• CA Technologies Rallies 3.6%
    Posted by on January 23rd, 2013 at 11:18 am

    Yesterday, the Russell 2000, Dow Transports, S&P Mid-Cap 400 and S&P Small-Cap 600 made all-time high closes. Also, the S&P 500 Healthcare and Consumer Discretionary Sectors made all-time highs.

    The market is about flat today. Earnings reports continue to pour in. Two standouts were IBM ($IBM) and Google ($GOOG), and both stocks are doing well today. Due to its high price, IBM has the largest weighting of any Dow stock (about 11%), so the Dow is ahead of the broader indexes today.

    CA Technologies ($CA) is also doing well thanks to yesterday’s good earnings report. The shares have been as high as $25.57 today. Right now, the stock is up 90 cents or about 3.6%. For the year, CA is a 15.5%. Not bad for a dull stock.

    We’re going to get Stryker’s ($SYK) earnings after the close, but the company already told us to expect good news so most of the pop is gone.

    The strength from tech earnings has helped push Oracle ($ORCL) to a new 52-week high. The stock got as high as $35.20 today. It had a lot of trouble breaking through $35.

    Our Buy List now has four stocks (ORCL, CA, MOG-A, SYK) that are up double-digits on the year. Ross Stores and Ford aren’t far behind.

  • Morning News: January 23, 2013
    Posted by on January 23rd, 2013 at 6:37 am

    Banks Too Big to Manage Find Davos Vows Too Hard to Win

    Global Economy Set for ‘Slow Recovery’

    Yen Strengthens as Japan Delays Stimulus; U.S. Futures Decline

    Europe’s Odd Couple, France and Germany, 50 Years Later

    Can Britain Forge Looser Ties to Europe Without Losing Influence?

    Google Still in a Struggle With Mobile

    Microsoft Risks Strain to PC Partnerships With Dell Investment

    Jamie Dimon Laments Too-Big-to-Fail? Give Me a Break

    Delta Confirms Return To US Profitability

    Allergan to Buy MAP Pharmaceuticals for $958 Million

    WellPoint Quarterly Profit Rises; Membership Increases

    Peregrine Financial Fraud Loss Tops $215 Million, U.S. Says

    The Great Rotation: A Flight To Equities In 2013

    Edward Harrison: Grexit

    Howard Lindzon: Howie’s Stock Market Investing Lessons…

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  • CA Technologies Earns 63 Cents Per Share
    Posted by on January 22nd, 2013 at 7:24 pm

    One of our more boring Buy List stocks, CA Technologies ($CA), is having a very good year so far. Through Tuesday’s trading the stock is up 11.69% on the year. After the close, the company reported better-than-expected earnings and reiterated its full-year forecast.

    For the three months ending in December, CA Technologies earned 63 cents per share which was two cents better than the Street’s consensus. Quarterly revenue came in at $1.2 billion which was also ahead of the Street at $1.17 billion.

    “I am very pleased to be a part of the CA Technologies team,” said CA Technologies CEO Mike Gregoire. “While we are encouraged by improvements we saw in the business during our third quarter, including increased demand for our Nimsoft, Infrastructure Management and Service Virtualization offerings, we know that we need to do more to accelerate innovation, gain market share and better differentiate our solutions in the marketplace.

    “We also know there is room for improvement in our cost of sales and in the speed and intensity with which we pursue our objectives,” he continued. “Over the next few months we will perform a detailed diagnostic of where we are, and lay out a plan on how to achieve our strategic and financial goals.”

    CA Technologies is currently sitting on a cash horde of just over $2.5 billion, which is more than $5.50 per share. The company reaffirmed its fiscal-year earnings-per-share forecast of $2.36 to $2.44. CA’s fiscal year ends in March.

    The stock is up 25 cents in the after-hours market.

  • Wells Fargo Raises Dividend By 14%
    Posted by on January 22nd, 2013 at 4:26 pm

    After the close, Wells Fargo ($WFC) announced that it’s raising its quarterly dividend from 22 cents to 25 cents per share. The bank will now pay out $1 for the whole year. Going by today’s close, that’s a yield of 2.85%.

    Wells Fargo & Company (WFC) today announced a quarterly common stock dividend of $.25 per share, an increase of three cents, or 14 percent, per share from the prior quarter. The dividend is payable March 1, 2013, to stockholders of record on February 1, 2013, as approved today by the Wells Fargo board of directors. Wells Fargo has approximately 5.3 billion shares outstanding.

    This dividend increase for the first quarter of 2013 was part of the company’s 2012 Capital Plan that the Federal Reserve did not object to in March, 2012. Wells Fargo submitted its 2013 Capital Plan on January 4, 2013, and it is currently under review by the Federal Reserve.

    “The dividend increase approved by our board today was included in our 2012 Capital Plan and reflected the confidence we have in our company’s performance,” Chairman and CEO John Stumpf said. “We remain committed to returning more capital to our shareholders. We requested an increase in capital distributions in our 2013 Capital Plan as compared to our 2012 plan, subject to review and non-objection by the Federal Reserve Board.”

    The Fed still needs to sign off on these dividend increases for many banks. Wells will have no trouble covering this dividend. If the earnings projections for this year are correct, Wells is passing on just 27% of its profits in the form of dividends.

  • Apple In Terms of Google
    Posted by on January 22nd, 2013 at 1:26 pm

    I admit this chart doesn’t mean much of anything but I was just curious to see it. This chart shows the price of Apple divided by the share price of Google. In other words, Apple in terms of Google.

    image1300

    Apple has about three times as many shares outstanding as Google.

  • Earnings Season Numbers
    Posted by on January 22nd, 2013 at 12:46 pm

    It’s still early but here are some numbers about this earnings season. The current consensus is for the the S&P 500 to earn $25.18 which is an increase of 6.1% over the Q4 from 2011.

    For all of 2012, the S&P 500 is expected to earn $98.85. That’s only a slight increase over the $96.44 from 2011. For 2013, the current consensus is for the index to earn $112.49.

    The current divisor for the S&P 500 is about 8.93 billion, so just multiply that to any of the figures I’ve given above and you can see the total dollar amount.

  • How Closely Tied Are Stocks and the Economy?
    Posted by on January 22nd, 2013 at 11:33 am

    Not as much as you’d think.

    Here’s a look at the annual nominal change in GDP (running along the bottom) with the change in the S&P 500 (running vertically).

    fredgraph01222013

    I didn’t run a regression, but just by eyeballing the results, the correlation looks pretty weak. This shouldn’t be too surprising. For one, the stock market is concerned with corporate profits, not the overall economy. Secondly, the stock market usually runs about six to nine months ahead of the economy. Finally, of course we know that the market can simply leave the realm of fair value entirely.

  • Yes, Now Investors Are Bullish
    Posted by on January 22nd, 2013 at 10:48 am

    What happens after a 3.8-year-old bull market?

    Bloomberg: Investors Are Most Optimistic on Stocks in 3 1/2 Years

    International investors are the most bullish on stocks in at least 3 1/2 years, with close to two- thirds planning to raise their holdings of equities during the next six months, according to a Bloomberg survey.

    As the global financial and business elite gather in Davos for their annual forum, 53 percent of respondents to the Bloomberg Global Poll also say equities will offer the highest return in the next year. That’s a 17 percentage point jump from the last poll in November and the most since the quarterly survey of investors, analysts and traders who subscribe to Bloomberg began in July 2009.

    Behind the enthusiasm for shares: growing confidence in the U.S. economy and ebbing concerns about Europe. America is in its best shape in two years, according to the poll, with a majority of the 921 surveyed on Jan. 17 describing the economy as improving. In a sign the euro-area’s three-year debt crisis is easing, only 45 percent said the region’s economy is still deteriorating, down from seven in 10 two months ago.

    “There does appear to be some cautious optimism that things are slowly being resolved,” Ben Kelly, an equity analyst at Louis Capital Markets in London and a poll participant, said in an e-mail. “There are some positive shoots that people are grabbing on to.”

    I think the underlying story is that people are finally getting fed up with the low yields in bonds and they’re starting to leave. This is part of what I’ve talked about recently as fear is slowing melting away from this market.

  • S&P 500 Comes Within 1% of 1,500
    Posted by on January 22nd, 2013 at 10:37 am

    The stock market is holding on to some small gains this morning ahead of some major earnings announcements today. At one point, the S&P 500 got as high as 1,486.34. That’s just 1% away from 1,500.

    On Friday, the $VIX plunged down to 12.26 during the day, though it’s back over 13 today. I’ve backed-tested the numbers and found that 13 is the magic number for the VIX; the stock market has performed much better below that number than above it.

    One of our former Buy List stocks, Johnson & Johnson ($JNJ), reported earnings above Wall Street’s consensus, but the company guided below analysts’ forecasts for the year. The Street had been expecting $5.49 per share but JNJ said EPS will range between $5.35 and $5.45 for 2013. As much as I like the company, I think shares of JNJ are a bit overpriced here.

  • Morning News: January 22, 2013
    Posted by on January 22nd, 2013 at 6:29 am

    Markets Tumbling, Yen Soaring After Historic Move By The Bank of Japan

    Euro Area Grapples With ESM Rules as Legacy Assets Loom

    German Investor Confidence Increases to 2 1/2-Year High

    Spain Escapes Aid But Doubts Remain

    UK Credit Rating Under Threat As Borrowing Rises Again

    Greece’s New Loan Payout Cleared by Euro Area Signals Optimism

    U.N. Agency Warns of Rising Unemployment

    Prophesies Made in Davos Don’t Always Come True

    With Tax Advantages Looking Shaky, Private Equity Seeks a New Path

    Profits at $1 Trillion Meet Valuations as S&P 500 Rallies

    Atari’s U.S. Division Files for Bankruptcy, Hoping for a Sale

    GM’s Girsky Says Major Cost Cuts Still Needed At Opel

    Early Sales Tempered With Caution at Sundance

    Jeff Carter: Microeconomic Mondays-Perfect Competition, Producer Surplus

    Joshua Brown: New Secular Bull: Yes or No?

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