Upcoming Buy List Earnings Reports
Posted by Eddy Elfenbein on April 12th, 2012 at 9:27 am

Of the 20 stocks on our Buy List, 16 follow the March/June/September/December quarterly schedule. Here’s a look at when the 16 are due to report. I’ve also included Wall Street’s earnings estimate. Note that not all companies have said when they’re going to report.

Morning News: April 12, 2012
Posted by Eddy Elfenbein on April 12th, 2012 at 5:54 am

Italian Government Bonds Advance for 2nd Day Before Sale

Monti to Tackle Italy Corruption as Scandals Topple Politicians

World Bank Cuts China 2012 Growth Outlook on Exports

China’s New Yuan Loans Surge as Money Supply Accelerates

Greek Crisis Leaves Cyprus Mired in Debt

Economy Continues to Recover Modestly, Fed Reports

Fed May Extend Support Past 2014, Official Says

Treasury Faulted in Effort to Relieve Homeowners

U.S. Alleges E-Book Scheme

Energy Costs Stir Worries in U.S. Economic Expansion

BrightSource Energy Withdraws IPO, Citing Market Volatility

Carrefour Cites ‘Difficult’ Retail Environment as Sales Rise

Nokia Sales Slump Puts Pressure on Elop to Consider Split

Stores Go Online to Find a Perfect Fit

Why Bank of America Is a Buy Now

Roger Nusbaum: Small Trade Executed

Jeff Carter: MRUN.us

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Does “Sell in May” Really Work?
Posted by Eddy Elfenbein on April 11th, 2012 at 1:34 pm

There’s an old Wall Street saying that investors should “sell in May and go away.” Recent years have been excellent examples. Last year, the stock market peaked on April 29th and in 2010, it peaked on April 23rd. This year, the S&P 500 is down since April 2nd.

I recently crunched all the Dow’s daily closing figures going back to 1896 and found that there is, indeed, a seasonal effect. The chart below shows what the Dow has done, on average, throughout the year. Historically, the Dow hits a peak on May 6th and pulls back an average of 1.33% by May 25th. The chart shows that even by October 27th, the Dow has advanced just 0.34% from May 6th. This means that the market is nearly flat for slightly more than one-third of the year. Excluding that period, that has gained an average of 7.5% for the rest of the year.

Morning News: April 11, 2012
Posted by Eddy Elfenbein on April 11th, 2012 at 6:19 am

Germany Grows Robust from Sick Man With Demand at Home

Japanese Investors Shun Spanish Bonds

Trade Gains Put China in Quandary

IMF Said Ready to Cut China Current-Account Surplus Forecast

Oil Trades Near Eight-Week Low on Rising U.S. Inventories

New Stance of Forgiving Mortgages

Lenders Again Dealing Credit to Risky Clients

Facebook Plays Offense and Defense in a Single Deal

A Billion-Dollar Turning Point for Mobile Apps

Apple Market Value Jumps Above $600 Billion Mark

SAP Challenges Oracle With $500 Million Hana Incentive

Alcoa Sees Aluminum Cuts as Production Gains

Best Buy CEO Resigns During Personal Conduct Probe

Luxury Goods Oust Executives With Global Economy in Flux

Joshua Brown: Earnings Season Approaches! Four Things to Watch For

Pragmatic Capitalism: It’s The Eurozone That’s Turning Japanese…Or Maybe We All Are

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Changes at the Top at Best Buy
Posted by Eddy Elfenbein on April 10th, 2012 at 10:55 am

Brian Dunn is out at Best Buy ($BBY). Since he became CEO, the stock had dropped from $33 to $22 while the S&P 500 rallied from 900 to 1,400.

Numbers Tell the Story
Posted by Eddy Elfenbein on April 10th, 2012 at 8:15 am

Investor’s Business Daily referenced this post in one of their editorials.

Numbers tell the story. Since Obama entered office promising a jobs boom from his “stimulus,” the economy has lost 1.6 million jobs. Since the employment peak in early 2008, 5.2 million jobs have disappeared.

Labor participation rates have plunged in recent years, in part due to retirements, but mostly due to people just dropping out — they can’t find jobs at all.

Today, a record 100.5 million Americans older than 16 don’t have jobs, up 34% since 2000. As Eddy Elfenbein, editor of the Crossing Wall Street blog, notes, “If we were to have the same jobs-to-population ratio as 12 years ago, there would have to be 14.6 million more jobs, or 22.6 million fewer people.”

That’s the scale of the damage done to our economy.

“DirecTV Simply Looks Too Cheap”
Posted by Eddy Elfenbein on April 10th, 2012 at 8:03 am

Bloomberg has an interesting article today on one of our Buy List favorites, DirecTV ($DTV). The article highlights two importact facts about DTV.

One is how well the company is doing in Latin America (“It’s not hard to envision a day when Latin America is perceived to be the core of DirecTV, and where the U.S. is an afterthought”).

The other is the enormous cash flow the company generates. They’re buying back $100 million of their shares per week.

Morning News: April 10, 2012
Posted by Eddy Elfenbein on April 10th, 2012 at 5:45 am

Spain Confronts Crisis Threat as Rajoy Seeks Deficit Cuts

In Surprise, China Posts Trade Surplus

Food Prices Push Rate of Inflation Up in China

Bank of Japan Stands Pat But Seen Keeping Finger on Trigger

Bernanke Says Banks Need Bigger Capital Buffer

Obama Candidate Sketches Vision for World Bank

Raising the Floor on Pay

Sony Posts Record Loss After Taking $3.7 Billion Tax Charge

Microsoft’s AOL Deal Intensifies Patent Wars

Billionaires Unmasked as Coty Persists in Pursuit of Avon

Facebook to Buy Photo-Sharing Service Instagram for $1 Billion

AT&T to Sell Majority of Yellow Pages Business to Cerberus

A Costly Toy Subsidized by Others

Credit Writedowns: The Ways China Can Rebalance

Howard Lindzon: Creating Shareholder Value….Yahoo vs. AOL

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Goodbye Dow 13,000
Posted by Eddy Elfenbein on April 9th, 2012 at 5:26 pm

Today was an ugly day on Wall Street. The market is still reeling from Friday’s jobs report. The cylicals were hit especially hard as were many financials.

There are a few things to remember: The market has climbed almost continuously for six-straight months, so some give back is to be expected. Also, the jobs report is hardly evidence that the new recession is on the way. It merely signals that jobs growth isn’t quite as robust as we thought. These numbers will be revised and the other evidence continues to show a modestly improving jobs environment.

One outlier in today’s selloff was Nicholas Financial ($NICK). The shares closed at $12.42 which is a 5.48% fall from Thursday’s close. The stock got as low at $12.14 in today’s trading. I wouldn’t worry about this at all.

There’s absolutely no news to indicate that NICK is in any trouble. This is purely a market-driven event. If anything, the belief that the Fed will hold down rates for a while longer is actually good news for NICK. Going by today’s close, the stock yields 3.22%.

The Reckoning for Friday’s Jobs Report
Posted by Eddy Elfenbein on April 9th, 2012 at 10:18 am

The stock market is getting its first chance to react to Friday’s lousy jobs report, and not surprisingly, it’s not happy. The Dow is down 140 points and the S&P 500 is below 1,380.

The cyclicals and financials are taking most of the hits. The gold market is up which makes sense if traders expect the Fed will be more accommodative (though it’s kinda hard to be any more accommodative at this point). The bond market is also rallying.

This could be the fourth down day in a row for the market. Plus, it would finally snap the “up, up, down, down, down” trend of the past three weeks. Still, this isn’t that much of a drop. We’re currently off about 2.7% from the 44-month high we made last Monday.

I said that the stock market had two hurdles coming — one was the jobs report and the second was earnings season. Wall Street clearly didn’t like the first, so now it’s up to the second. As I’ve said, I expect the market to bounce around for a few weeks until we have a clearer picture of what the second half of 2012 will look like. That’s why I’m not only focusing on earnings but also on company guidance.