With the uneasiness of markets over the past few days it has become apparent that the Dow and S&P indices are facing some headwinds but that the Nasdaq is having an easier time attracting investor capital. The Nasdaq has been able to advance strongly on up days and better hold gains when market volatility cranks up intraday. We find that interesting and have taken note, especially as the biotechs appear to be once again the focus of many investors.
Chart of the Day:
The chart certainly appears to indicate that the biotechs are about to break out and this is one of the market leaders. Combine this potential positive news with that of the oil E&P names just starting to break out as well and one has to be getting bullish here.
Source: Yahoo Finance
We have economic news today and it is as follows:
- Nonfarm Payrolls (8:30 a.m. ET): Est: 177k Actual: 169k
- Nonfarm Private Payrolls (8:30 a.m. ET): Est: 180k Actual: 152k
- Unemployment Rate (8:30 a.m. ET): Est: 7.4% Actual: 7.3%
- Hourly Earnings (8:30 a.m. ET): Est: 0.2% Actual: 0.2%
- Average Workweek (8:30 a.m. ET): Est: 34.5 Actual: 34.5
Asian markets finished mixed today:
- All Ordinaries -- up 0.11%
- Shanghai Composite -- up 0.83%
- Nikkei 225 -- down 1.45%
- NZSE 50 -- down 0.16%
- Seoul Composite -- up 0.19%
In Europe, markets are mostly lower this morning:
- CAC 40 -- down 0.15%
- DAX -- down 0.22%
- FTSE 100 -- down 0.13%
- OSE -- up 0.04%
Shares in Louisiana Pacific (LPX) moved sharply higher yesterday after the company's announced acquisition of Ainsworth Lumber and subsequent upgrades from Wall Street firms. Louisiana Pacific shares rose $1.69 (11.07%) on all the news to close at $16.97 on volume of 17.4 million shares. We have been bullish all things housing for some time, however LPX shares have hardly been solid performers with their returns. This acquisition is less focused upon the United States and more focused upon international markets with Ainsworth being a Canadian company that possesses exposure to Asian markets. Although Moody's moved to possibly downgrade the company's debt due to the deal, we think that long-term this might be an excellent move as Louisiana Pacific bulks up before a potential international recovery. The analyst who upgraded the shares has a $21/share price target, which was raised from $20/share.
It has been a tough year for shareholders, but the company made a good move in our opinion with the acquisition to gain international exposure and that should pay dividends moving forward.
Source: Yahoo Finance
One minor red flag for investors watching the housing market was Conn's (CONN). The company saw its shares fall $7.95, or 11.64%, to close at $60.36/share on heavy volume of 6.4 million shares after the company reported earnings which caught investors off guard. Sales were up strongly, and so too were profits, however the miss was caused by the company's financing arm as certain loans performed below expectations. The retail operation was, by all accounts, strong however as is the case with many retailers owning their own credit arms, the quality of credit had apparently deteriorated based on short-term issues which have apparently been corrected. We would not be buyers here as we think there are better areas to play this retail segment. For those who want to read the conference call transcript you can use this link.
The news that Vivus' (VVUS) new CEO, who just assumed the role two months ago, was stepping down for health reasons prompted a strong pullback in the company's shares the past two days. The shares closed at $10.84/share after falling nearly 9% yesterday, which is on top of the initial pullback. Replacing the outgoing Mr. Zook will be Seth Fischer, an ex-exec from Johnson & Johnson. It is never good to have a revolving door of CEOs, however our readers who are traders might find some opportunity here as this was unforeseen by all parties and not due to poor performance, simply poor health for an individual. The pullback seems a bit overdone at this point, and we see a trading opportunity for those with risk capital available.
Oversold? We think so, at least on a short-term basis.
Source: Yahoo Finance
Himax Technologies (HIMX) is once again trending higher and hit a new 52-week high in yesterday's trading session of $8.64/share. The shares rose over 17% on volume of 38.2 million shares, which is well above normal levels, and managed to close just a couple of pennies off of the session highs. There have been more positive analyst notes coming out regarding the company and as Google Glass comes closer to launch we suspect more positive research notes and price targets will be issued with investors in the mainstream picking up on the name. We pointed this name out a month or two ago as Google took a stake in the company's subsidiary and our belief is that this will become a strategic supplier of parts for next generation hardware currently being developed by various companies. The strong growth estimates and people with money behind this name draw U.S. to it. We have no investment in the shares at this time.
We have previously highlighted Jos. A Bank Clothiers (JOSB) due to its poor performance and growing unhappiness among its larger shareholders. We speculated that the threat from one of those shareholders to possibly go hostile and submit a slate of directors for the company's board was a real possibility if the company did not look to put its cash to work and step up their efforts to get sales and earnings back on track. Although the company did miss their earnings estimate by $0.01/share they did announce that Bud Bergren, the former head of Bon-Ton Stores, would be joining the company's Board of Directors. That is a step in the right direction and the market appeared to approve the move, but we do hope that the company does not simply stop there. The conference call transcript discussing the company's quarterly results is located here.