Seeking Alpha
Long/short equity, special situations, momentum, growth
Profile| Send Message|
( followers)  

Durable Goods are always a volatile measurement, so today's numbers do not concern U.S. all that much. Big misses are generally met with big beats and vice versa. What we do know is that the economy worldwide is indicating that one wants to own manufacturing names and be rotating investments into names with global exposure.

If one does not want to pick out individual names, there are some great ETFs out there which can provide diversification and allow one to choose exactly how they are getting their international exposure and where. Right now though we do like the big U.S. multinational manufacturing names, all of which have been on a tear lately.

Chart of the Day:


(Click to enlarge)

Source: Briefing

We have economic news today and it is as follows:

  • MBA Mortgage Index (7:00 a.m. ET): Est: N/A Actual: 5.5%
  • Durable Orders (8:30 a.m. ET): Est: 0.5% Actual: 0.1%
  • Durable Goods-Ex Trans (8:30 a.m. ET): Est: 0.9% Actual:-0.1%
  • New Home Sales (10:00 a.m. ET): EST: 415k
  • Crude Inventories (10:30 a.m. ET): EST: N/A

Asian markets finished mixed today:

  • All Ordinaries -- up 0.78%
  • Shanghai Composite -- down 0.41%
  • Nikkei 225 -- down 0.76%
  • NZSE 50 -- up 1.15%
  • Seoul Composite -- down 0.45%

In Europe, markets are mostly lower this morning:

  • CAC 40 -- down 0.28%
  • DAX -- down 0.31%
  • FTSE 100 -- down 0.43%
  • OSE -- up 0.09%

Technology

Applied Materials (AMAT) announced a deal to purchase Tokyo Electron for a total of $9.39 billion. The deal is set to further consolidate an industry which has more participants than customers (on a total number basis) and should provide both considerable cost savings in the first year as well as afford the combined company pricing power. Those cost savings in the first year are estimated to be worth $250 million, helped in part by the company domiciling in the Netherlands which will lower its tax rate. There were concerns yesterday of whether this deal gets done without serious antitrust scrutiny, but if it closes as planned investors will have a much more formidable company that will also be aggressively distributing cash back to shareholders via about $3 billion in share buybacks.

Another name to watch in the sector is Lam Research (LRCX) which saw its shares rise 3.2% on the news and hit a new 52-week high. If the Applied-Tokyo deal sets off a new wave of consolidation in the industry we will most certainly see prices increase and margins rapidly expand. This is why many fear that the deal will face heavy scrutiny, but at the end of the day even if Applied's deal gets nixed, the rock is already rolling and other players are going to end up combining which will have the same effect. We are watching this sector closer now to see how this all plays out.

Rarely does one get the opportunity to essentially call the bottom in a stock's fall correctly, but that is what was done with 3D Systems shortly after their split. It has been a great call for readers ever since.


(Click to enlarge)

Source: Yahoo Finance

One of our biggest winners this year, 3D Systems (DDD), continues to power higher and set new 52-week highs. That was the case yesterday as the shares rose $1.40 (2.60%) to close at $55.15/share on strong volume of 4.1 million shares. As we have stated numerous times, we view this as a trade and not an investment and treat it as such. We follow it closely looking for any indication that the uptrend has broken down and that it is time to alert our readers to exit, but that has not happened. In fact, the name simply continues to gain momentum and appears set to be one of the big winners heading into the final months of the year. These momentum names are the types of holdings one likes to have heading into the final three months of the year as everyone likes to be holding the hot names in their fund for window dressing purposes. Our guess is that this is a 'Hold' until January, at which time profits might need to be taken.

Entertainment

This has been one of our biggest winners highlighted in our daily market analysis articles and we think that there are further gains to come as business continues to improve and the company looks to new markets to expand.


(Click to enlarge)

Source: Yahoo Finance

Both Las Vegas Sands (LVS) and MGM Resorts (MGM) hit fresh highs yesterday as investors cheer the bullish news that continues to be released by the casino operators. There are few headwinds the industry is facing these days and many tailwinds pushing these names forward. Las Vegas Sands has not sounded this bullish in some time and although they already have a lot on their plate as far as bringing new projects online and ramping up recently completed ones, the company continues to seek out opportunities for their mega integrated resorts. Their focus is upon Japan right now, and their view is that this is the best opportunity in years that they have had to get the gambling ban overturned in the country. Based on their successes in China and Singapore developing these integrated resorts, it would seem natural that the company is well positioned to take advantage of any change in law in Japan. We continue to like the story surrounding the casino stocks, especially Las Vegas Sands.

Source: Today's Market: Tech Names Heating Up, Gambling Stocks To Double Down On