Archive for January, 2011

  • Buy List Earnings Calendar
    , January 26th, 2011 at 10:33 pm

    There are still lots of holes, but hopefully they’ll all be filled in soon.

    Company Symbol Date EPS Est EPS
    JPMorgan Chase JPM 14-Jan $0.99 $1.12
    Gilead Sciences GILD 25-Jan $0.94 $0.95
    Johnson & Johnson JNJ 25-Jan $1.03 $1.03
    Stryker SYK 25-Jan $0.91 $0.93
    Abbott Laboratories ABT 26-Jan $1.29 $1.30
    Deluxe Corp. DLX 27-Jan $0.71
    AFLAC AFL 1-Feb $1.35
    Becton, Dickinson BDX 8-Feb $1.29
    Wright Express WXS 10-Feb $0.71
    Fiserv FISV n/a $1.07
    Ford Motor F n/a $0.48
    Moog MOG-A n/a $0.63
    Reynolds American RAI n/a $0.61
    Sysco SYY n/a $0.47
    Nicholas Financial NICK n/a n/a

  • CWS Buy List +4.74% YTD
    , January 26th, 2011 at 7:47 pm

    The Dow broke 12,000 today for the first time since June 20, 2008. However, the index closed the day just below the mark at 11,985.44. The S&P 500 got as high as 1,299.74 but closed at 1,296.63 which is its highest close since August 28, 2008. So we came very close to a double milestone day.

    The Buy List rose by 0.46% today which slightly beat the S&P 500’s 0.42%. For the year, the Buy List is now up 4.74% to the S&P’s 3.10%. I hope we’re on our way to our fifth-straight market-beating year.

    Today was another good lesson on the benefits of diversification. Even though Abbott Labs (ABT) got knocked down today by 2.52%, other stocks picked up the slack. Moog (MOG-A), for example, hit a new 52-week high. So did Deluxe (DLX) and AFLAC (AFL). I was happy to see that AFL got as high as $58.79. I said it was going to make a run for $60.

    I should add that I have no idea why ABT dropped 2.5%. It’s still a very solid stock.

    I’m also happy to see Ford (F) back above $18 where it belongs.

    The big winner today was Gilead Sciences (GILD). By the closing bell, shares of GILD had gained $1.50 which was close to 4%. Again, I don’t know why Wall Street reacted this way. Gilead only beat by a penny. The reason why GILD should be rising is because it’s very inexpensive. Anyway, I won’t argue with stocks heading in my direction.

  • Today’s FOMC Statement
    , January 26th, 2011 at 3:17 pm

    The Fed has spoken:

    Information received since the Federal Open Market Committee met in December confirms that the economic recovery is continuing, though at a rate that has been insufficient to bring about a significant improvement in labor market conditions. Growth in household spending picked up late last year, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software is rising, while investment in nonresidential structures is still weak. Employers remain reluctant to add to payrolls. The housing sector continues to be depressed. Although commodity prices have risen, longer-term inflation expectations have remained stable, and measures of underlying inflation have been trending downward.

    Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. Currently, the unemployment rate is elevated, and measures of underlying inflation are somewhat low, relative to levels that the Committee judges to be consistent, over the longer run, with its dual mandate. Although the Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability, progress toward its objectives has been disappointingly slow.

    To promote a stronger pace of economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to continue expanding its holdings of securities as announced in November. In particular, the Committee is maintaining its existing policy of reinvesting principal payments from its securities holdings and intends to purchase $600 billion of longer-term Treasury securities by the end of the second quarter of 2011. The Committee will regularly review the pace of its securities purchases and the overall size of the asset-purchase program in light of incoming information and will adjust the program as needed to best foster maximum employment and price stability.

    The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels for the federal funds rate for an extended period.

    The Committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to support the economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate.

    Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Richard W. Fisher; Narayana Kocherlakota; Charles I. Plosser; Sarah Bloom Raskin; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen.

    Nothing here is unexpected. The only major change is that Thomas Hoening, the usual sole dissenter, has rotated off the committee. The Fed plans to continue doing what it’s been doing. The market is taking this in stride. The Dow is holding above 12,000 and the S&P 500 is closing in on 1,300.

  • Dow XMM
    , January 26th, 2011 at 11:15 am

    Shortly after 10 am this morning, the Dow traded above 12,000 for the first time since June 20, 2008:

  • Abbott Labs Earns $1.30 Per Share
    , January 26th, 2011 at 9:35 am

    This morning, Abbott Labs (ABT) reported Q4 earnings of $1.30 per share which beat Wall Street’s forecast by a penny. Sales for the quarter rose by 13% to just shy of $10 billion.

    One of the reasons I like Abbott is that the stock has been weighed down by some bad news recently. In the past few months, the company had to pull a diet drug off the market. That was actually good news compared to when Abbott had to pull its baby formula off the market due to contamination from…wait for it…insect parts.

    Despite the bad news, this is a very solid company. Drug sales, which make up about 60% of ABT’s business, surged 23% in Q4. For all of 2011, ABT said it expects earnings-per-share between $4.54 and $4.64 per share. That gives Abbott a forward P/E of about 10.4 which is a very good value.

  • Morning News: January 26, 2011
    , January 26th, 2011 at 7:53 am

    Dollar Falls Against Yen, Euro; FOMC Eyed

    Davos: Cautious CEOs Counting on BRICs for Growth

    Davos: As Europe Toils on Debt, U.S. and Japan Watch Nervously

    Obama Calls for Lowering Corporate Tax Rates, Closing Loopholes

    Obama on Debt: What He Said and What He Didn’t Say

    Roubini Says U.S. Risks ‘Train Wreck’ From Bond Vigilante Wrath

    Bernanke Gets 66% Approval From Investors Disliking QE2

    Financial Crisis Was Avoidable, Inquiry Finds

    Mortgage Applications in U.S. Fall to Lowest Level in Two Years

    California Default Notices Drop in Fourth Quarter

    Yahoo Profit Rises Even as Sales Dip 4%

    Paul Kedrosky: Apple’s Near-Field Communications Venture Outed

    Joshua Brown: Obama Says the Magic Words

  • Earnings for Stryker and Gilead Sciences
    , January 25th, 2011 at 9:34 pm

    After the bell, we had earnings reports from Stryker (SYK) and Gilead Sciences (GILD).

    For Q4, Stryker earned 93 cents per share which was two cents ahead of expectations. Revenues rose 9% to $1.99 billion. This was a very solid quarter for SYK. I really like this stock.

    For the year, Stryker earned $3.33 per share. Stryker recently said that it expects EPS for this year to range from $3.65 to $3.73. The stock is down about 1.5% after-hours.

    Gilead earned 95 cents per share after charges which was a penny ahead of expectations. For all of 2010, Gilead earned $3.32 per share on sales of $7.39 billion. The AP has some details:

    The company said revenue from its antiviral drugs rose 5 percent to $1.7 billion during the quarter. Sales of its three-in-one HIV drug Atripla grew 11 percent to $775.2 million, while sales of Truvada increased 2 percent to $681.7 million and sales of the HIV and hepatitis B drug Viread rose 7 percent to $191.1 million.

    Revenue from Gilead’s pulmonary arterial hypertension drug Letairis increased 23 percent to $64 million, and sales of its chronic angina drug Ranexa climbed 47 percent to $67.8 million. Sales of its other products dipped 6 percent to $150.4 million. Royalty, contract, and other revenue plunged 70 percent to $68.5 million. That was mostly because of the sharp drop in sales of the flu treatment Tamiflu compared to last year. Swiss drugmaker Roche pays royalties to Gilead on sales of the drug.

    Tamiflu royalty payments fell 89 percent to $21.9 million.

    Gilead also announced Tuesday that the Food and Drug Administration did not accept its application for approval of a new HIV therapy. The drug, which Gilead developed with Tibotec Pharmaceuticals, is a single tablet combining Truvada with Tibotec’s drug candidate rilpivirine.

    Gilead said the FDA wants more information, which the company plans to provide by the end of this quarter.

    After hours, the shares are down $1.06 or 2.78%. Wall Street currently expects Gilead to earn $4.06 per share next year which gives GILD a forward P/E of 9.4.

  • Apple’s Stock and Earnings
    , January 25th, 2011 at 5:12 pm

    In response to yesterday’s chart on Google (GOOG), A number of you asked to see a similar chart for Apple (AAPL). Like Jeeves, I endeavor to give satisfaction.

    Once again, the lines are scaled at a ratio of 20-to-1. I’m not saying that’s the proper earnings multiple; I merely think that’s the clearest way to present the data. You can also see how modest Wall Street’s earnings projections are compared with the recent trend.

  • Jim Simons
    , January 25th, 2011 at 1:53 pm

    Via Paul Kedrosky, here’s Jim Simons of Renaissance Technologies. (Hearing him speak, Simons always reminds me of a minor character on Seinfeld.)

  • JNJ Earns $1.03 Per Share
    , January 25th, 2011 at 10:20 am

    Johnson & Johnson (JNJ) released earnings this morning and they were a very slight disappointment. The company earned $1.03 per share which was inline with expectations.

    Technically, the company earned 70 cents per share, but the company’s net was dragged down by recall and litigation costs.

    J&J’s McNeil Consumer Healthcare division has recalled more than 40 brands of over- the-counter medicines, including Tylenol and Rolaids, since late 2009, and the company removed orthopedic implants last year. J&J said the consumer recalls cut 2010 sales by about $900 million dollars, about $300 million more the company projected in July.

    The recalls made 2010 a “difficult and disappointing” year, Chief Executive Officer William Weldon said on a conference call with analysts. J&J is in the midst of an “uncompromising effort” to improve quality and restore trust in its brands, he said.

    “If those reviews reveal any further issues, we will not hesitate to take any action that is needed,” Weldon said.

    Johnson & Johnson also released their earnings estimate for this year: $4.80 to $4.90 per share. Wall Street had been expecting $4.98 per share, so this was a bit below expectations.

    The stock is down about $1 per share this morning. Today’s news is disappointing but not earthshaking. JNJ is the bluest of the blue chips so I see any pullback as a good opportunity to buy.