There is a lot of global news which has taken place over the past 48 hours, with new leadership in China, possible new leadership in Japan and tensions once again rising in the Middle East. Japan seems to like the options for their next leader, although this is how it always happens with Japan. New leadership will be ushered in to praise and high favorability rates in the polls only to see the public quickly tire of them and see their popularity fall into the 20% area. It seems to always happen and if they only sold futures on this trend we could have retired two Prime Ministers ago. One thing to certainly pay attention to on a more serious note regarding this situation is whether the Japanese public elect a parliament which is hostile to China and only serves to further drive the two Asian neighbors apart.
We have economic news due out today and it is as follows:
- Net Long-Term TIC Flows - N/A
- Industrial Production - 0.1%
- Capacity Utilization - 78.3%
Asian markets finished lower for the most part:
- All Ordinaries - down 0.24%
- Shanghai Composite - down 0.77%
- Nikkei 225 - up 2.20%
- NZSE 50 - CLOSED
- Seoul Composite - down 0.53%
In Europe markets are lower this morning:
- CAC 40 - down 0.32%
- DAX - down 0.69%
- FTSE 100 - down 0.68%
- OSE - down 0.47%
One of our favorite clothing retailers we have mentioned quite often here on Seeking Alpha reported another solid quarter last night, as predicted. Retail is a story of trends, on a product level, a coolness level and a momentum level. Right now Gap, Inc. (GPS) is riding that wave higher and reminding investors just how well the company can perform when they have all three major brands cranked up. Shares were up about 3% in after hours trading last night after the company reported 3rd quarter earnings of $0.68/share which were up from $0.38/share in the prior year period. The company also raised its full year guidance and said that same store brands were up across the board with the Old Navy franchise setting the pace by posting growth in the high single digits. We remain bullish here, especially with other retailers beginning to see strength - and those players are not executing nearly as well - which indicates to us that the consumer may be coming back in a big way this holiday season.
PetSmart, Inc. (PETM) is one of those great long-term investments which has rewarded investors for years now. They continue to meet or beat Wall Street estimates and appear to be in a business which is recession proof. People like to reward their pets, just like children and the stores are like the mall for pets - everything a pet owner could want is there, including more pets! The company reported another good quarter with their third quarter coming in with revenues rising by 9% and earnings following suit. We think that there is room for the company to raise their dividend as they saturate the remaining available store locations, but the company may be forced to do this at a slower rate than we anticipate due to the growing online threat that analysts continue to bring up. Shares rose $2.63 (4.06%) to close at $67.48/share on volume of 3.8 million shares on the news.
Cirrus Logic (CRUS) shares continue to trend lower with investors seeing shares fall by $2.66 (8.66%) to close at $28.07/share on volume of 5.8 million shares. The stock is getting real cheap at these levels and looks ripe for a trade and long-term investment - quite possibly a situation where one buys a core position and a trading position where the core position is used for a long-term investment tool and the trading position used for a short-term pop and/or moving in and out on the volatility here. One must remember at all times just how dependent the company is on their largest customer's product cycles and new product development and that is obviously what is dragging the shares lower these days. We already know that short-term the company is going to blow the numbers away, but people are worried about what's next and currently the market sees very little as far as the 'next big thing' in the customer's development pipeline.
NetApp (NTAP) shares rose $3.08 (11.36%) yesterday on volume of 22.8 million shares after the company reported solid quarterly earnings after the close on Wednesday and had Wall Street analysts begin to raise their numbers and recommendations on the stock. Based on the results thus far, it appears that we see the industry perform better than anticipated as others in the industry have also delivered better results than were expected.
Monster Worldwide (MWW) hit a new 52-week low but rallied off of the $5.01 mark to finish at $5.47/share, although that was still down nearly 8% for the day. Volume was 4.3 million shares and we hope that any readers who were involved with this at any time we have written about it got out. Being invested in a poorly run company during a market correction is never fun and if the smart money does not want to own the company, then why should you? This is one of those stocks you simply put on your blacklist and do not buy until there is a change at the top or dramatic change in the business which even the current management team cannot mess up.