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Inflation May Show It’s Ugly Head, Big Week for Bank Earnings

Christian Hill — Mon, 13 Jul 2009 15:00:33 +0000

Monday

Earnings Announcements: Novellus (NVLS)

Tuesday
Economic Reports: Core PPI, PPI, Retail Sales

Will this be the month that we finally see inflation take hold? If expectations come true, it very well could be. PPI is anticipated to show an increase of nearly 1%. Core PPI (which excludes food and energy costs) is expected to show an increase of 0.10%. Retail Sales are expected to post a surprising increase. Most reports I have seen show that retailers are still struggling. I don’t expect this report to beat expectations.

Earnings Announcements: Goldman Sachs (GS), Johnson and Johnson (JNJ), Yum Brands (YUM)

Wednesday
Economic Reports: Core CPI, CPI

The CPI is expected to show an increase of 0.60%, and Core CPI an increase of 0.10%. If both CPI and PPI meet expectations, we could be in for the start of a long bout of inflation.

Earnings Announcement: Abbott Labs (ABT)

Thursday
Economic Report: Philadelphia Fed

If we meet expectations this month with the Philadelphia Fed report, it will mark 19 out of the last 20 months showing a negative reading. Last month we almost saw a positive reading, but this month we slipped back a little bit. The good news is the decline is slowing and has bounced back considerably in the past few months.

Earnings Announcement: Baxter Int’l (BAX), Harley-Davidson (HOG), JPMorgan Chase (JPM), Google (GOOG), IBM (IBM)

Friday
Economic Calendar: Building Permits, Housing Starts

Housing this week is a mixed bag. Permits are expected to increase and starts are expected to decrease. I would expect both reports to miss estimates. While we are in the midst of the traditional building season in the northern states, I just can’t see the housing industry adding more inventory.

Earnings Announcements: Bank of America (BAC), Citigroup (C), General Electric (GE)

Source: Inflation May Show It’s Ugly Head, Big Week for Bank Earnings

Inflation, Retail, and Housing Reports; Earnings Go Full Bore

Christian Hill — Mon, 13 Apr 2009 15:45:14 +0000

This promises to be a very busy week with a full calendar of economic reports and earnings announcements, so let’s dive right in and highlight some of the more important ones.

Tuesday:
Economic Reports: PPI, Core PPI, Retail Sales.

Are we beginning to see inflation creep in? Those were my thoughts after the January and February reports showed increases in the PPI. But this month’s reports are expected to stay flat. The Core PPI report which excludes food and energy costs is expected to post a slight increase. The figure has been increasing every month since January, but the increase is slowing every month. So with both these reports remaining relatively the same, inflation seems to be held in check at least for now.

Retail Sales for March are announced at 8:30 am, and somehow, someway, they are expected to show an increase versus February. I’m not sure where this jump is coming from, so I will be curious to see the data when it is released.

Earnings Announcements: CSX, GS, INTC, JNJ

Wednesday:
Economic Reports: CPI, Core CPI, Industrial Production, Fed Beige Book

Much of what I said above about the PPI reports applies to the CPI and Core CPI reports released today. Both are expected to show increases, but a smaller increase than the last few months. Inflation is still being held in check.

Industrial Production is unfortunately expected to show further declines. While this pace is also slowing, it is still not encouraging that we are still seeing a decline at all. Until factories get back to increased production, the economy is going to struggle.

While it does not come with an expected number, the Fed Beige Book still garners attention when it is released. It gathers insight from the twelve Fed regions relating to their individual outlooks on their region. This is combined to give an overall national outlook. Hopefully at least a few regions will begin to show some positive economic signs.

Earnings Announcements: ABT

Thursday:

Economic Reports: Building Permits, Housing Starts, Philadelphia Fed

Housing is back in the news on Thursday. March Building Permits are expected to show a slight increase, while Housing Starts in March are expected to show a much larger decline. After a few months of the market expecting increases and being disappointed for the most part, this month seems a lot more realistic. I expect both these reports to be in line with expectations.

The Philly Fed report also comes out Thursday, and it looks like the manufacturing sector is facing continued slowdowns. As I mentioned with the Industrial Production report, manufacturing needs to get going to help bolster the economy. It looks like that’s not happening anytime soon, based on how far down this reading has slipped.

Earnings Announcements: BAX, GOOG, HOG, JPM

Friday:

Economic Reports: Michigan Sentiment

It looks like consumers are at least starting to feel better. While this reading would be encouraging if it holds true (consumers need to feel positive about things in order to spend money), we could still be a long way from a real turnaround.

Earnings Announcement: C, GE

Source: Inflation, Retail, and Housing Reports; Earnings Go Full Bore

Nothing Left for The Big Bad Wolf

Christian Hill — Tue, 20 Jan 2009 15:48:49 +0000

The only reports on the calendar this week are housing related, and it got me thinking: what’s left? Pretty much nothing. As the fairy tale goes, the big bad wolf doesn’t even need to huff and puff; the house has already been blown down.

Foreclosures jumped 81 percent nationwide last year. That’s 3.2 million homes.

In December alone, foreclosures jumped 41 percent versus the December 2007 reading.

The readings for the reports this week anticipate further drops in both December Building Permits and Housing Starts. The only question is by how much. Last month, expectations for both reports were off by at least 10 percent. This month is expected to be nearly identical to last month for Building Permits, and a drop of about 15k units in the Housing Starts report.

Try as I might, I can’t see either of these reports coming close to expectations. I don’t think a slowdown of 75k units on each is unrealistic. The housing market is just in terrible shape. Excess inventory is growing, not shrinking. A reading of 550k or even less on both reports is reasonable. I guess we will find out Thursday.

Earnings:
Tues: BAC, CSX, IBM, JNJ,
Wed: ABT, AAPL, EBAY, USB, UTX
Thur: BAX, GOOG, MSFT
Fri: GE, HOG,

Source: Nothing Left for The Big Bad Wolf

How To Find The Next Big Buyout Winner

Jim Nelson — Thu, 15 Jan 2009 11:50:01 +0000

Investors can make astonishing gains in a matter of days if the company they own is bought at a premium by a larger firm. But how do you find these hidden gems ? Jim Nelson gives a list of six criteria that can help you pick a great buyout candidate.

This from Penny Sleuth:

On Monday morning, the sun was shining extra bright for one Southern Californian firm. The small specialized health care business of Advanced Medical Optics (NYSE:EYE) experienced a truly perfect day. At least, its investors did.

You see, Abbott Laboratories (NYSE:ABT) announced that it intends to acquire AMO for $22 per share in cash. That’s about 149% above it’s $8.85 Friday close. It took 18 years for the S&P 500 to bring those kinds of gains. Seriously, you’d have had to invest in February 1991 to realize a 149% gain today.

Most investment advisors compare their expected returns to benchmark indexes like the S&P 500 or the Dow Jones. Even small-cap specialists compare their gains to the Russell 2000. But, why in the world would you want to wait 18 years to grow your money, when there are investments you can buy on a Friday afternoon and cash out on Monday for the same return.

So the question before us is: how can you double your money like AMO investors?

AMO is a rare case when investors oversold a company’s stock and a large competitor takes advantage. To benefit from cases like these, you need to find similar scenarios. Let’s walk through AMO’s story…

Finding a Mega Value

AMO sells vision-correction technologies and products for a wide variety of patients. For instance, no one sells more LASIK surgical devices – used in more than 90 percent of all U.S. refractive surgical procedures – than AMO. The company also holds the number two spot in the cataract surgical devices market and the number three position in the contact lens products market.

Now, without serious research there’s simply no way for me to tell you any more than that. Frankly, I don’t know much about this industry, and since the jump already occurred, I don’t need to.

But apparently, Abbott Laboratories did do that research and figured that AMO was still a buy at a 148% premium. The point is, Abbott realized how important it was to control the top spots in these fields.

Over 60% of 60+ year olds have cataracts. In the next 11 years, the number of 60+ year olds globally is expected to increase 43%. Simply put… the older you are, the more chances you’ll need AMO’s technologies. And with more older people than ever, the demand is rising. You don’t have to be an eye expert to realize what Abbott was thinking.

On top of a great looking future, AMO was also incredibly cheap just last week. Abbott is basically paying a total $2.8 billion for a company that produces $1.1 billion in revenue per year. In just two and a half years, the company’s revenue will merit the investment.

Sure, it’s not a highly profitable company yet, but it is in the black. AMO is already turning a profit, which is just another stream of income for Abbott even before synergies are realized.

Back to how this affects you…

If you know what to look for, you can be in on the next AMO. Below is a quick list of criteria to look for when searching for a buyout candidate:

Value – are the company’s price-to-earnings, price-to-sales, and price-to-cash flow ratios low?

ROI – has the company made smart investment decisions? Will there be a lot of useless intangible assets lying around that would disinterest a potential owner?

Industry – is the company in a growing or contracting industry? Is it an industry that is conducive to mergers and acquisitions?

Profit – is the company profiting already, or at least have a profitable horizon?

Debt – is the company carrying high debt? Would a potential buyer use the debt situation to lower its buying price?

Synergy – is the company’s business model flexible, and can a potential buyer save costs by synergizing departments?

Of course, each company is different, and each acquisition is different. It takes some serious studying to find great buyout candidates. But done right, and you can save yourself 18 years of waiting around in the stock market. If you find the right candidate, you might just multiply your money in hours, not years.

Source: How to Find a Buyout Candidate

Global Investment News Roundups Tuesday, January 13th, 2009

William Patalon III — Tue, 13 Jan 2009 13:45:24 +0000

Rio Tinto Slows Expansion; Foreign Real Estate Investors Bullish; Abbott Laboratories Buys Advanced Medical Optics; Congo Jacks Primary Rate to 55%; Ford May Need TARP; LG Chem Gets a Charge from GM

With steel demand falling, Rio Tinto Group PLC (ADR: RTP) said it will postpone its $2.15 billion expansion of the Brazil’s Corumba iron-ore mine. “We retain the option of resuming the expansion when credible signs of a market recovery are seen,” Gervase Greene, a spokesman for Rio, told Bloomberg.

The Association of Foreign Investors in Real Estate is said foreign real estate investors are feeling bullish about 2009. According to the group’s recent report, lenders expect to boost investments by 54% globally and by 58% in the United States, Reuters reported.

Abbott Laboratories (ABT) said it has agreed to buy Advanced Medical Optics Inc. (EYE) for $1.36 billion, or $22 a share. The acquisition will give Abbott a strong first step into the eye-car business, Dow Jones reported.

Facing rapid currency depreciation, the Democratic Republic of Congo raised it main interest rate to 55%, up from its previous mark of 40%. The government also raised the minimum asset share banks must hold as cash to 7% from 5%, Bloomberg reported.

Ford Motor Co. (F) may need federal money after all as the weakening economy threatens to drive domestic sales 10% lower than the company’s forecast, Bloomberg News reported. U.S. automakers and industry analysts agree that domestic sales will fall again this year after tumbling 18% in 2008 to 13.2 million vehicles, trailing the annual average of about 16 million over the past decade.

General Motors Corp. (GM) said yesterday (Monday) it has picked LG Chem Ltd. of South Korea to supply the lithium-ion battery cells for its Chevrolet Volt electric vehicle, The Associated Press reported. The cells will be made in Korea, but they’ll be assembled into battery modules and packs at a factory in Michigan.

Source: Global Investment News Roundups Tuesday, January 13th, 2009

It’s time to buy Isis Pharmaceuticals (ISIS)

Laura Cadden — Fri, 19 Dec 2008 17:43:49 +0000

Isis Pharmaceuticals, Inc. (NASDAQ:ISIS) is a biopharmaceutical company that focuses entirely on RNA-based technologies and primarily, on antisense therapies.

Here’s my take on what that means…

The scientists at Isis seek to treat disease by first identifying the sequence of a gene known to have a causative role in that disease.

They then synthesize a strand of nucleic acid (DNA, RNA or a chemical analogue) to bind to the messenger RNA (mRNA) produced by that gene and to modify it or in effect, turn the gene “off”.

It’s that synthesized nucleic acid that is called an “antisense”. (The unblocked gene’s mRNA is called the “sense” sequence.)

The folks at Isis have been working with this technology for years. Back in 1998, the company received marketing clearance for the world’s first antisense drug. That same drug, Vitravene (now marketed by Novartis), has been approved by the FDA for the treatment for cytomegalovirus retinitis.

Antisense drugs could prove the key to the treatments of various cancers, diabetes, ALS, Duchenne muscular dystrophy, etc…

But why invest today?

It was announced just this morning that Abbott Laboratories (NYSE:ABT) will be exercising an option to purchase Ibis Biosciences, Inc., a subsidiary of Isis, for $175 million. This is in addition to payments for post-closing sales of Ibis systems and equipment.

This will bring a nice boost to Isis who just last quarter, saw a net profit margin of 5.32%. I know that doesn’t sound like much, but actual profits for drug discovery outfits aren’t always the norm.

I recommend you buy shares of Isis Pharmaceuticals, Inc. (NASDAQ:ISIS) at or under $13 and hold on for double-digit gains.

Source: It’s time to buy Isis Pharmaceuticals (ISIS)