• Medtronic Earns 72 Cents a Share
    Posted by on August 19th, 2008 at 9:54 am

    This morning, Medtronic (MDT) posted adjusted fiscal first-quarter earnings of 72 cents a share which topped Wall Street’s forecast of 69 cents a share. For last year’s Q1, the company earned an adjusted 62 cents a share, so that’s an impressive increase. Revenues rose 18.5% to $3.71 billion. Sales for its spinal biz rose 33%. Revenue outside the U.S. grew by 24% and accounted for nearly 40% of all revenue.
    This is the latest is a string of good news for the company. A few weeks ago, the board increased the quarterly dividend by 50%. In May, the company said it expects earnings-per-share for 2009 to range between $2.94 and $3.02. After today’s report I wouldn’t be surprised to see that range revised higher. If Q2 earnings come in at 70 cents a share or better, than I think MDT should easily earn $3 this fiscal year.
    Here’s a look at MDT’s sales and earnings for the past several quarters:
    Quarter………..EPS………….Sales
    Jul-01…………$0.28………..$1,455.70
    Oct-01………..$0.29………..$1,571.00
    Jan-02………..$0.30………..$1,592.00
    Apr-02………..$0.34………..$1,792.00
    Jul-02…………$0.32………..$1,713.90
    Oct-02………..$0.34………..$1,891.00
    Jan-03………..$0.35………..$1,912.50
    Apr-03………..$0.40………..$2,148.00
    Jul-03…………$0.37………..$2,064.20
    Oct-03………..$0.39………..$2,163.80
    Jan-04………..$0.40………..$2,193.80
    Apr-04………..$0.48………..$2,665.40
    Jul-04…………$0.43………..$2,346.10
    Oct-04………..$0.44………..$2,399.80
    Jan-05………..$0.46………..$2,530.70
    Apr-05………..$0.53………..$2,778.00
    Jul-05…………$0.50………..$2,690.40
    Oct-05………..$0.54………..$2,765.40
    Jan-06………..$0.55………..$2,769.50
    Apr-06………..$0.62………..$3,066.70
    Jul-06…………$0.55………..$2,897.00
    Oct-06………..$0.59………..$3,075.00
    Jan-07………..$0.61………..$3,048.00
    Apr-07………..$0.66………..$3,280.00
    Jul-07…………$0.62………..$3.127.00
    Oct-07………..$0.58………..$3,124.00
    Jan-08………..$0.63………..$3,405.00
    Apr-08………..$0.78………..$3,860.00
    Jul-08…………$0.72………..$3.706.00

  • PPI Rises at Fastest Rate Since 1981
    Posted by on August 19th, 2008 at 9:29 am

    Ah, it seems like old times. Not only is the Cold War coming back, but today’s report on producer prices indicates that wholesale inflation is at its highest level in 27 years.
    The PPI jumped 1.2% last month which is more than double what economists were expecting. Even if you strip out food and energy and just look at the “core rate” wholesale inflation still rose by 0.7% or more than three times the 0.2% expected by economists.

    For July, wholesale energy prices jumped by 3.1 percent following a 6 percent gain in June. That increase reflected big jumps in the price of natural gas, home heating oil and liquefied petroleum gas, which offset a 0.2 percent dip in gasoline costs.
    Food prices rose by 0.3 percent in July after a 1.5 percent surge in June. Beef prices jumped by 7.4 percent, the biggest increase in nearly four years. Milk prices shot up by 5 percent, the biggest gain in a year, while soft drink prices rose by 2.4 percent, the largest increase in four years.
    Excluding energy and food, the 0.7 percent rise in core inflation reflected big gains in the prices of passenger cars and light trucks, pharmaceutical preparations and plastic products.

    Naturally there’s a bit of a lag to these numbers and the dramatic sell-off in oil prices will most likely be seen in next month’s report.

  • More Troubles on Wall Street
    Posted by on August 18th, 2008 at 2:07 pm

    Part 1:

    Part 2:

    Part 3:

    From Equity Private.

  • From the Halls of Academia
    Posted by on August 18th, 2008 at 1:50 pm

    Finally!
    A New Value-Weighted Total Return Index for the Finnish Stock Market 1912-1969

  • JNJ Hits New High
    Posted by on August 18th, 2008 at 1:11 pm

    I really like the stock of Johnson & Johnson (JNJ). Few companies have been as stable long-term winners as JNJ. A few months ago, I said it was a good buy, especially under $60. Just recently, the shares finally took out their 2005 high. The company reported good earnings again last month. JNJ now sees 2008 EPS coming in at $4.45 to $4.50 which is almost certainly too low.
    Here’s a look at JNJ’s stock (blue line, left scale) and earnings (gold line, right scale with EPS projection in red). The two lines are scaled at 16-to-1.
    image706.png

  • The Nasdaq Lauches for New Indexes
    Posted by on August 18th, 2008 at 11:42 am

    The Nasdaq has announced that it’s launching four new indexes; biotech, coal, steel and precious metals.
    If anyone needs me, I’ll be shorting biotech, coal, steel and precious metals.

  • The Plunge of Gold Continues
    Posted by on August 18th, 2008 at 11:20 am

    A few weeks ago, I wrote about the recent peak in gold prices and said that we’re never quite sure if we’re in a bubble until it’s over. Perhaps one of the best signs that we’re in a bubble is that people will refuse to acknowledge that we’re in a bubble. If that’s any indication, the commentors on my post at Seeking Alpha definitely should have clued us in that gold was headed for a big fall.
    Bloomberg reports this morning:

    Gold may fall for a sixth straight week, the longest slide in four years, as a strengthening dollar erodes the precious metal’s appeal as an alternative investment.
    Twelve of 21 traders, investors and analysts surveyed from Mumbai to Chicago on Aug. 14 and Aug. 15 advised selling gold, which last week fell to $792.10 an ounce in New York, capping an 8.4 percent drop for the week that was the biggest in 25 years. Eight respondents said to buy, and one was neutral.
    Gold, priced in dollars, generally moves in the opposite direction of the U.S. currency. Gold is down as much as 25 percent from a record $1,033.90 reached on March 17. The last time the metal fell for six straight weeks was in May 2004.

    If you have some time for a little cheap entertainment, this link will take you to the Yahoo Message board posts for Cisco’s stock on March 27, 2000. That was the highest day for the hottest stock of the era. These posters are so madly in love with their stock it’s almost funny. Absolutely no criticism is allowed. Just look at the posts. They have a religious intensity to them.
    To scroll through the posts, just click on the > symbol right by the time stamp.

  • A 400,000% Return
    Posted by on August 18th, 2008 at 11:06 am

    Floyd Norris asks, “Has a Penny Stock Become a Big Company?”
    In my opinion, the short answer is no. If any company is serious about its business and its future, it has no business being listed on the pink sheets. Any real company has nothing to fear from full disclosure. Multimedia Kingpin Tim Sykes makes his living doing nothing but spotting phony pink sheet stocks that have no reason business outside of issuing daily press releases.
    The longer answer, however, is that yes, a very smaller number of stocks that have fallen to less than $1 per share have gone on to become real companies.
    In early 1985, Apco Argentina (APAGF) traded for as little as 12.5 cents (or an 1/8 back then). The stock has since split 4-for-1 (last November) so it was even less than that. It’s now worth about $27 a share,
    A better example is Mylan Labs (MYL). That stock was going for 75 cents a share in 1976. Since then it’s split 11 times (one 5-for-4, four 2-for-1 and six 3-for-2) for a total of 227.8125 for 1. Which means that adjusted for splits, the stock was going for less than one-third of a penny per share. Mylan is now going for $13.72 which is about half what it was five years ago. Still, that’s a nice 400,000% return from its low.
    (H/T: Paul K.)

  • Inflation at 17-Year High
    Posted by on August 14th, 2008 at 4:09 pm

    Ugh.

    Inflation reached a 17-year high last month, fueled by high gasoline and food prices, all but assuring that the Federal Reserve will keep interest rates at their current level for the time being.
    Consumer prices were 5.6 percent higher last month than they were in July 2007, a brisker pace than economists had expected, the Labor Department said on Thursday.
    That was the sharpest annual increase since January 1991, as Americans paid more for clothing, food, transportation and recreational products.
    The news was distressing for investors and the stock markets initially fell on the report. The major exchanges recovered, however, and the Dow Jones industrials up more than 80 points in early afternoon trading. Investors returned to buying financial stocks, taking advantage of a sector that has fared poorly in recent sessions. The broader S.&P. 500-stock index was up 0.46 percent. Wal-Mart also reported a better-than-expected rise in quarterly profits, but the discount retail giant also issued a gloomy sales forecast for the rest of the year. In addition, crude oil prices continued to fall, dropping below $113 a barrel.
    The overall Consumer Price Index, considered the benchmark gauge of domestic inflation, rose 0.8 percent in July. Economists had forecast a rise of half that rate. In June, prices rose 1.1 percent, the second highest monthly pace in 26 years.

    image705.png

  • Stat of the Day
    Posted by on August 13th, 2008 at 6:42 pm

    From its peak in 1980, if the price of gold had kept pace with total return of the Wilshire 5000, today gold would be worth over $21,000 an ounce.