Archive for March, 2011
Best Q1 in 13 Years
Eddy Elfenbein, March 31st, 2011 at 4:59 pm
I apologize for the lack of posting this week, but honestly, not much has been going on. The market finished its last day of the quarter today and Wall Street had its best first quarter since 1998.
For the first three months of 2011, the S&P 500 gained 5.42% (not including dividends) and our Buy List gained 7.62%. Including dividends, our Buy List gained 8.06% compared with 5.92% for the S&P 500. And if this means anything to you, our beta so far is 1.035.
For the five-and-a-quarter years of the Buy List, we’re up 44.83% compared with 18.62% for the S&P 500. Our long-term beta is 0.943.
Historically, when the market gains between 5% and 7% in the first quarter of the year, it averages another 7.1% gain for the rest of the year.
I’ll note that Oracle ($ORCL) gapped up a week ago after its earnings announcement. The stock, however, drifted lower on Friday and this past Monday. Since then, in almost a delayed reaction to its earnings news, the shares have slowly rallied.
Joe Banks ($JOSB) looked like it was behaving the same way as Oracle—jumping on earnings then drifting back. However, JOSB seems to have found some support around $51 per share.
I should add that being diversified has helped us out a lot this year. Of our 20 stocks on the Buy List, 14 are up and six are down for the year. Please take note. It doesn’t take much to make sure your portfolio is well-diversified.
And by the way, being diversified doesn’t mean owning Apple ($AAPL) and Google ($GOOG). You need to own different industries as well (says the guy who stupidly left energy off his Buy List).
Morning News: March 31, 2011
Eddy Elfenbein, March 31st, 2011 at 7:30 am
JOSB Gaps Higher!
Eddy Elfenbein, March 30th, 2011 at 11:31 am
This is a very good morning for our Buy List. Joey Banks ($JOSB) got as high as $52.50 this morning which is an increase of close to 8% from yesterday’s close—and yesterday afternoon saw a pretty nice rally for the shares. The stock is off its intra-day high, but this still looks to be a very good day for JOSB. This is an all-time high for the stock.
Two other Buy List stocks, Reynolds American ($RAI) and Leucadia National ($LUK) are at 52-week highs. By the end of trading today, our Buy List will probably be a full two percentage points ahead of the S&P 500. That’s a high for the year. My goal for the Buy List is to beat the market by a modest amount while doing so with modestly less risk.
JoS. A. Bank Clothiers Earns $3.08 Per Share
Eddy Elfenbein, March 30th, 2011 at 8:16 am
JoS. A. Bank Clothiers ($JOSB) just reported its 2010 earnings-per-share of $3.08. Through their first three quarters, JOSB earned $1.61 per share. That means that Q4 earnings were $1.47 per share which was four cents more than Wall Street’s consensus.
JoS. A. Bank Clothiers, Inc. announces today record results for its fiscal year ended January 29, 2011 (“fiscal year 2010”).
Net income for fiscal year 2010 increased 21% to a record $85.8 million, as compared with net income of $71.2 million for the fiscal year ended January 30, 2010 (“fiscal year 2009”). Earnings per share for fiscal year 2010 increased 20% to $3.08 as compared with earnings per share of $2.56 for fiscal year 2009.
Net sales reached a record of $858.1 million in fiscal year 2010, representing an 11.4% gain as compared with net sales of $770.3 million in fiscal year 2009. Comparable store sales increased 7.0% during fiscal year 2010, while Direct Marketing sales increased 24.4%.
“2010 was another very successful year for the Company,” commented R. Neal Black, President and CEO of JoS. A. Bank Clothiers, Inc. “We realized double digit sales growth again through strong comparable store sales and Direct Marketing sales, combined with the sales contribution from the 36 new stores we added during the year. Additionally, we generated net income growth of 21% as we continued to gain leverage, primarily through margin expansion and expense control. Our cash from operating activities grew 25% and our financial position remains very strong. Once again, we ended the year with no debt. With this quarter’s results, we have achieved earnings growth in 37 of the past 38 quarters when compared to the respective prior year periods, including 19 quarters in a row,” continued Mr. Black.
Morning News: March 30, 2011
Eddy Elfenbein, March 30th, 2011 at 7:04 am
Haliburton Under Bush and Obama
Eddy Elfenbein, March 29th, 2011 at 3:48 pm
Here’s how Haliburton ($HAL) performed during the administration of George W. Bush:
And here’s how it performed since Barack Obama become president:
The stock is at another new 52-week high today.
Sprint Nextel Is a Financial Black Hole
Eddy Elfenbein, March 29th, 2011 at 1:31 pm
Check out some of these numbers on Sprint Nextel ($S):
Year Sales EBIT Depreciation Total Net Income EPS 2001 $25,562 -$2,350 $4,576 -$1,599 -$1.16 2002 $26,679 $401 $4,890 $451 $0.32 2003 $26,197 -$504 $4,973 -$292 -$0.21 2004 $21,647 -$3,244 $3,658 -$2,006 -$1.40 2005 $28,771 $1,291 $5,200 $821 $0.40 2006 $41,003 $1,483 $9,592 $995 $0.33 2007 $40,146 -$29,775 $8,933 -$29,444 -$10.24 2008 $35,635 -$4,060 $8,407 -$2,796 -$0.98 2009 $32,260 -$3,494 $7,416 -$2,436 -$0.84 2010 $32,563 -$3,299 $6,248 -$3,465 -$1.16
The company is a money-losing machine. Wall Street expects Sprint to lose another 80 cents per share this year and 59 cents per share next year.
Looking at the S&P 500’s Valuation
Eddy Elfenbein, March 29th, 2011 at 12:44 pm
Thanks to the mini-pullback following the Japanese earthquake, the S&P 500 hit a closing low of 1,256.88 on March 16th, which is a P/E Ratio of 14.62.
In the chart below, the S&P 500 and its earnings are scaled at a ratio of 16-to-1 since 16 seems to be the best value for a long-term earnings multiple. We actually haven’t been as high as 16 since last May.
For 2010, the S&P 500’s earnings were $83.76 which was a 47% increase over 2009. For 2011, Wall Street’s current consensus is for earnings of $96.23. With a P/E Ratio of 16, that gives us a year-end possible target of 1,539.28. That’s a 17.5% rally from yesterday’s close.
So That’s What It Got Us
Eddy Elfenbein, March 29th, 2011 at 12:10 pm
AP: March 29, 2011
NYT: July 15, 2010
The Yen’s Impact on the Stock Market
Eddy Elfenbein, March 29th, 2011 at 10:17 am
Here’s a look at the yen’s impact on the stock market. More correctly, I should say this is a look at how the yen is correlated with the U.S. stock market.
I looked at all the daily market activity from 1989 through 2010 and then I annualized what the stock market did on days when the yen rose against the dollar and on days when it fell against the dollar. The results are below.
As you might expect, the movement of the currencies has the least impact on domestic-oriented sectors like staples and healthcare, but it has a big impact on areas like tech and finance.