Summary of key articles from this morning's Wall Street Journal with related stocks highlighted. Links are to the original WSJ article, which requires a paid subscription. Use this summary as a starting point for research; check the summary against the original before trading:
- Summary: The major US airlines are now focused on profitability rather than market share by flying fewer planes and raising prices. Fewer seats means that capacity utilization is forecast to rise to 85% this summer, up from 75.5% in 2004, and that airlines can pass on rising fuel prices. Air ticket prices rose 9.1% in Q4 2005. Major airlines are also competing better against the discounters that failed to hedge against rising fuel costs.
- Related stocks/ETFs: AMR Corp. (AMR), Continental Airlines (CAL), UAL Corp. (UAUA), US Airways Group (LCC), JetBlue Airways Corp. (JBLU), Southwest Airlines (LUV).
- Summary: Saudi Arabia's oil minister confirmed that Saudi oil output has declined in recent months, falling from 9.5 million barrels a day in Q1 to 9.1 million in April. He claims the cause is lower demand, not an attempt to restrict supply to keep prices higher.
- Related stocks/ETFs: US Oil ETF (USO).
- Summary: The Newspaper Association of America reported that newspapers' revenue from online ads rose by 4.7% year over year, faster than print ad revenue growth of 0.3% (which was driven by real estate ads). But online ads still only comprise 5.5% of newspapers' total revenue in Q1.
- Related stocks/ETFs: Dow Jones (DJ), Gannett (GCI), Journal Communications (JRN), News Corp (NWS), New York Times (NYT), Tribune (TRB), Washington Post (WPO).
- Summary: Average daily room rates are expected to climb $5.78 this year, to $96.69, the largest dollar rise ever. Revenue per room in the top 25 US markets rose 11.1% in April. Large hotel chains are selling properites to REITs and private equity funds and focusing on hotel management and franchise fees rather than property ownership. Risks to an otherwise bullish outlook are terrorism and labor disputes.
- Related stocks/ETFs: Marriott International (MAR), Hilton Hotels (HLT-OLD), Starwood Hotels & Resorts Worldwide (HOT), Host Hotels & Resorts (HST).
- Summary: Demand for palladium jewelry in China rocketed from about zero in 1999 to 1.2 million ounces in 2005. Will the same happen in the US? Palladium rings are light, durable, and cheaper than platinum, and are already being sold by JC Penney and QVC among others.
- Related stocks/ETFs: North American Palladium (AMEX: PAL), Stillwater Mining (SWC), Norilsk Nickel (OTCPK:NILSY).
- Summary: The stock of NTT DoCoMo, Japan's largest wireless carrier (56% market share), is starting to look better after lagging competitor KDDI. Japan will introduce phone number portability in October, but DoCoMo's CEO has stated that he's confident the company won't lose subscribers. DoCoMo has cut prices, improved reliability and introduced a mobile credit payment system, and is now looking less staid than it did previously. DoCoMo's stock pays a 2.2% dividend, double KDDI's, and the company has a strong balance sheet.
- Related stocks/ETFs: NTT DoCoMo Inc. ADS (DCM)
- Summary: The dollar is likely to weaken more this week as evidence suggests the economy is slowing, reducing the likelihood of further interest rate hikes. Recent payroll data were weak and manufacturing activity slowed in May according to the ISI. The Euro and Yen could rise against the dollar. The ECB will announce its interest rate policy Thursday, and is expected to raise rates by 0.25%, to 2.75%.
- Related stocks/ETFs: Rydex Euro Currency Trust (FXE).
- Summary: Soft economic data suggests lower inflation and future interest rates, and thus may signal the end of falling Treasury bond prices. 10 year yields rose 0.61 percentage points since January, peaking at 5.19% in mid-May, but could fall to 4.3% if economic output slows to 2.5%.
- Related stocks/ETFs: iShares Lehman 7-10 Year Treasury Bond Fund (IEF).
- Summary: Three ethanol companies have filed for IPOs since March: VeraSun Energy Corp, Hawkeye Holdings and Aventine Renewable Energy Holdings. They are the second, third and fourth largest ethenol producers respectively. Archer-Daniels-Midland Co. is the largest producer, and has seen its stock double in the last 12 months, and Pacific Ethanol Inc.'s stock has trippled. "The Renewable Fuels Association estimates that ethanol production is likely to increase to about five billion gallons this year from four billion gallons in 2005. Production must increase to at least 7.5 billion gallons a year by 2012 under a requirement in the 2005 energy bill."
- Related stocks/ETFs: VeraSun Energy Corp. (VSE), Hawkeye Holdings (HKI), Aventine Renewable Energy Holdings (AVR), Archer-Daniels-Midland Co (ADM), Pacific Ethanol Inc. (PEIX).
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