Tuesday Morning, July 31st
Dow Stock News
General Motors Corp (GM) on Tuesday said it flipped to a second quarter net profit, beating Wall Street estimates as it benefited from cost-cutting, a better mix of products and growing sales overseas.
GM posted a net profit of $891 million, or $1.56 a share, compared with a net loss of $3.4 billion, or $5.98 a share a year earlier. Excluding one-time items, the company said it earned $2.48 a share. - Reuters
The WSJ writes that GM (GM) is offering 9% financing on pick-up trucks.
DuPont (DD) today announced that it will complete the remaining $1.1 billion of its $5 billion share repurchase plan earlier than expected. DuPont today entered into a structured stock repurchase agreement with a large financial institution in which the company made an upfront payment of $1.1 billion. The financial institution agreed to deliver a certain number of shares based on the volume-weighted average price, less a specified discount at the end of the contract period. The contract is expected to settle no later than Sept. 28, 2007. The company will finance the purchase with short- term borrowings.
The FT writes that Verizon (VZ) has bought Rural Cellular for $2.67 billion.
VZ Verizon UBS Upgraded from Neutral to Buy
Ice Man Stocks
Breakouts the Ice Man may consider trading:
UTHR - 70
AMAT - 22.15
MSA - 45.75
Regular Trades the Ice Man may consider:
CERN - 54
NTE - 13
FMC - 90
ROCM - 17
SMSC - 34
ITWO - 16.55
CAI - 45.45
HTCH - 20.52
CIEN - 38.29 upside gap
GNK - 56
Depressed stocks the Ice Man may buy:
IBM - 111.10 G
IMMR - 13.75 G
Dollar Man Ideas:
NYNY - 4.80
TTDS - 2.15
PLTG - 0.55
OCTL - 2.80 B
CAMP - 5
Depressed Dollar Man:
ICTL - 2.05 G
Media Commentators
Cramer's Comments:
Bullish: CELG, K, SLB, MHS, KMB, AMZN, GOOG, AAPL, RIMM, BAM, RAD
Cabot Top Ten:
ALGN - Align Technology
AMZN - Amazon.com
CROX - Crocs
CMI - Cummins
FSLR - First Solar
JASO - JA Solar
JDAS - JDA Software
RIMM - Research in Motion
SIGM - Sigma Designs
SWHC - Smith & Wesson
Ice Cold Commentators
Break Man Video Summary:
Break out buy watch list for short term gains July 31 includes: ULBI, PETS, ILNM, BCON, AMLN, ANAD, SIGM, AMAT.
Several candidates for break out or pullback plays for at least short term gains by buying the break out on good volume and selling at least some on the first day. http://stocktiger.com
CNBC Fast Money Review
1. Stocks Rebound From Worst Drop In 4 Years
The headline: Stocks Rebound From Their Worst Weekly Loss in Four Years...Is it Safe to Go Back In?
Bolling: Earnings are strong and stocks are still cheap.
Macke: A seller against 1490 on the S&P 500. He also feels the market is due for a bounce.
Adami: Some pain ahead – overall thinks the market looks fine.
Najarian: Investors are less nervous than they were Thursday and Friday.
2. CHIPS
The headline: NVDA, Semiconductors Among Best Performers
Najarian: Wireless community is on fire. Likes VOD, T, BRCM, QCOM, NVDA, and ERIC.
Adami: Keep an eye on NVDA´s gross margins.
Macke: Likes INTC as a long-term play.
3.REGIONAL BANKS
The headline: FITB, Regional Banks Among Best Performers
Adami: Environment favorable for regional banks, likes BAC. Thinks BAC is through with weakness from subprime exposure.
Bolling: No bank is through with weakness from subprime exposure. Stay away from the entire financial sector.
3.The Top 3
1. Global Growth
Last week's sell-off was just another battle between two huge forces in this market. They call the phenomenon King Kong - that's financial distress - versus Godzilla, or global growth.
Bolling: China is a juggernaut. Recommends owning iShares FTSE/Xinhua China 25 Index (FXI) and CurrencyShares Euro Trust (FXE).
Adami: Likes American companies that benefit from global exposure HPQ, BA, UTEK, and UTK.
Macke: Get long American companies that deal with China such as HON.
Najarian: Likes UTX as well as CHL and CHU.
2.Trash Talk
An earnings play you probably haven't heard of is trash. Garbage stocks may be the place to weather these turbulent times. AW and WMI come out with earnings this week. What´s the trash talk on The Street?
Adami: Favorite is RCG.
Najarian: likes AW in this space
Macke: AW
3.Dealmaking Not Dead Yet
Not everyone subscribes to the market gloom and doom. Predictions of M&A's demise last week might be premature. With balance sheets in the best shape in years, Corporate America may pick up the merger slack left behind by private equity firms.
Najarian: Deals are getting done. RO, RCCC and many other companies are all involved in M&A activity this week.
Adami: Companies such as HON are adding stock buybacks because they have great balance sheets.
Macke: Nelson Peltz might be buying more shares of WEN. The speculation is sending shares 10% higher after hours. Says if you own this stock, take profits now.
5. OIL $80
The headline: Crude Closes 20 Cents Below Record Close Of $77.03...Merrill Says Oil May Follow Pattern of Last Three Years and Pullback in Second Half.
Bolling: Says integrated oil is having a hard time keeping production high. Thinks going forward earnings will fall. Believes the environment is right for oil to hit $80 a barrel.
Najarian: Likes COP, CVX, and XOM with put protection
6. AFTER HOURS ACTION: SUN
SUNW Up 10% After Hours On Strong Earnings
Macke: KKR has taken a $700 million position in SUNW.
Najarian: Thinks the stock might start moving higher.
Adami: Management is running the company better.
News and Events Digest
Breaking News
Ryanair Holdings PLC, Europe's largest no-frills airline, reported a 20 percent increase in first-quarter profits Tuesday and raised its full-year forecast, citing plans to ground some aircraft in the slower winter months. Its shares rose over 10 percent. - AP
GlaxoSmithKline (GSK), the U.K. drugmaker, said it welcomed the decision of a U.S. Food and Drug Administration advisory committee to keep Avandia on the market. On Monday, the committee said it voted 20 to 3 to conclude that Avandia increases the risks of heart disease in type 2 diabetes, but it declined to recommend that the drug be pulled from the market. Only one member of the panel voted to remove the drug from the market. The FDA generally follows its advisory panels' recommendations but isn't required to do so. The company said it will continue to provide information to the FDA to help with its final decision-making. The panel urged the FDA to further study the effects of the drug and of a substitute drug, Actos, marketed by Takeda Pharmaceuticals. Takeda said in a statement late on Monday that it "underscores its position" that Actos "offers a proven safety profile regarding the risk of cardiovascular disease." - MarketWatch
China GrenTech Corporation Limited (GRRF), a leading China-based wireless coverage products and services provider and radio frequency, or RF, technology developer, announced after the close of trading in New York on July 30, 2007 that the secondary offering by two of its pre-IPO private equity investors of a total of 3,296,114 American Depositary Shares ("ADSs") was priced at US$9.65 per ADS. The US$31.8 million offering represents a sale of approximately 13.18% of the Company's outstanding ordinary shares. China GrenTech will not receive any of the proceeds from the sale of the ADSs by the selling shareholders, Actis China Investment Holdings No. 1 Limited and Standard Chartered Private Equity Limited.
Twin Disc, Inc. (TWIN), today announced that its Board of Directors has authorized the repurchase of up to 200,000 shares of its common stock outstanding, replacing its previously approved stock repurchase authorization. The stock when purchased will be added to the Company's treasury shares. These purchases will be made in the open market or in negotiated transactions from time to time depending on market conditions.
SPX Corporation (SPW) today announced its Kayex business was awarded a contract to design and manufacture state-of-the-art crystal growing equipment to support the rapid growth of the silicon-based solar energy market. The contract is with NorSun AS, a producer of mono crystalline ingots and wafers for the international solar industry. NorSun is headquartered in Oslo, Norway. The contract is valued at $40 million. Shipment of equipment is scheduled to begin in the third quarter of 2007.
Media Summary:
According to Reuters, a groups lead by an internet entrepreneur is still pressing it case to buy Dow Jones (DJ).
Reuters writes that Alcatel-Lucent''s (ALU) loss for Q2 was greater than expected.
Reuters reports that GSK's (GSK) diabetes drug Avandia should stay on the market according to the FDA but containers should carry a warner about heart risks.
The Wall Street Journal writes that News Corp (NWS) and Dow Jones (DJ) seem to be getting closer to a deal to sell the publisher of the WSJ.
The WSJ reports that raider Nelson Pettz is willing to pay $37 to $41 for Wendy's (WEN).
The Wall Street Journal writes that Sun (SUNW) posted a profit for the last quarter.
The New York Times writes that Liz Claiborne (LIZ) is working on a plan to make it less dependent on department store sales.
The New York Times writes that four independent record labels will sell music direct over the internet to AT&T (T) wireless phones.
Barron's writes that Dell (DELL) and Sun (SUNW) could suffer as virtualiztion cuts server sales.
M&A Activity:
Marathon Oil Corp. (MRO) agreed to buy Western Oil Sands Inc. (WTO.T) in a deal valued at C$6.5 billion, or about $6.2 billion. The Houston-based energy company said that under the agreement, Western shareholders will receive about $3.6 billion in cash and 34.3 million Marathon shares and securities exchangeable for Marathon stock. Marathon will also assume $650 million of debt in the deal, which it said it expects to close early in the fourth quarter. Terms of the deal require Western to spin off its WesternZagros unit, which has interests in Kurdistan, prior to closing. In addition, Marathon approved an additional $2 billion repurchase plan. - MarketWatch
Triarc is willing to offer $37 to $41 a share for Wendy's, investor Nelson Peltz said, but he is balking at signing a confidentiality pact. - WSJ
D.E. Shore announces a 5% stake in ITWO
MA - 5% stake announced by D. Shore and Co.
IPO Central:
Morgan Stanley (MS) said Tuesday it plan to sell a minority interest in its investment decision support unit, MSCI Inc., in an initial public offering of Class A common stock. The IPO is expected to be completed by the end of 2007. Morgan said it currently believes it will divest its remaining ownership interest in MSCI. "However, that decision will be subject to market conditions and other factors," the investment bank said. - MarketWatch
Economic Data:
8:30 Personal Income
8:30 Personal Spending
8:30 Core PCE Inflation
8:30 Employment Cost Index
9:45 Chicago PMI
10:00 Construction Spending
10:00 Consumer Confidence
Upgrades and Downgrades by Sector:
Advertising
VCLK Bank of America says to Buy
VCLK ValueClick Kaufman Bros Cut Price Target Hold $33 to $23
Biotech
CVTX CV Therapeutics Needham & Co Downgraded from Buy to Hold
IVGN Invitrogen Bear Stearns Downgraded from Outperform to Peer Perform
Broadcasting
KNOL Knology Jefferies & Co Upgraded from Hold to Buy $20
Business Services
ABM ABM Industries Lehman Brothers Upgraded from Equal-weight to Overweight
ARP American Reprograph Sun Trust Rbsn Hum Downgraded from Buy to Neutral
Chemicals
CE Celanese Citigroup Upgraded from Hold to Buy
Computer Hardware
SUNW Sun Microsystems Caris & Company Upgraded from Average to Above Average $6 to $6.30
IVAC Intevac Needham & Co Downgraded from Buy to Hold
IVAC Intevac Piper Jaffray Downgraded from Outperform to Market Per
ELX Emulex RBC Capital Mkts Cut Price Target Sector Perform $22 to $21
IVAC Intevac Brean Murray Cut Price Target Sell $16.50 to $15.50
NTAP Network Appliance RBC Capital Mkts Cut Price Target Outperform $40 to $36
OLED Cambridge Display Tech. CIBC Wrld Mkts Coverage Dropped
Computer Software
CNQR Concur Tech Cantor Fitzgerald Price Target Raised Buy $22 to $24
ININ Int. Intelligence Northland Securities Price Target Raised Outperform $23.50 to $24
Electronics
OPTM Optium Jefferies & Co Downgraded from Buy to Hold $21 to $12
OPTM Optium Needham & Co Cut Price Target Buy $22 to $11
Environmental Prod
FTEK Fuel-Tech Roth Capital Cut Price Target Hold $35 to $33
Foods
UL Unilever PLC Credit Suisse Downgraded from Neutral to Underperform
Gold and Silver Mining
NEM Newmont Mining RBC Capital Mkts Price Target Raised Underperform $43 to $44
Healthcare
IMA Inverness Medical Caris & Company Upgraded from Above Average to Buy $65
KYPH Kyphon Bear Stearns Downgraded from Outperform to Peer Perform
AMMD American Medical RBC Capital Mkts Cut Price Target Outperform $24 to $22
HR Healthcare Realty Friedman Billings Cut Price Target Mkt Perform $34 to $26
Household Goods
MLHR Herman Miller Susquehanna Financial Initiated at Positive
Industrial Equipment
FELE Franklin Electric Robert W. Baird Downgraded from Neutral to Underperform $48 to $45
Insurance
CNC Centene Matrix Research Upgraded from Buy to Strong Buy
MTG MGIC Investment Bear Stearns Downgraded from Outperform to Peer Perform
MTG MGIC Investment Friedman Billings Cut Price Target Mkt Perform $55 to $43
Manufacturing
GRC Gorman-Rupp Company Friedman Billings Price Target Raised Mkt Perform $30 to $31
Manufacturing - Tires
GT Goodyear Tire Matrix Research Downgraded from Hold to Sell
Mfg - Office Supplies
LFUS Littelfuse Barrington Research Cut Price Target Outperform $47 to $44
Mfg-Building Products
SSD Simpson Manufacturing Matrix Research Downgraded from Buy to Hold
Mfg-Industrial Goods
KOP Koppers Holdings KeyBanc Capital Mkts / McDonald Upgraded from Buy to Aggressive Buy $40
Mining Non-Ferr Metal
CCJ Cameco CIBC Wrld Mkts Upgraded from Sector Perform to Sector Outperform
CCJ Cameco RBC Capital Mkts Cut Price Target Top Pick $80 to $70
CCJ Cameco Friedman Billings Cut Price Target Outperform $55 to $50
Motor Vehicles
LKQX LKQ Corp Piper Jaffray Initiated at Outperform $36
Oil and Gas
FTI FMC Tech RBC Capital Mkts Price Target Raised Outperform $86 to $108
HES Citigroup mentions as potential takeover targets: HES, MRO, APC, SWN, DVN, and NBL.
WRES Warren Resources RBC Capital Mkts Initiated at Outperform
ETE Energy Transfer Equity UBS Downgraded from Neutral to Reduce $41 to $36
Paper and Packaging
WY Merrill Lynch Downgraded to Neutral
Publishing
GCI Gannett Bear Stearns Upgraded from Peer Perform to Outperform
Recreational Vehicles
MNC Monaco Coach McAdams,Wright,Ragen Upgraded from Hold to Buy $17
WMAR West Marine Morgan Joseph Downgraded from Buy to Hold
Regional Banks
WB Smith Barney adds WB, EMN, JWN to the recommended list.
REITs
HCP Health Care Ppty Friedman Billings Cut Price Target Outperform $41.50 to $34
NNN National Retail Properties Ferris Baker Watts Cut Price Target Buy $27 to $25
SNH Senior Housing RBC Capital Mkts Cut Price Target Sector Perform $25 to $20
Restaurants
MRT Mortons Restaurant Group RBC Capital Mkts Upgraded from Sector Perform to Outperform
Retail Trade
GYMB Gymboree Susquehanna Financial Upgraded from Neutral to Positive
GYMB Gymboree Friedman Billings Upgraded from Mkt Perform to Outperform $43 to $47
MHS Medco Health Solutions First Albany Price Target Raised Buy $89 to $90
BLDR Builders Firstsource Piper Jaffray Downgraded from Outperform to Market Per
HOTT Hot Topic AG Edwards Downgraded from Hold to Sell
RSH RadioShack Citigroup Downgraded from Hold to Sell
Savings & Loan
HTLF Heartland Finl RBC Capital Mkts Cut Price Target Sector Perform $28 to $22
Semiconductors
VSEA Varian Semi Credit Suisse Upgraded from Underperform to Neutral
AMAT Applied Materials Credit Suisse Price Target Raised Outperform $21 to $25
FORM FormFactor Friedman Billings Cut Price Target Mkt Perform $50 to $45
Telecommunications
PSO Pearson Plc Lehman Brothers Upgraded from Underweight to Equal-weight
CTV Jeffries Price Target Raised $75
CTV Commscope Stifel Nicolaus Price Target Raised Buy $59 to $67
CTV Commscope Robert W. Baird Price Target Raised Outperform $60 to $62
PWAV Powerwave Credit Suisse Price Target Raised Neutral $6 to $7
NVTL Novatel Wireless JP Morgan Downgraded from Neutral to Underweight
RADN Radyne Roth Capital Cut Price Target Buy $12.60 to $12.20
Transportation
HTLD Heartland Express Stifel Nicolaus Upgraded from Hold to Buy $18
SFL Ship Finance Intl JP Morgan Upgraded from Neutral to Overweight
DHT Double Hull Tankers JP Morgan Downgraded from Overweight to Neutral
Utilities
CHG CH Energy Soleil Upgraded from Sell to Hold $42.75 to $40
EXC Exelon UBS Upgraded from Neutral to Buy
FE FirstEnergy Jefferies & Co Upgraded from Hold to Buy $69
FPL FPL Group Wachovia Upgraded from Mkt Perform to Outperform
BWP Boardwalk Pipeline RBC Capital Mkts Price Target Raised Outperform $40 to $42
WMB Smith Barney price target raised $40
ETP Energy Transfer UBS Downgraded from Neutral to Reduce
SRP Sierra Pacific RBC Capital Mkts Cut Price Target Outperform $22 to $20