Archive for 2011

  • Slight Gain for the Buy List
    , January 10th, 2011 at 4:44 pm

    Today was a decent day for the Buy List. While the overall market was down 0.20%, our Buy List gained 0.06%. Not big, but at least we’re going in the right direction.

    The big winner today was Deluxe Corp. (DLX) which climbed 3.98%. Hopefully, Stryker (SYK) will give us another boost tomorrow.

    For the year so far, the Buy List is up 1.68% to the S&P’s 0.96%.

  • Nice Guidance from Stryker
    , January 10th, 2011 at 4:16 pm

    Great news from Stryker (SYK). The company announced Q4 sales ahead of its earnings report. Sales for the quarter came in at $1.995 billion which is up 8.8% from a year ago and in line with what Wall Street was expecting. For the year, sales were $7.32 billion, up 8.9% for the year.

    Stryker also said to expect full-year earnings (after charges) for 2010 to range between $3.31 to $3.33 per share, which is slightly above their earlier guidance of $3.27 to $3.30 per share. That’s an increase of 12.2% to 12.9% over 2009’s EPS of $2.95.

    Here’s what they had to say for 2011:

    The financial forecast for 2011 includes a constant currency sales increase of 11-13% as a result of growth in shipments of Orthopaedic Implants and MedSurg Equipment as well as sales from the recently acquired Neurovascular business. If foreign currency exchange rates hold near current levels, the Company anticipates net sales will be favorably impacted by approximately 0% to 1.0% in the first quarter of 2011 and by approximately 0.5% to 1.5% for the full year of 2011. Excluding the expected impact from foreign currency as well as acquisitions (Sonopet Ultrasonic Aspirator, Gaymar Industries, Porex Surgical and the Neurovascular division of Boston Scientific), projected sales growth is 5-7%.

    The Company projects that adjusted diluted net earnings per share for 2011 will be in the range of $3.65 to $3.73 (Note: Wall Street had been expecting $3.64 – Eddy), an increase of 10% to 13% over expected adjusted diluted net earnings per share of $3.31 to $3.33 in 2010. In 2011, the Company anticipates acquisition and integration-related charges associated with the recently completed acquisition of the Neurovascular business to reduce reported diluted net earnings per share by approximately $0.21 to $0.25, including transaction costs, additional costs associated with the step-up of inventory to fair value and other integration costs.

    “We believe our results for 2010 and our financial forecast for 2011 underscore the strength of our unique sales footprint that is driving superior results in the near term while investing in critical growth areas for the long term,” commented Stephen P. MacMillan, Chairman, President and Chief Executive Officer.

    The stock is up 2.4% after-hours. If you’re new to investing, I should point out how good it is to have a company give us guidance for the next 12 months. Not many companies do that. I don’t expect the forecast to be perfect, but I love the fact that we’re not kept in the dark.

    Today’s closing price was $54.70. Let’s take the mid-point of their 2011 forecast which is $3.69. That comes to a forward P/E of 14.8 which is a good value, and there’s still plenty of room for upside surprises.

  • Medtronic CEO: “Cautiously Optimistic”
    , January 10th, 2011 at 4:00 pm

    William Hawkins, the outgoing CEO of Medtronic (MDT) made some comments about the industry at today’s JPMorgan Healthcare Conference. (That’s an odd coming-together of two of our Buy List stocks.)

    Hawkins, who was named CEO in Aug. 2007, said he’s satisfied with his performance despite a roughly 30% decline in the company’s share price during his tenure in what’s been “arguably the toughest three years in the history of medical devices.”

    “I feel like I’ve gotten done what I wanted to get done,” Hawkins said, citing in particular an improved position for the company in emerging markets such as China, better margins and a management team put in place that’s “truly is one of the best management teams in all of health care.”

    Hawkins added that he is “cautiously optimistic” about the state of the industry in 2011, saying that there is some evidence people are starting to visit their physician more frequently, following a slow-down during the economic recession.

    “We’re seeing some stability,” Hawkins said. “People, they can’t wait forever to have their back repaired.”

    “Cautiously optimistic” is one of those nonsense phrases that sound like you’re saying something but you’re really not. It can be used in any situation.

  • Not All Banks Are Suffering
    , January 10th, 2011 at 1:42 pm

    One bank in particular just finished a banner year:

    The Federal Reserve Board on Monday announced preliminary unaudited results indicating that the Reserve Banks provided for payments of approximately $78.4 billion of their estimated 2010 net income of $80.9 billion to the U.S. Treasury. This represents a $31.0 billion increase in payments to the U.S. Treasury over 2009 ($47.4 billion of $53.4 billion of net income). The increase was due primarily to increased interest income earned on securities holdings during 2010.

    Under the Board’s policy, the residual earnings of each Federal Reserve Bank, after providing for the costs of operations, payment of dividends, and the amount necessary to equate surplus with capital paid-in, are distributed to the U.S. Treasury.

  • A Look at the Defense Sector
    , January 10th, 2011 at 11:59 am

    The Spade Defense Index (^DXS) had a remarkable run for several years. The index outperformed the S&P 500 every year for nine-straight years from 2000 through 2008.

    Lately, however, many defense and aerospace stocks have come under hard times. Just recently, a few defense names have come to life. Over the last three sessions, the DXS is up by 2.36% compared with just 0.10% for the S&P 500.

    A couple of stocks like General Dynamics (GD), Lockheed Martin (LMT) and Raytheon (RTN) are beginning to look very attractive. Check out their P/E ratios.

    From our Buy List, I like Moog (MOG-A). I’ve also written before that DigitalGlobe (DGI) and GeoEye (GEOY) both look very compelling.

    Here’s a look at the stocks in the index along with their dividend yield and forward P/E ratios:

    Company Symbol Price Yield Forward P/E
    AAR Corp. AIR $27.06 12.6
    Applied Signal Technology APSG $37.87 1.32% 29.6
    American Science and Engineering ASEI $84.64 1.42% 16.8
    Alliant Techsystems ATK $76.84 1.04% 8.9
    AeroVironment AVAV $26.70 22.4
    Boeing BA $68.76 2.44% 15.2
    Ball Corporation BLL $68.73 0.58% 12.8
    CACI International CACI $51.33 12.0
    Comtech Telecommunications CMTL $27.50 3.64% 19.0
    Rockwell Collins COL $59.74 1.61% 13.3
    Ceradyne CRDN $35.52 24.2
    Computer Sciences CSC $52.06 1.54% 9.2
    Cubic Corporation CUB $46.57 0.39% 16.7
    Ducommun DCO $21.99 1.36% 10.0
    DigitalGlobe DGI $30.31 86.6
    EMS Technologies ELMG $19.83 16.5
    Esterline Technologies ESL $68.07 13.7
    Elbit Systems ESLT $52.79 2.18% 10.8
    FLIR Systems FLIR $28.58 16.4
    Force Protection FRPT $5.73 15.1
    General Dynamics GD $71.17 2.36% 10.0
    GeoEye GEOY $39.92 21.2
    Goodrich GR $89.15 1.30% 17.0
    GenCorp GY $5.14 17.1
    Honeywell International HON $53.73 2.25% 14.3
    Herley Industries HRLY $16.94 12.1
    Harris Corporation HRS $47.01 2.13% 9.6
    L-1 Identity Solutions ID $11.89 297.3
    Integral Systems ISYS $11.12
    ITT Corporation ITT $52.83 1.89% 11.1
    Ladish LDSH $48.54 25.5
    L-3 Communications LLL $76.38 2.09% 9.2
    Lockheed Martin LMT $73.77 4.07% 11.2
    ManTech International MANT $39.22 10.7
    Moog MOG-A $42.64 13.7
    Mercury Computer MRCY $17.82 26.2
    NCI, Inc. NCIT $22.11 12.0
    Northrop Grumman NOC $67.05 2.80% 9.7
    Orbital Sciences ORB $17.42 20.7
    OSI Systems OSIS $35.95 16.4
    Oshkosh Corporation OSK $37.96 10.1
    Precision Castparts PCP $141.24 0.08% 16.5
    Raytheon Company RTN $49.69 3.02% 10.2
    SAIC Inc SAI $16.00 11.2
    SRA International SRX $25.30 16.5
    TASER International TASR $4.74 52.7
    Teledyne Technologies TDY $43.67 13.6
    Triumph Group TGI $93.58 0.17% 12.4
    Textron Inc. TXT $24.03 0.33% 18.9
    URS Corporation URS $40.27 10.9
    United Technologies UTX $78.01 2.18% 14.7
    ViaSat VSAT $44.17 29.8
    VSE Corporation VSEC $32.42 0.74% 6.5

  • The Invention of Money
    , January 10th, 2011 at 9:45 am

    This past weekend, This American Life had a good show on the subject of money: What exactly is money?

    It’s an interesting question and the answer isn’t so easy to explain. The show is about an hour long, and if you have the chance, I recommend giving it a listen.

  • Morning News: January 10, 2011
    , January 10th, 2011 at 7:29 am

    Stock Futures Lower on Portugal Concerns Despite M&A

    Wall Street Dumps Most Treasuries Since 2004 on Growth

    German Refusal to Boost Euro Rescue Fund May Weaken

    Euro Zone Debt Worries Return to Hit Euro, Stocks

    China’s Trade Surplus Decline Suggests Less Reliance on Exports

    China Stays World’s Largest Auto Market as 2010 Sales Jump 33% on Stimulus

    The Story Of 2011 Is That Major Emerging Markets Are Tanking

    Laos Launches Stock Exchange

    The Invention of Money

    Dupont to Buy Danisco for $5.8 Billion to Add Enzymes

    Patni-iGate Buyout Deal Valued at $1.22 Billion

    2 Goldman Traders to Set Up Their Own Fund

    Stocktwits Interview… with Charles Kirk

    Wanna feel old? The teacher from Van Halen’s “Hot for Teacher” video turns 50 today. Happy Birthday!

  • Townes Van Zandt – Dead Flowers
    , January 7th, 2011 at 5:47 pm

    The first week of 2011 was a good one for us. The Buy List gained 1.61% to the S&P 500’s 1.10%.

    Time to stop work. Have Townes Van Zandt get your weekend started right with this classic:

  • The Dow Has Missed the Rally
    , January 7th, 2011 at 10:15 am

    Here’s one for the wonks. The Dow Jones Industrial Average has badly trailed the S&P 500 since the rally began in late August.

    I’m not much of a fan of the Dow since it’s 30 stocks are weighted by price. The problem is that the Dow hasn’t captured the strength in cyclical stocks.

  • NFP = 103,000
    , January 7th, 2011 at 8:41 am

    The Labor Department has reported that the economy created 103,000 jobs last month. That’s not good. With revisions, the economy created 71,000 jobs in November and 210,000 in October.

    The unemployment rate fell to 9.4%. Ben Bernanke testified before Congress this morning. Here’s the bit getting a lot of attention:

    Although it is likely that economic growth will pick up this year and that the unemployment rate will decline somewhat, progress toward the Federal Reserve’s statutory objectives of maximum employment and stable prices is expected to remain slow. The projections submitted by Federal Open Market Committee (FOMC) participants in November showed that, notwithstanding forecasts of increased growth in 2011 and 2012, most participants expected the unemployment rate to be close to 8 percent two years from now. At this rate of improvement, it could take four to five more years for the job market to normalize fully.