Disaster Two Days for Media Stocks
Posted by Eddy Elfenbein on August 6th, 2015 at 5:06 pm

Yesterday and today have been terrible for media stocks. Here’s the S&P 500 Media Stock Total Return Index:

Thanks to big losses from Disney (DIS) and Viacom (VIA), the sector has looked terrible. Twenty-First Century Fox (FOXA) and Time Warner (TWX) have also been weak.

Meanwhile, Netflix (NFLX) is near another new high.

Morning News: August 6, 2015
Posted by Eddy Elfenbein on August 6th, 2015 at 7:13 am

German Orders Post Strongest Quarterly Rise in More Than 4 Years

Lone Bank of England Official Votes to Raise Rates, Others Unrushed

A Long Time Coming, Sunlight on the Executive Pay Gap

Google’s $6 Billion Miscalculation on the EU

Bill Ackman Has Found His Next Big Target: Mondelez

Viacom Reports Results for June Quarter; Adjusted EPS Up 4% To a Record $1.47

Neiman Marcus Is Set To Return To Public Stock Markets After A Decade In Private Hands

CF Industries to Buy Businesses from OCI for $6 Billion

Disney Buys Anaheim Land, Sparking Expansion Speculation

Planet Fitness IPO Prices at $16 a Share

Adidas’s Earnings Rise Slightly, May Shed Golf Business

Tesla Tanks as Musk Struggles With SUV’s Artsy Middle Seat

From Frat Brothers to FBI Suspects

Joshua Brown: The Riskalyze Report: Advisors Shorten Up Duration

Cullen Roche: Why Countercyclical Indexing Makes Sense

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Realities of Investing
Posted by Eddy Elfenbein on August 5th, 2015 at 12:42 pm

This chart caught my eye. This shows the long-term performance of Consumer Discretionaries (XLY) and Energy (XLE). Note how different they are. Both have had periods of tremendous growth, and both have also had rough patches.

These aren’t individual stocks but major market sectors, and they’re still vulnerable to the whims of the market.

Cognizant Beats and Raises Guidance
Posted by Eddy Elfenbein on August 5th, 2015 at 7:22 am

This morning, we got the final earnings report of this season. Cognizant Technology Solutions (CTSH) just posted Q2 earnings of 79 cents per share. That was six cents better than estimates. Revenue rose 22.6% to $3.09 billion.

Cognizant also sees full-year earnings of at least $3 per share. The previous guidance expected earnings of at least $2.93 per share. They’ve already earned $1.50 per share for the first half of this year.

The Company is providing the following guidance:

Third quarter 2015 revenue expected to be at least $3.14 billion.

Third quarter 2015 non-GAAP diluted EPS expected to be at least $0.75.

Fiscal 2015 revenue expected to be at least $12.33 billion, up at least 20.1% compared to 2014.

Fiscal 2015 non-GAAP diluted EPS expected to be at least $3.00.

“Our strong performance has allowed us to raise our full year revenue and EPS guidance for the second time this year, despite the impact to our full year revenues from the announcement that Health Net would be acquired by Centene Corporation,” said Karen McLoughlin, Chief Financial Officer. “During the quarter, we repurchased $153 million of shares, under our existing stock repurchase program, reflecting our strong cash flows and our confidence in the strength of our business.”

The shares are up 5% in pre-market trading.

Q2 Earnings Calendar
Posted by Eddy Elfenbein on August 5th, 2015 at 7:14 am

Sixteen of our 20 Buy List stocks have reported Q2 earnings in the current reporting season. Here’s a list of reporting dates and Wall Street’s consensus estimates.

Morning News: August 5, 2015
Posted by Eddy Elfenbein on August 5th, 2015 at 7:05 am

I.M.F. Report Recommends Delay in Elevating China’s Currency

Puerto Rico Has Another Debt Worry on Horizon

Atlanta Fed’s Lockhart: Fed Is ‘Close’ to Being Ready to Raise Short-Term Rates

Luxury Retailer Neiman Marcus is Going Public

GE Unveils Customized Cloud Service in Industrial Data Push

Cognizant Announces Record Second Quarter 2015 Results

Netflix Offers Employees One Year Paid Parental Leave

Standard Chartered Profit Fell 37% in First Half

DreamWorks Animation Loses $38.6 Million in Second Quarter

Disney Earnings Soar 11%, But Changes in TV Industry Pose Risks

ING’s Underlying Net Up 21% on Loan, Deposit Growth

First Solar’s Profit Surges on Higher Revenue and a Tax Gain

Buffett’s Celebration Tempered by 50th Anniversary Stock Slump

Joshua Brown: What Happens After The S&P 500 Posts a Lame First Half?

Cullen Roche: Why Are People Worried About Bond Market Liquidity?

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Panic Selling Costs You
Posted by Eddy Elfenbein on August 4th, 2015 at 1:30 pm

Sam Ro points out a study done by Bank of America Merrill Lynch’s Savita Subramanian:

“We compare a buy-and-hold strategy vs. a panic selling strategy from 1960-present,” she said in a recent note to clients. “We assume an investor sells after a 2% down-day and buys back 20 trading days later, provided the market is flat or up at the end of that period.”

Can you guess what happened?

“This strategy underperforms the market on a cumulative basis since 1960 both overall and during every decade, given the best days typically follow the worst days.”

This confirms what we’ve believed for a long time. It’s best for investors to ride out storms. In fact, the worst of it has usually passed by the time you even realize you’re in a storm.

Good July for Ford
Posted by Eddy Elfenbein on August 4th, 2015 at 10:13 am

After slipping for several months, sales at Ford (F) rose 4.8% last month.

The company finally found some momentum in both production and demand. “As our inventories continue to improve, we are seeing sales follow,” Ford Vice President Mark LaNeve said on a conference call this morning. He added that Ford’s pickup workers are getting “very good at squeezing additional production now when we need it.”

It’s difficult to overstate how critical this truck is to Ford and the size of the shadow it casts on the auto business at large. It has been the best-selling vehicle in the U.S. for decades, and it is the closest thing this fickle industry has to a sure thing.

Morning News: August 4, 2015
Posted by Eddy Elfenbein on August 4th, 2015 at 7:20 am

Puerto Rico Just Defaulted On Its $72 Billion Debt Pile

Oil’s Below $50 and About to Get Worse

Auto Sales Jumped in July; G.M. and Fiat Chrysler Were Up 6%

CVS Health Gives Soft Outlook Despite Strong Pharmacy Sales

Aetna Profit Beats as Government Plans Expand

Toyota Warns of Tougher China Market, Raises Japan Target

Glamour Is Out At Pimco As It Begins To Recover From Gross Exit

Alibaba Group Appoints Michael Evans as President of Alibaba Group

Archer Daniels Midland Earnings Fall on Record Ethanol Production

Scripps Networks Profit Rises 26% on Higher Affiliate Fees

Regeneron Pharmaceuticals Profit Doubles

Macy’s Is Taking On Amazon With Same-Day Delivery in 17 Cities

BMW Shifts Gear and Steers Sales Away From China

Howard Lindzon: Something Has to Give !?

Roger Nusbaum: A Deceptively Volatile Week

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Earnings Beats Ain’t What They Used to Be
Posted by Eddy Elfenbein on August 3rd, 2015 at 2:09 pm

At CNBC, Alex Rosenberg notes that companies beating earnings aren’t getting the love they used to:

“One possibility is that this far in the cycle, investors understand company fundamentals well enough that surprises aren’t really surprising,” Convergex chief market strategist Nicholas Colas told CNBC.

In other words, investors don’t need to be convinced that a company is able to operate profitably, and the questions answered by a given earnings report are thus less consequential than they used to be.

A similar argument can be made about momentum stocks, according to Eddy Elfenbein, author of the “Crossing Wall Street” blog.

“One of the few areas that have been working consistently has been momentum stocks like biotech and online retail names,” Elfenbein wrote recently. “That’s the sign of an aging bull, and I think the reaction to earnings beliefs reflects the thought that the ceiling is close for momentum.”

So at the same time moderate growth is less noteworthy, fast growth isn’t quite as impressive as it used to be, either. Investors figure that it won’t last forever.