutely no debt, there are a few concerns that may set an investor back when analyzing this company. The first being its relatively low volume of daily trading, which currently stands around 215K shares daily. This number could keep some investors away from it in that they would be looking for the volatility in order to get huge returns on specific news or earnings releases. The other worrying sign could be that of a high P/E Ratio, currently at 57.5. But then again, no other company in the past, which were considered a growth stock, didn’t possess high P/E Ratios, so this could be a blessing in disguise for those looking for the home run here.
On the backs of such a strong quarterly performance, the company also issued forward looking guidance today for the company’s full-year performance along with expectations for the upcoming 3Q. Beginning with the 3Q, APEI now projects that the company will be able to post earnings per share of $0.17 or $0.18 on total sales between $25.5M and $26.2M. Full-year projections are coming in between $0.76 and $0.80 per share based upon total revenues in the range of $103M and $105.5M. These figures are up from the company’s earlier prediction back in May of $0.67 and $0.72 per share, and revenues of $102M and $104M. Analysts, meanwhile, are expecting 3Q results of $0.16 per share on $26.2M in sales, and a full-year tally of $0.72 per share on $104.6M in total sales
For more information on the stock and options markets check out the wealth of information at BetterTrades.
During the same time frame, analysts were looking for APEI to book earnings per share of $0.15, based upon total revenues of $24.7M. All the while, the company’s current enrollment jumped to 39.5K students, an increase of 57% year-over-year. in light of such a strong earnings report, one analyst from Stifel Nicolaus & Co., stated that the results from APEI’s release was a “strong quarter all around,” and thus, has maintained his “buy” rating on the stock along with increasing his price target to $54, from $42 previously stated. This increase equates to a 28.5% increase over the earlier target price.
American Public Education, and its subsidiaries, provides online postsecondary education to the military and public service communities in the United States. It operates through two universities, American Military University and American Public University. The company's universities offer a common faculty and curriculum, which includes 57 degree programs and 49 certificate programs in various disciplines related to national security, military studies, intelligence, homeland security, criminal justice, technology, business administration, and liberal arts.
Despite the company being relatively new to the trading scene, it has drawn new examinations since the company went public back in November of 2007. During the company’s IPO, shares were offered at $15 to $17, and within moments of their first trade, the stock had climbed as high as $38.36 a share, and reached almost $47 a share a little over a month later. However, the impressive gains within the company and the stock itself have put tremendous strains on the company internally and yet they have still been able to manage revenue growth by an average of 40% year-over-year since 2002.
Other impressive fundamental stats that will make investors look at this company more intensely include average quarterly earnings per share growth rate of 294% over the past eight quarters along with yearly EPS for 2008 and 2009 to increase 33% and 47% respectfully. Amazingly, APEI possesses yearly earnings per share growth rate of 86% over the past five years, which equates to the company being a special growth stock. In addition to earnings, the company continues to increase their sales volume quarter-over-quarter, and over the past eight, APEI has grown sales on average more than 62%, which also gives the company a Return on Equity (ROE) of 38.9%, quite impressive.
So, while the company carries absolutely no debt, there are a few concerns that may set an investor back when analyzing this company. The first being its relatively low volume of daily trading, which currently stands around 215K shares daily. This number could keep some investors away from it in that they would be looking for the volatility in order to get huge returns on specific news or earnings releases. The other worrying sign could be that of a high P/E Ratio, currently at 57.5. But then again, no other company in the past, which were considered a growth stock, didn’t possess high P/E Ratios, so this could be a blessing in disguise for those looking for the home run here.
On the backs of such a strong quarterly performance, the company also issued forward looking guidance today for the company’s full-year performance along with expectations for the upcoming 3Q. Beginning with the 3Q, APEI now projects that the company will be able to post earnings per share of $0.17 or $0.18 on total sales between $25.5M and $26.2M. Full-year projections are coming in between $0.76 and $0.80 per share based upon total revenues in the range of $103M and $105.5M. These figures are up from the company’s earlier prediction back in May of $0.67 and $0.72 per share, and revenues of $102M and $104M. Analysts, meanwhile, are expecting 3Q results of $0.16 per share on $26.2M in sales, and a full-year tally of $0.72 per share on $104.6M in total sales
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Thursday, October 16, 2008
BetterTrades looks at Parker Hannifin Corp. - October 16, 2008
In a recent announcement, Parker Hannifin Corp. (PH) confirmed their finding for the company’s 1Q performance in which the firm posted net income of $250.2M, or $1.50 per share, compared to last year’s performance of $229.6M, or $1.33 per share. For the quarter, net income increased 9%, while earnings per share increased just over 13%. In addition to increases in earnings, the company also managed to grow their sales numbers from last year, advancing them from $2.79B last year, to $3.06B as each of the company’s segments had stronger results than the previous year. Analysts, in the meantime, were looking for the firm to record earnings of $1.39 per share on overall sales of $3.04B.
Parker-Hannifin Corporation is a leading worldwide full-line manufacturer of motion control products, including fluid power systems, electro-mechanical controls and related components. Fluid power involves the transfer and control of power through the medium of liquid, gas or air, in hydraulic, pneumatic and vacuum applications. Fluid power systems move and position materials, control machines, vehicles and equipment and improve industrial efficiency and productivity.
Within the company’s segmented businesses, quarterly sales increased in every department with aerospace leading the way, percentage wise. For the 1Q, sales from Aerospace increased 12% from last year’s total, up to $478.5M, while the Industrial International segment increased 11.1%, to generate $1.22B in sales. As for the Industrial North American segment, its sales advanced 10.1% to $1.11B, as the company’s Climate & Industrial Controls advanced marginally to garner $255.9M in revenues.
With increases across the board, the company is still concerned about the global economy in regards to the overall sentiment of their customers and whether the markets, here and abroad, will continue to benefit the company. Thus, Parker Hannifin has adjusted their 2009 earnings expectations downward, from a range of $5.65 to $6.05 per share to a range of $5.35 to $5.75 per share. Although the company adjusted their earnings downward, the company still anticipates their operating margins will be higher for the fiscal year. "There is enough uncertainty in many of our end markets and sentiment among our customers to warrant a downward revision in our earnings expectations for the year," Chief Executive Officer Don Washkewicz said in a statement. "While this ultimately may prove to be conservative, at this time we believe it is prudent."
On top of releasing the company’s quarterly performance, there was another topic related to the company that garnered some attention. In a statement last month, Parker Hannifin was awarded a contract from Bombardier Aerospace to design and produce a fully integrated hydraulic and fuel system for their new C-Series class of aircraft. With the contract set in place, Parker Hannifin is estimating that the recently acquired business will generate in the neighborhood of $1.2B in total revenues of the life of the contracts.
Looking at the company from a fundamental standpoint, Parker Hannifin has increased their yearly dividends consecutively over the past 52 years. They are one of only five companies ever listed on the S&P 500 to say that. The company currently possesses a 1.1% yearly dividend, which is uncommon for their industry and for those who do, well above the industry average. Along with solid margins and low debt, the company can afford to throw some cash around, as it did when it acquired Titan Industries a few months back as the purchase will help with PH’s position within the industrial hose market. Titan manufactures industrial rubber, custom made and composite hoses for fluid and material transfer as well as related products, services, and accessories. In Titan’s last fiscal year, the company generated $28M worth of sales that will lead Parker into the marine, aircraft, food and dockside refueling markets.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Parker-Hannifin Corporation is a leading worldwide full-line manufacturer of motion control products, including fluid power systems, electro-mechanical controls and related components. Fluid power involves the transfer and control of power through the medium of liquid, gas or air, in hydraulic, pneumatic and vacuum applications. Fluid power systems move and position materials, control machines, vehicles and equipment and improve industrial efficiency and productivity.
Within the company’s segmented businesses, quarterly sales increased in every department with aerospace leading the way, percentage wise. For the 1Q, sales from Aerospace increased 12% from last year’s total, up to $478.5M, while the Industrial International segment increased 11.1%, to generate $1.22B in sales. As for the Industrial North American segment, its sales advanced 10.1% to $1.11B, as the company’s Climate & Industrial Controls advanced marginally to garner $255.9M in revenues.
With increases across the board, the company is still concerned about the global economy in regards to the overall sentiment of their customers and whether the markets, here and abroad, will continue to benefit the company. Thus, Parker Hannifin has adjusted their 2009 earnings expectations downward, from a range of $5.65 to $6.05 per share to a range of $5.35 to $5.75 per share. Although the company adjusted their earnings downward, the company still anticipates their operating margins will be higher for the fiscal year. "There is enough uncertainty in many of our end markets and sentiment among our customers to warrant a downward revision in our earnings expectations for the year," Chief Executive Officer Don Washkewicz said in a statement. "While this ultimately may prove to be conservative, at this time we believe it is prudent."
On top of releasing the company’s quarterly performance, there was another topic related to the company that garnered some attention. In a statement last month, Parker Hannifin was awarded a contract from Bombardier Aerospace to design and produce a fully integrated hydraulic and fuel system for their new C-Series class of aircraft. With the contract set in place, Parker Hannifin is estimating that the recently acquired business will generate in the neighborhood of $1.2B in total revenues of the life of the contracts.
Looking at the company from a fundamental standpoint, Parker Hannifin has increased their yearly dividends consecutively over the past 52 years. They are one of only five companies ever listed on the S&P 500 to say that. The company currently possesses a 1.1% yearly dividend, which is uncommon for their industry and for those who do, well above the industry average. Along with solid margins and low debt, the company can afford to throw some cash around, as it did when it acquired Titan Industries a few months back as the purchase will help with PH’s position within the industrial hose market. Titan manufactures industrial rubber, custom made and composite hoses for fluid and material transfer as well as related products, services, and accessories. In Titan’s last fiscal year, the company generated $28M worth of sales that will lead Parker into the marine, aircraft, food and dockside refueling markets.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Wednesday, October 15, 2008
BetterTrades looks at Abbott Laboratories Inc. - October 15, 2008
In a statement released before the markets opened, Abbott Laboratories Inc. (ABT) confirmed that for the company’s 3Q, profits more than doubled as sales from stents, other heart related products and from Humira, the company’s top-performing arthritis medication. Abbott is a global, broad-based health care company devoted to discovering new medicines, new technologies and new ways to manage health. Abbott products span the continuum of care, from nutritional products and laboratory diagnostics through medical devices and pharmaceutical therapies. Abbott’s comprehensive line of products encircles life itself addressing important health needs from infancy to the golden years.
In their earnings release, the company affirmed that net income for the recent quarter totaled $1.08B, or $0.69 per share, compared to last year’s tally of $717M, or $0.46 per share. If the company had not taken certain charges, Abbott would have posted earnings per share of $0.79. Additionally, revenues for the quarter surged nearly 18%, from $6.38B last year, to $7.5B for this year. Analysts, in the meanwhile, were expecting the health care company to record earnings of $0.77 per share on overall revenues of $7.35B. "We're performing really well across the board in all our businesses, and that gives us confidence to continue growing the earnings of this company," Chief Financial Officer Tom Freyman said during a conference call.
In reference to the company’s Humira drug, sales during the previous quarter surged more than 50%, totaling $1.2B in total revenues. Used for the treatment of Crohn’s disease, rheumatoid arthritis, and other immune disorders, the company adjusted their full-year outlook for the drug’s sales totals to $4.4B. In regards to the company’s other outstanding revenue generator, the drug-coated stent business, Abbott saw its sales in that segment doubled in size to produce over $300M in sales for the quarter.
Stents are tiny metal-mesh tubes that prop open-heart arteries after they have been cleared of plaque. Use of drug-coated stents declined after 2006, when a series of studies suggested they could be more dangerous than their bare-metal predecessors could. However, findings released at a cardiology conference just over a week ago showed that drug-coated stents are making a comeback and now represent 70% of the overall stent market. The drug coatings on the stents are designed to prevent scar tissue from growing over them.
Findings from the 3,000-patient study showed comparable rates of death, stroke and other safety problems between drug-coated and bare-metal stents. The study also showed patients treated with drug-coated stents were 41% less likely to need a second artery-clearing procedure than patients who received bare-metal stents. Drug-coated stents are not approved for use in heart attack patients, although doctors sometimes use them anyway.
Looking at the company in a purely fundamental fashion, Abbott Labs is a sound pharmaceutical company. The company currently is valued at $84.2B with a trailing P/E ratio of 20.38, and a forward-looking P/E of 14.93. The biggest difference between Abbott and their competitors is the fact that they have outstanding long-term earnings per share growth potential. Within their industry, Abbott’s major competition comes from Pfizer (PFE), Glaxosmithkline (GSK), AstraZeneca (AZN), and Merck (MRK). With those companies, the highest EPS growth potential comes from MRK, which is only able to bolster a 6.2% growth probability. As for Abbott, over the long term, the company should average just over 11% potential to grow earnings. One was the company is able to do this is that they are a diversified conglomerate which allows them to be resistant to increased competition in the markets by generic brands.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
In their earnings release, the company affirmed that net income for the recent quarter totaled $1.08B, or $0.69 per share, compared to last year’s tally of $717M, or $0.46 per share. If the company had not taken certain charges, Abbott would have posted earnings per share of $0.79. Additionally, revenues for the quarter surged nearly 18%, from $6.38B last year, to $7.5B for this year. Analysts, in the meanwhile, were expecting the health care company to record earnings of $0.77 per share on overall revenues of $7.35B. "We're performing really well across the board in all our businesses, and that gives us confidence to continue growing the earnings of this company," Chief Financial Officer Tom Freyman said during a conference call.
In reference to the company’s Humira drug, sales during the previous quarter surged more than 50%, totaling $1.2B in total revenues. Used for the treatment of Crohn’s disease, rheumatoid arthritis, and other immune disorders, the company adjusted their full-year outlook for the drug’s sales totals to $4.4B. In regards to the company’s other outstanding revenue generator, the drug-coated stent business, Abbott saw its sales in that segment doubled in size to produce over $300M in sales for the quarter.
Stents are tiny metal-mesh tubes that prop open-heart arteries after they have been cleared of plaque. Use of drug-coated stents declined after 2006, when a series of studies suggested they could be more dangerous than their bare-metal predecessors could. However, findings released at a cardiology conference just over a week ago showed that drug-coated stents are making a comeback and now represent 70% of the overall stent market. The drug coatings on the stents are designed to prevent scar tissue from growing over them.
Findings from the 3,000-patient study showed comparable rates of death, stroke and other safety problems between drug-coated and bare-metal stents. The study also showed patients treated with drug-coated stents were 41% less likely to need a second artery-clearing procedure than patients who received bare-metal stents. Drug-coated stents are not approved for use in heart attack patients, although doctors sometimes use them anyway.
Looking at the company in a purely fundamental fashion, Abbott Labs is a sound pharmaceutical company. The company currently is valued at $84.2B with a trailing P/E ratio of 20.38, and a forward-looking P/E of 14.93. The biggest difference between Abbott and their competitors is the fact that they have outstanding long-term earnings per share growth potential. Within their industry, Abbott’s major competition comes from Pfizer (PFE), Glaxosmithkline (GSK), AstraZeneca (AZN), and Merck (MRK). With those companies, the highest EPS growth potential comes from MRK, which is only able to bolster a 6.2% growth probability. As for Abbott, over the long term, the company should average just over 11% potential to grow earnings. One was the company is able to do this is that they are a diversified conglomerate which allows them to be resistant to increased competition in the markets by generic brands.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Tuesday, October 14, 2008
BetterTrades looks at Tidewater Inc. - October 14, 2008
As a provider of offshore supply vessels and marine support services to the offshore energy industry, Tidewater Inc. (TDW) affirmed in August that the company’s 1Q earnings slipped from $87.5M or $1.55 a share a year ago, versus $84.8M or $1.64 a share this year. Current results included an after-tax charge in the tune of $3.5M, or $0.06 per share, for legal and personnel costs. In addition, revenues for TDW climbed 11%, from $305.5M a year ago, to $340.1M, as 85% of their revenues coming from outside the continental U.S. Analysts, meanwhile, had expected that Tidewater post earnings of $1.52, which TDW managed to beat. Despite the positive figures, investors looked upon the number differently, as shares of Tidewater dropped $4.42, or 7.4%, to close out the week at $55.52.
With the hurricane season in full swing, and lasting through all of November, there are certain companies and sectors that investors can get into to offset any downtime related to storms. Tidewater is one of those plays, in that it is tied directly to the energy sector and with the price of energy today, this is an opportune time for Tidewater to be in this field.
Drilling rigs and offshore platforms are not self-sustaining structures, especially during the hurricane season. This is where Tidewater Inc. comes into play. The company provides services to support various phases of offshore exploration, development, and production, including towing of and anchor handling of mobile drilling rigs and equipment, transporting supplies and personnel, and assisting in offshore construction activities.
The company's marine vessel fleet includes platform supply vessels, and anchor handling towing supply vessels used for transporting supplies and equipment from shore bases to deepwater and intermediate water depth offshore drilling rigs, platforms, and other installations. Towing-supply and supply vessels used for transportation in intermediate and shallow waters and crew boats and utility vessels for transporting personnel and supplies from shore bases to offshore drilling rigs, platforms, and other installations.
Tidewater’s fleet currently consists of over 460 vessels and one of their top priorities within the company is maintaining that fleet. As with many other shipping and energy companies, Tidewater is set on expanding their reach globally, this in turn will help bolster profits.
As for the company’s financial position, TDW stands tall. Many investors and analysts alike consider a good PEG Ration of 1 or below to be a buy signal, Tidewaters’ is 0.10, an extremely low number for a $2.2B company. In addition, the company possesses a 8.75% Return on Assets, and an 18% Return on Equity, and a Debt/Equity ratio of 0.158. Both operating and profit margins are among the highest within the industry, along with enjoying cash flows of some $461M.
Looking ahead, there seems to be a positive vibe to Tidewater shares, with a “moderate buy” sentiment among analysts. The company recently announced that they are declaring a quarterly dividend of $0.25 on Sept. 15th, for those of record on Sept. 5th. As of today, TDW currently have more than 51 million shares outstanding and has also announced that the company will initiate a $200M stock buyback program that could last through June of next year. This is turn will help boost the price of Tidewater’s stock, thus generating more value and revenues for current shareholders.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
With the hurricane season in full swing, and lasting through all of November, there are certain companies and sectors that investors can get into to offset any downtime related to storms. Tidewater is one of those plays, in that it is tied directly to the energy sector and with the price of energy today, this is an opportune time for Tidewater to be in this field.
Drilling rigs and offshore platforms are not self-sustaining structures, especially during the hurricane season. This is where Tidewater Inc. comes into play. The company provides services to support various phases of offshore exploration, development, and production, including towing of and anchor handling of mobile drilling rigs and equipment, transporting supplies and personnel, and assisting in offshore construction activities.
The company's marine vessel fleet includes platform supply vessels, and anchor handling towing supply vessels used for transporting supplies and equipment from shore bases to deepwater and intermediate water depth offshore drilling rigs, platforms, and other installations. Towing-supply and supply vessels used for transportation in intermediate and shallow waters and crew boats and utility vessels for transporting personnel and supplies from shore bases to offshore drilling rigs, platforms, and other installations.
Tidewater’s fleet currently consists of over 460 vessels and one of their top priorities within the company is maintaining that fleet. As with many other shipping and energy companies, Tidewater is set on expanding their reach globally, this in turn will help bolster profits.
As for the company’s financial position, TDW stands tall. Many investors and analysts alike consider a good PEG Ration of 1 or below to be a buy signal, Tidewaters’ is 0.10, an extremely low number for a $2.2B company. In addition, the company possesses a 8.75% Return on Assets, and an 18% Return on Equity, and a Debt/Equity ratio of 0.158. Both operating and profit margins are among the highest within the industry, along with enjoying cash flows of some $461M.
Looking ahead, there seems to be a positive vibe to Tidewater shares, with a “moderate buy” sentiment among analysts. The company recently announced that they are declaring a quarterly dividend of $0.25 on Sept. 15th, for those of record on Sept. 5th. As of today, TDW currently have more than 51 million shares outstanding and has also announced that the company will initiate a $200M stock buyback program that could last through June of next year. This is turn will help boost the price of Tidewater’s stock, thus generating more value and revenues for current shareholders.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Monday, October 13, 2008
BetterTrades looks at Chesapeake Energy Co. - October 13, 2008
In a recent statement, one analyst from Jefferies & Company confirmed that his findings show that Chesapeake Energy Co. (CHK) could reach growth potential of more than 10% for the forward-looking year with the stipulation that natural gas prices for the year average above $8 per Btu. The analyst also added that with the current volatilities in the markets as a whole, which usually push energy prices lower, Chesapeake could face risks within the oil and gas markets. To combat those risks, company officials have made it known that they have placed cost cutting procedures into action that should save the company some substantial amounts of capital. In their plans, CHK would reduce their drilling expenditures by $3B from now until 2010, while increasing their sales figures by $2B on amplified sales production.
Chesapeake Energy Corp. is an independent oil and gas company engaged in the development, exploration, acquisition and production of onshore natural gas and oil reserves. Chesapeake owns interests in producing oil and gas wells concentrated in three primary operating areas: the Mid-Continent region of Oklahoma, western Arkansas, southwestern Kansas and the Texas Panhandle; the Gulf Coast region consisting primarily of the Austin Chalk Trend in Texas and Louisiana and the Tuscaloosa Trend in Louisiana; and the Helmet area of northeastern British Columbia.
With the company’s chart looking rather dismal, having lost nearly 73% of it value from its 52-week trading high of $74 set on July 2nd, the main culprit to the decline lays with the falling price of crude and natural gas. July’s record stock prices came on the heels of a barrel of crude hitting its all-time high above $147, and natural gas prices eclipsing the $13 per cubic feet mark. However, with the markets volatility and massive losses over the past month or so, traders and investors alike have scaled back their demand in oil, pushing the price of crude to a 13-month low under $80 a barrel. The same can be said about the natural gas markets as well. In lieu of very mild autumn weather, and above averages in gas inventories, the price per cubic foot of natural gas currently sits just above the $6.50 level.
Also announced was the company’s outlook forecast for their upcoming yearly production views which projects the company’s growth potential for 2008 to come in around 18%, while 2009 and 2010 figures should generate about 16% growth for those two years. As for production generated, the company anticipates that they will continue to operate between 135 and 140 rigs by the end of this year, and will maintain those numbers heading into fiscal 2009 and 2010. Additionally, Chesapeake looks towards the end of 2008, which should garner some $2.5B to $3B worth of cash on their books.
For the past twelve months, the company has been able to post operating cash flow of more than $5.5B, which is much needed facing the facts that the company has taking severe hits financially as liabilities have increased while margins have shrunk. The one shining spot for the company, is that the company has been growing their reserves by about a 20% mark due to their expanding production, which in turn, is a key figure to the company’s potential stock price advancements.
In other company related news, the acting CEO, Aubrey K. McClendon, had to sell nearly all of his holding within the company in order to meet margin calls. "I am very disappointed to have been required to sell substantially all of my shares of Chesapeake," McClendon said in a news release. "These involuntary and unexpected sales were precipitated by the extraordinary circumstances of the worldwide financial crisis." Although the exact amounts of shares sold were not confirmed, estimates place those figures in the 33M-plus neighborhood. Just recently, before the huge sell-off, McClendon was rated No. 134 on the Forbes top 400 richest Americans with a net worth of $3B.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Chesapeake Energy Corp. is an independent oil and gas company engaged in the development, exploration, acquisition and production of onshore natural gas and oil reserves. Chesapeake owns interests in producing oil and gas wells concentrated in three primary operating areas: the Mid-Continent region of Oklahoma, western Arkansas, southwestern Kansas and the Texas Panhandle; the Gulf Coast region consisting primarily of the Austin Chalk Trend in Texas and Louisiana and the Tuscaloosa Trend in Louisiana; and the Helmet area of northeastern British Columbia.
With the company’s chart looking rather dismal, having lost nearly 73% of it value from its 52-week trading high of $74 set on July 2nd, the main culprit to the decline lays with the falling price of crude and natural gas. July’s record stock prices came on the heels of a barrel of crude hitting its all-time high above $147, and natural gas prices eclipsing the $13 per cubic feet mark. However, with the markets volatility and massive losses over the past month or so, traders and investors alike have scaled back their demand in oil, pushing the price of crude to a 13-month low under $80 a barrel. The same can be said about the natural gas markets as well. In lieu of very mild autumn weather, and above averages in gas inventories, the price per cubic foot of natural gas currently sits just above the $6.50 level.
Also announced was the company’s outlook forecast for their upcoming yearly production views which projects the company’s growth potential for 2008 to come in around 18%, while 2009 and 2010 figures should generate about 16% growth for those two years. As for production generated, the company anticipates that they will continue to operate between 135 and 140 rigs by the end of this year, and will maintain those numbers heading into fiscal 2009 and 2010. Additionally, Chesapeake looks towards the end of 2008, which should garner some $2.5B to $3B worth of cash on their books.
For the past twelve months, the company has been able to post operating cash flow of more than $5.5B, which is much needed facing the facts that the company has taking severe hits financially as liabilities have increased while margins have shrunk. The one shining spot for the company, is that the company has been growing their reserves by about a 20% mark due to their expanding production, which in turn, is a key figure to the company’s potential stock price advancements.
In other company related news, the acting CEO, Aubrey K. McClendon, had to sell nearly all of his holding within the company in order to meet margin calls. "I am very disappointed to have been required to sell substantially all of my shares of Chesapeake," McClendon said in a news release. "These involuntary and unexpected sales were precipitated by the extraordinary circumstances of the worldwide financial crisis." Although the exact amounts of shares sold were not confirmed, estimates place those figures in the 33M-plus neighborhood. Just recently, before the huge sell-off, McClendon was rated No. 134 on the Forbes top 400 richest Americans with a net worth of $3B.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Friday, October 10, 2008
BetterTrades looks at Kensey Nash Corp. - October 10, 2008
Kensey Nash Corporation (KNSY) designs, develops, manufactures, and processes proprietary biomaterials products for the orthopedics, cardiology, drug/biologics delivery and wound care markets. The company also is involved with cardiovascular medical technology, specifically, arterial revascularization and puncture closure devices. The company intends to leverage its proprietary knowledge and expertise to develop new products and technologies and to explore additional applications for its products.
In an announcement made at the end of August, Kensey Nash released data that confirmed that the company posted a loss that was lower than last year’s 4Q figures. During the quarter, the company lost $1.1M, or $0.09 per share, which compares to last year’s loss of $1.7M, or $0.15 per share. Revenues, which were propelled by increased sales of the company’s biomaterial products and higher royalties received by other product sales, jumped over 29%, from $17M the prior year to $22M this year. If the company were to exclude a one-time charge for the sale of their endovascular business, Kensey would have posted EPS of $0.35, beating analysts’ expectations of $0.32 per share.
With the company’s products being used for numerous surgical procedures, their main procurer of their products is St. Jude Medical Inc (STJ). During the recent quarter, overall sales for Kensey surged some 37% to $13.3M, with more than $8M of those sales coming from orthopedic products, and some $4M in sales coming from heart related products. In addition, the company also added more than $1.6M in revenues from their endovascular products. With the markets being battered heavily today, shares of Kensey Nash retreated on the day, falling $0.74, or 2.6%, to end the week at $28.00 per share.
In light of the company’s better-than-expected earnings release, company officials also made it known that they have adjusted fiscal 2009 earnings upwards to reflect the positive showing in the recent quarter. For the full-year, Kensey is anticipating that the company produces earnings per share of $1.60 to $1.70 on the heels of $86.7M to $89M in total revenues. Previously projected, the company was looking for earnings between $1.57 and $1.65. Meanwhile, analysts are expecting that Kensey post earnings of $1.61 per share.
Also added, was the company’s upcoming expectations for their 1Q of 2009, in which officials are anticipating that Kensey Nash record earnings per share in the neighborhood of $0.37 and $0.38 on total sales between $19M and $20M. Prior to yesterday’s earnings release, the company had predicted 1Q earnings of $0.34 to $0.36 per share on overall revenues of $19.4M to $19.9M. Analysts’ expectations remain at the lower end of the company’s previously stated earnings projections of $0.34 per share.
"The company is forecasting significant investment in its cartilage repair product this coming year, where efforts will be dedicated to pre-clinical and clinical programs to further this product toward regulatory approval," Kensey Nash said in a statement. "Even with this increase in research and development spending, the company expects that its operating margins will continue to substantially improve and exceed 30% in fiscal year 2009."
For more information on the stock and options markets check out the wealth of information at BetterTrades.
In an announcement made at the end of August, Kensey Nash released data that confirmed that the company posted a loss that was lower than last year’s 4Q figures. During the quarter, the company lost $1.1M, or $0.09 per share, which compares to last year’s loss of $1.7M, or $0.15 per share. Revenues, which were propelled by increased sales of the company’s biomaterial products and higher royalties received by other product sales, jumped over 29%, from $17M the prior year to $22M this year. If the company were to exclude a one-time charge for the sale of their endovascular business, Kensey would have posted EPS of $0.35, beating analysts’ expectations of $0.32 per share.
With the company’s products being used for numerous surgical procedures, their main procurer of their products is St. Jude Medical Inc (STJ). During the recent quarter, overall sales for Kensey surged some 37% to $13.3M, with more than $8M of those sales coming from orthopedic products, and some $4M in sales coming from heart related products. In addition, the company also added more than $1.6M in revenues from their endovascular products. With the markets being battered heavily today, shares of Kensey Nash retreated on the day, falling $0.74, or 2.6%, to end the week at $28.00 per share.
In light of the company’s better-than-expected earnings release, company officials also made it known that they have adjusted fiscal 2009 earnings upwards to reflect the positive showing in the recent quarter. For the full-year, Kensey is anticipating that the company produces earnings per share of $1.60 to $1.70 on the heels of $86.7M to $89M in total revenues. Previously projected, the company was looking for earnings between $1.57 and $1.65. Meanwhile, analysts are expecting that Kensey post earnings of $1.61 per share.
Also added, was the company’s upcoming expectations for their 1Q of 2009, in which officials are anticipating that Kensey Nash record earnings per share in the neighborhood of $0.37 and $0.38 on total sales between $19M and $20M. Prior to yesterday’s earnings release, the company had predicted 1Q earnings of $0.34 to $0.36 per share on overall revenues of $19.4M to $19.9M. Analysts’ expectations remain at the lower end of the company’s previously stated earnings projections of $0.34 per share.
"The company is forecasting significant investment in its cartilage repair product this coming year, where efforts will be dedicated to pre-clinical and clinical programs to further this product toward regulatory approval," Kensey Nash said in a statement. "Even with this increase in research and development spending, the company expects that its operating margins will continue to substantially improve and exceed 30% in fiscal year 2009."
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Thursday, October 09, 2008
BetterTrades looks at Emerson Electric Co. - October 9, 2008
In recent trade, shares of Emerson Electric Co. (EMR) advanced on the heels of a Robert W. Baird analyst upgraded his view of the company, from “outperform” to “neutral”, until the markets fears took over sending their shares lower by the close. The analyst attributed his upgrade on the fact that Emerson should grow in large part to their focus on energy efficiency, infrastructure, and the ever-increasing emerging markets. "We believe the current multiples at historical lows offer a compelling entry point for investors and believe Emerson is better positioned ahead of the next recession versus the 2001 recession due to its increased global presence and end-market diversification," the analyst wrote.
Emerson Electric, a diversified global technology company, engages in designing and supplying product technology and delivering engineering services to industrial and commercial, and consumer markets worldwide. It operates in five segments: Process Management, Industrial Automation, Network Power, Climate Technologies, and Appliance and Tools. The Process Management segment offers product technology, as well as engineering and project management services for precision control, monitoring, and asset optimization of plants that produce power, or that process or treat items, such as oil, natural gas, and petrochemicals; food and beverages; pulp and paper; pharmaceuticals; and municipal water supplies. The Industrial Automation segment provides integrated manufacturing solutions to the manufacturers of products, including motors, transmissions, alternators, fluid controls, and materials joining equipment.
The Network Power segment designs, manufactures, installs, and maintains products providing grid-to-chip electric power conditioning, power reliability, and environmental control for telecommunications networks, data centers, and other critical applications. This segment offers power systems, embedded power supplies, precision cooling, and inbound power systems. The Climate Technologies segment provides products and services for areas of the climate control industry, including residential, commercial, and industrial heating and air-conditioning, and commercial refrigeration. Its technology enables homeowners and businesses to manage their heating, air-conditioning, and refrigeration systems; and digitally controls and remotely monitors refrigeration units in grocery stores and other food distribution outlets. The Appliance and Tools segment offers products and solutions in motors, appliances and components, and tools and storage.
In addition, the analysts reveled that they believe that Emerson’s earnings per share for a full-year can remain above $3 per share. For the upcoming release of the company’s 4Q earnings, analysts are looking for the electrical products manufacturer to post earnings per share towards the upper end of the company’s guidance, which is between $0.82 and $0.87 per share. While the company is able to post solid earnings, and most often, increase them over time, the company is also considered a strong dividend stock. Leading up to 2008, Emerson has been able to average an annual return to investors of nearly 11%, while also increasing their Return on Equity (ROE) that currently stands at almost 26%. Finally, the company has been able to increase their dividend payout annually by 7% over the past 10 years, which equates to a dividend payment doubling nearly every 10 years.
With exposure of their products in more than 150 countries worldwide, overseas revenues for Emerson account for some 54% total sales, with company officials looking for that figure to increase. As for the company’s revenues, for fiscal 2007, sales were broken down by segments, with the Process Management segment contributing nearly 24% of the company’s revenues, while the Network Power portion generated 22% of overall sales. Additionally, Appliance and Tools accounted for nearly 20%, with the Industrial Automation segment contributing 18.6%, and the Climate Technologies coming in at 15.8%.
At the recent trading price for the stock, this is in earshot of hitting its 52-week low of $35.10, the company does possess some strong fundamental figures. With a market cap of just over $30B, Emerson’s net income has increased, on average, 18% while being able to reduce costs by over 20%. That equates to increased revenues and over the past year, the company has posted overall sales of $24.6B. Further analysis of the stock shows that at its current price, it is undervalued. With earnings per share above $3, and potentially 15% growth of the company, analysts have posted a fair-value price of $53 for the stock. This, with the current price, sees an upside potential for the stock of just over 34%.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Emerson Electric, a diversified global technology company, engages in designing and supplying product technology and delivering engineering services to industrial and commercial, and consumer markets worldwide. It operates in five segments: Process Management, Industrial Automation, Network Power, Climate Technologies, and Appliance and Tools. The Process Management segment offers product technology, as well as engineering and project management services for precision control, monitoring, and asset optimization of plants that produce power, or that process or treat items, such as oil, natural gas, and petrochemicals; food and beverages; pulp and paper; pharmaceuticals; and municipal water supplies. The Industrial Automation segment provides integrated manufacturing solutions to the manufacturers of products, including motors, transmissions, alternators, fluid controls, and materials joining equipment.
The Network Power segment designs, manufactures, installs, and maintains products providing grid-to-chip electric power conditioning, power reliability, and environmental control for telecommunications networks, data centers, and other critical applications. This segment offers power systems, embedded power supplies, precision cooling, and inbound power systems. The Climate Technologies segment provides products and services for areas of the climate control industry, including residential, commercial, and industrial heating and air-conditioning, and commercial refrigeration. Its technology enables homeowners and businesses to manage their heating, air-conditioning, and refrigeration systems; and digitally controls and remotely monitors refrigeration units in grocery stores and other food distribution outlets. The Appliance and Tools segment offers products and solutions in motors, appliances and components, and tools and storage.
In addition, the analysts reveled that they believe that Emerson’s earnings per share for a full-year can remain above $3 per share. For the upcoming release of the company’s 4Q earnings, analysts are looking for the electrical products manufacturer to post earnings per share towards the upper end of the company’s guidance, which is between $0.82 and $0.87 per share. While the company is able to post solid earnings, and most often, increase them over time, the company is also considered a strong dividend stock. Leading up to 2008, Emerson has been able to average an annual return to investors of nearly 11%, while also increasing their Return on Equity (ROE) that currently stands at almost 26%. Finally, the company has been able to increase their dividend payout annually by 7% over the past 10 years, which equates to a dividend payment doubling nearly every 10 years.
With exposure of their products in more than 150 countries worldwide, overseas revenues for Emerson account for some 54% total sales, with company officials looking for that figure to increase. As for the company’s revenues, for fiscal 2007, sales were broken down by segments, with the Process Management segment contributing nearly 24% of the company’s revenues, while the Network Power portion generated 22% of overall sales. Additionally, Appliance and Tools accounted for nearly 20%, with the Industrial Automation segment contributing 18.6%, and the Climate Technologies coming in at 15.8%.
At the recent trading price for the stock, this is in earshot of hitting its 52-week low of $35.10, the company does possess some strong fundamental figures. With a market cap of just over $30B, Emerson’s net income has increased, on average, 18% while being able to reduce costs by over 20%. That equates to increased revenues and over the past year, the company has posted overall sales of $24.6B. Further analysis of the stock shows that at its current price, it is undervalued. With earnings per share above $3, and potentially 15% growth of the company, analysts have posted a fair-value price of $53 for the stock. This, with the current price, sees an upside potential for the stock of just over 34%.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Wednesday, October 08, 2008
BetterTrades looks at H.J. Heinz Co. - October 8, 2008
H. J. Heinz Company (HNZ) and its subsidiaries manufacture and market an extensive line of processed food products throughout the world including ketchup, condiments, sauces, and frozen foods, acknowledged a few weeks ago that the company posted a profit for their 1Q which increased 11% year-over-year. For the past quarter, Heinz recorded earnings of $229M, or $0.72 per share, up from last year’s results of $205.3M, or $0.63 per share. The increase in net income was due in large part the company increasing their overall sales, which were up from $2.25B last year, to $2.58B this year, a 14% jump. A contributing factor to increased revenues was the act of the company increasing their pricing model, which they raised some 5.2% in order to offset the surge in commodity prices.
Analysts were anticipating that the company post earnings of $0.66 per share on total sales of $2.46B, in which Heinz was able to beat both figures. Also adding to the company’s success for the quarter was increased overall sales in North America, which were up 12%, Asia and the Pacific sales were up 23%, while sales in Europe were up 20%. The biggest surge in sales came from the Middle East and Latin American regions, in which they were higher by some 36%. With the increase in sales, the company reiterated their earnings potential for the year, citing a range between $2.87 and $2.91 per share. With the markets in turmoil, the company’s stock retreated in value by the close today, plunging $2.60, or 5.2%, to end the session at $47.14. The company's 10-year high stock price was $55.18, set on November 16th, 1998.
Also included in their recent earnings report, the company stated that they intend to increase their marketability in the coming years, despite the recent demise of the economic condition. In continuing with this sentiment, which was laid out during last year’s fiscal meeting, the company plans on adding some $100M to this year’s marketing expenditures in order to improve on last year’s sales totals which topped $10B for the first time in the company’s history. With the new plan in place, company officials are looking for sales to grow some 6%-plus per year, with earnings per share growth to come in around 8% to 11% per year as well.
Within the industry in which Heinz resides, that of the consumer packaged goods industry, its has taken on huge transformations in light of a weakening dollar, the lack of discretionary spending and added pressure for the companies themselves to reduce costs. In order for a company to reduce overall operating costs, they themselves much increase their selling prices in order to offset those cost increases. The only way to do that, is to pass the costs onto the consumers, which in turn, buy less or change to generic brands in order to save money.
Looking ahead, there appears to be some concerns with the overall market condition for companies within the consumer packaged goods industry, but a company like H.J. Heinz may not suffer as much as others within the sector due to numerous factors in which the company possesses. Some of those positives that Heinz incorporates are the fact that they have a diversified product-line for both regional and international sales, the ability to increase revenues and earnings growth, and the initiative to streamline their production capabilities and the knowledge and fortitude to implement cost-cutting measures from top to bottom. In spite of everything, people and families alike, still need to eat, and despite certain economic conditions, many consumers have become very brand loyal no matter what the price of their favorite condiment may be.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Analysts were anticipating that the company post earnings of $0.66 per share on total sales of $2.46B, in which Heinz was able to beat both figures. Also adding to the company’s success for the quarter was increased overall sales in North America, which were up 12%, Asia and the Pacific sales were up 23%, while sales in Europe were up 20%. The biggest surge in sales came from the Middle East and Latin American regions, in which they were higher by some 36%. With the increase in sales, the company reiterated their earnings potential for the year, citing a range between $2.87 and $2.91 per share. With the markets in turmoil, the company’s stock retreated in value by the close today, plunging $2.60, or 5.2%, to end the session at $47.14. The company's 10-year high stock price was $55.18, set on November 16th, 1998.
Also included in their recent earnings report, the company stated that they intend to increase their marketability in the coming years, despite the recent demise of the economic condition. In continuing with this sentiment, which was laid out during last year’s fiscal meeting, the company plans on adding some $100M to this year’s marketing expenditures in order to improve on last year’s sales totals which topped $10B for the first time in the company’s history. With the new plan in place, company officials are looking for sales to grow some 6%-plus per year, with earnings per share growth to come in around 8% to 11% per year as well.
Within the industry in which Heinz resides, that of the consumer packaged goods industry, its has taken on huge transformations in light of a weakening dollar, the lack of discretionary spending and added pressure for the companies themselves to reduce costs. In order for a company to reduce overall operating costs, they themselves much increase their selling prices in order to offset those cost increases. The only way to do that, is to pass the costs onto the consumers, which in turn, buy less or change to generic brands in order to save money.
Looking ahead, there appears to be some concerns with the overall market condition for companies within the consumer packaged goods industry, but a company like H.J. Heinz may not suffer as much as others within the sector due to numerous factors in which the company possesses. Some of those positives that Heinz incorporates are the fact that they have a diversified product-line for both regional and international sales, the ability to increase revenues and earnings growth, and the initiative to streamline their production capabilities and the knowledge and fortitude to implement cost-cutting measures from top to bottom. In spite of everything, people and families alike, still need to eat, and despite certain economic conditions, many consumers have become very brand loyal no matter what the price of their favorite condiment may be.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Tuesday, October 07, 2008
BetterTrades looks at Supervalu Inc. - October 7, 2008
Supervalu Inc. (SVU) is one of the nation's largest supermarket retailer and largest food distributor in the United States and operates combination stores, food stores, and limited assortment food stores under the Acme Markets, Albertsons, Bristol Farms, Bigg’s, Cub Foods, Farm Fresh, Hornbacher’s, Jewel-Osco, Lucky, Save-A-Lot, Shaw’s Supermarkets, Shop n Save, Shoppers Food & Pharmacy, and Star Markets banners. Its stores offer various grocery products, general merchandise, health and beauty care products, pharmacy products, fuel, and other items and services.
In statement made last month, Supervalu made it known that, the company has put in motion a new line of gourmet foods that will allure restaurant goers away from them and into their new products. Under the newly established Culinary Circle brand name, the recently launched products will be available at all Supervalu-owned retailers nationwide. The newly established brand will contain some 150 products and will priced about 20% to 25% less than the same fare received at a restaurant, while being some 15% lower than their competitors premium brand names.
"The rising cost of gas and other household necessities makes it harder for many consumers to justify dining out as often as they'd like," said Chad Terrell, Culinary Circle brand manager. "Our line-up of chef-inspired Culinary Circle products is designed to bring affordable, quality meals to the dining room, and help meet the needs of consumers who love to eat out and sample different kinds of foods or indulge in the kinds of meals they simply don't have the time to make at home. Culinary Circle brings families back to their own dining rooms with the quality and unique variety of food found on casual dining restaurant menus.”
Despite the fact that the stock has been beaten down since its high of $43.30 in late November, there seems to be some misplaced discern about the company and the stock that has lead other analysts to view this as a buying opportunity for a relatively strong company. With a UBS analyst downgrading the stock just a week ago, shares fell to a five-year low, before rebounding the past couple of sessions. One reason for the downgrade was the massive amount of debt the company carries on their books. SVU has over $9B in long-term debt, while their two biggest rivals, Safeway (SWY) and Kroger’s (KR) only carry $5.8B and $7.7B in debt respectfully.
The positives for the company, fundamentally, include the figures that show that the stock is trading at discount forward P/E ratio of 6.86, while their competitors are both above 11. Additionally, Supervalu provides a dividend yield that’s more than 3-times Kroger’s and Safeway’s, as SVU produces a 3% yield. The final thing that is impressive to investors is that unlike many retailers, Supervalu owns more than 65% of the land in which their businesses reside. With nearly 2500 stores and 23 distribution centers, that equates to a lot of equity the company has, and the value of those properties has most certainly appreciated over the years as well. In comparison, SWY only owns 41% of the land on which some 1700-plus stores are located, while Kroger’s stores are mostly on leased land.
Therefore, with the stock beginning to bounce off a support level near $21, many may look at this company as a potential to provide nice appreciation potential without taking on too much risk. Analysts have stated that a $34 target price for Supervalu will signify a 60% increase, in that the company’s stock last saw that price in mid-June. It’s very possible for the stock to venture back that way with the expected success of the newly launched product line. At the close of today’s trading session, shares of SVU were slightly higher, adding $0.08, or 0.4%, to conclude the day at $20.65 a share.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
In statement made last month, Supervalu made it known that, the company has put in motion a new line of gourmet foods that will allure restaurant goers away from them and into their new products. Under the newly established Culinary Circle brand name, the recently launched products will be available at all Supervalu-owned retailers nationwide. The newly established brand will contain some 150 products and will priced about 20% to 25% less than the same fare received at a restaurant, while being some 15% lower than their competitors premium brand names.
"The rising cost of gas and other household necessities makes it harder for many consumers to justify dining out as often as they'd like," said Chad Terrell, Culinary Circle brand manager. "Our line-up of chef-inspired Culinary Circle products is designed to bring affordable, quality meals to the dining room, and help meet the needs of consumers who love to eat out and sample different kinds of foods or indulge in the kinds of meals they simply don't have the time to make at home. Culinary Circle brings families back to their own dining rooms with the quality and unique variety of food found on casual dining restaurant menus.”
Despite the fact that the stock has been beaten down since its high of $43.30 in late November, there seems to be some misplaced discern about the company and the stock that has lead other analysts to view this as a buying opportunity for a relatively strong company. With a UBS analyst downgrading the stock just a week ago, shares fell to a five-year low, before rebounding the past couple of sessions. One reason for the downgrade was the massive amount of debt the company carries on their books. SVU has over $9B in long-term debt, while their two biggest rivals, Safeway (SWY) and Kroger’s (KR) only carry $5.8B and $7.7B in debt respectfully.
The positives for the company, fundamentally, include the figures that show that the stock is trading at discount forward P/E ratio of 6.86, while their competitors are both above 11. Additionally, Supervalu provides a dividend yield that’s more than 3-times Kroger’s and Safeway’s, as SVU produces a 3% yield. The final thing that is impressive to investors is that unlike many retailers, Supervalu owns more than 65% of the land in which their businesses reside. With nearly 2500 stores and 23 distribution centers, that equates to a lot of equity the company has, and the value of those properties has most certainly appreciated over the years as well. In comparison, SWY only owns 41% of the land on which some 1700-plus stores are located, while Kroger’s stores are mostly on leased land.
Therefore, with the stock beginning to bounce off a support level near $21, many may look at this company as a potential to provide nice appreciation potential without taking on too much risk. Analysts have stated that a $34 target price for Supervalu will signify a 60% increase, in that the company’s stock last saw that price in mid-June. It’s very possible for the stock to venture back that way with the expected success of the newly launched product line. At the close of today’s trading session, shares of SVU were slightly higher, adding $0.08, or 0.4%, to conclude the day at $20.65 a share.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
Monday, October 06, 2008
BetterTrades looks at Eli Lilly & Co. - October 6, 2008
In an announcement made early Monday morning, Eli Lilly & Co. (LLY) confirmed reports that the company has agreed to purchase ImClone Systems Inc. (IMCL), for what amounts to more than $6B in cash for the biotech company. Eli Lilly discovers, develops, manufactures, and sells products in the pharmaceutical industry. The company directs its research efforts primarily toward the search for products to diagnose, prevent and treat human diseases. The company also conducts research to find products to treat diseases in animals and to increase the efficiency of animal food production.
ImClone, on the other hand, is advancing oncology care by developing a portfolio of targeted biologic treatments, which address the unmet medical needs of patients with a variety of cancers. The company's three programs include growth factor blockers, cancer vaccines and anti-angiogenesis therapeutics. ImClone's strategy is to become a fully integrated biopharmaceutical company, taking its development programs from the research stage to the market.
Within the arrangement, Eli affirmed to pay $70 per share, in cash, for ImClone, which amount to roughly an 8% premium above ImClone’s closing price this past Friday. It also signifies a 50% increase over Eli’s initial offer for ImClone back in July. The driving factor to Eli’s purchase of the company lies with the acquisition of Erbitux, a drug developed by ImClone, which treats colorectal, and head and neck cancers, while also adding Alimata, a lung cancer and mesothelioma treatment and Gemzar, a chemotherapy agent.
Regarding the purchase of ImClone, Eli shores up additional drugs to the company’s portfolio, and with the pending patent loss of their top-selling drug, Zyprexa, which is an anti-psychotic, in 2011, the company protects themselves from a substantial loss in revenues. Last year, Zyprexa accounted for more than 25% of the company’s total of $18.6B in overall revenues. On top of that, Eli will also lose their patents of their second and third highest selling products, Cymbalta and Gemzar, respectfully, in 2013.
With patent losses looming in the near future, Eli Lilly has mentioned that with the acquisition, they have been able to recognize three potentially profitable drugs in the pipeline that ImClone has been working on. The first, named IMC-112B, will be responsible for attacking and killing tumors by preventing the growth of blood vessels that the tumors feed off. The second, named IMC-11F8, will work as an antibody that targets the production of proteins that cancer cells produce. Finally, the last one, IMC-A12, has yet to have information reveled about its possibilities, but has Eli looking towards the future for its anticipated potential.
Eli Lilly is also awaiting approval of their blood-thinning drug Effient, which has some analyst believing that the drug, once confirmed safe by the FDA, could generate upwards of $2B in revenues for the company and will compete with Plavix, which is currently marketed by Bristol-Myers Squibb (BMY) and Sanofi-Aventis (SNY). Once the news hit the airwaves of the takeover, shares of ImClone surged, climbing 3% on the day, adding $1.94 to end the session at $66.90, while shares of LLY slipped on the day, giving back $2.89, or 7%, to close out at $38.42 a share.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
ImClone, on the other hand, is advancing oncology care by developing a portfolio of targeted biologic treatments, which address the unmet medical needs of patients with a variety of cancers. The company's three programs include growth factor blockers, cancer vaccines and anti-angiogenesis therapeutics. ImClone's strategy is to become a fully integrated biopharmaceutical company, taking its development programs from the research stage to the market.
Within the arrangement, Eli affirmed to pay $70 per share, in cash, for ImClone, which amount to roughly an 8% premium above ImClone’s closing price this past Friday. It also signifies a 50% increase over Eli’s initial offer for ImClone back in July. The driving factor to Eli’s purchase of the company lies with the acquisition of Erbitux, a drug developed by ImClone, which treats colorectal, and head and neck cancers, while also adding Alimata, a lung cancer and mesothelioma treatment and Gemzar, a chemotherapy agent.
Regarding the purchase of ImClone, Eli shores up additional drugs to the company’s portfolio, and with the pending patent loss of their top-selling drug, Zyprexa, which is an anti-psychotic, in 2011, the company protects themselves from a substantial loss in revenues. Last year, Zyprexa accounted for more than 25% of the company’s total of $18.6B in overall revenues. On top of that, Eli will also lose their patents of their second and third highest selling products, Cymbalta and Gemzar, respectfully, in 2013.
With patent losses looming in the near future, Eli Lilly has mentioned that with the acquisition, they have been able to recognize three potentially profitable drugs in the pipeline that ImClone has been working on. The first, named IMC-112B, will be responsible for attacking and killing tumors by preventing the growth of blood vessels that the tumors feed off. The second, named IMC-11F8, will work as an antibody that targets the production of proteins that cancer cells produce. Finally, the last one, IMC-A12, has yet to have information reveled about its possibilities, but has Eli looking towards the future for its anticipated potential.
Eli Lilly is also awaiting approval of their blood-thinning drug Effient, which has some analyst believing that the drug, once confirmed safe by the FDA, could generate upwards of $2B in revenues for the company and will compete with Plavix, which is currently marketed by Bristol-Myers Squibb (BMY) and Sanofi-Aventis (SNY). Once the news hit the airwaves of the takeover, shares of ImClone surged, climbing 3% on the day, adding $1.94 to end the session at $66.90, while shares of LLY slipped on the day, giving back $2.89, or 7%, to close out at $38.42 a share.
For more information on the stock and options markets check out the wealth of information at BetterTrades.
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