This holiday shortened week is chalk full of economic data. Today saw a (not) unexpected 10% bump in existing home sales. This of course was due to first time home-buyer's tax credits and the continuing momentum in "short" sales.
Traders seemed to embrace this and Monday's pre-market 90+ Dow futures held up through Monday's close. There was also data showing a slight improvement in punctual credit card payments. However, this is likely due to less plastic being carried around in wallets and purses these days.
Two stocks on our Merriam Report Focus List reported earnings in-line with our expectations. Management at Ross Stores (ROST)continues to navigate this difficult retail environment in good style and we initiated partial positions in this well-run retail apparel discounter following the earnings release.
Target (TGT) also provided numbers that were in line, but sales growth was darn near flat. You can read our updates on these two companies at the MR website.
We also added biotech giant Amgen (AMGN) and packaging maker Silgan Holdings (SLGN) to our Focus List .
Jason's latest market musings were just published on the Seeking Alpha financial website. Titled, "Stock Market Needs Lubrication (and a reality check)", it discusses some interesting divergences in this seemingly unstoppable rally. You can read the article here. Have a safe and happy holiday.
Monday, November 23, 2009
Thursday, November 5, 2009
Market News for November 5th
CVS gets a whoopin while Cisco shines
Thursday's market tape was impressive, even without volume to speak of. Tech bellweather Cisco (CSCO) beat estimates on lower sales (who would have guessed), while retail pharmacy and prescription benefit giant CVS Caremark saw its shares taken to the woodshed.
We used the weakness (shares of CVS were down 22% at one point) to initiate and add to CVS positions. Much of the whip-lash was due to company failing to land some Medicare and corporate contracts. We believe investors had bid up the shares over the past few months in anticipation of these deals.
However, CVS has very good earnings quality and we agree with management that the PBM model (integrating Caremark into the fold) is a good one. The company has a good track record of assimilating acquired businesses.
While the Caremark deal was a mouthful to integrate (CVS paid $27 billion in 2007), we have faith that things will work out. At any rate, CVS shares look attractive at the $28 area.
Comparing fruit can get folks uppity!
If you think comparing apples-to-oranges is tough, try comparing apples-to-blackberries. Our newly published article on the Seeking Alpha website titled "Apple Remains Overvalued, Despite its Gadget Glory" garnered lots of comments. Judging by the tone of replies, we apparently ruffled the feathers of some obviously die-hard Apple (AAPL) devotees. Our analysis may be unconventional, but we're sticking to our guns on this one. Controversy is a healthy thing and everyone is entitled to their opinion. It's just that we think shares of Research in Motion (RIMM) offer better value.
Thursday's market tape was impressive, even without volume to speak of. Tech bellweather Cisco (CSCO) beat estimates on lower sales (who would have guessed), while retail pharmacy and prescription benefit giant CVS Caremark saw its shares taken to the woodshed.
We used the weakness (shares of CVS were down 22% at one point) to initiate and add to CVS positions. Much of the whip-lash was due to company failing to land some Medicare and corporate contracts. We believe investors had bid up the shares over the past few months in anticipation of these deals.
However, CVS has very good earnings quality and we agree with management that the PBM model (integrating Caremark into the fold) is a good one. The company has a good track record of assimilating acquired businesses.
While the Caremark deal was a mouthful to integrate (CVS paid $27 billion in 2007), we have faith that things will work out. At any rate, CVS shares look attractive at the $28 area.
Comparing fruit can get folks uppity!
If you think comparing apples-to-oranges is tough, try comparing apples-to-blackberries. Our newly published article on the Seeking Alpha website titled "Apple Remains Overvalued, Despite its Gadget Glory" garnered lots of comments. Judging by the tone of replies, we apparently ruffled the feathers of some obviously die-hard Apple (AAPL) devotees. Our analysis may be unconventional, but we're sticking to our guns on this one. Controversy is a healthy thing and everyone is entitled to their opinion. It's just that we think shares of Research in Motion (RIMM) offer better value.
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