By Larry Gellar
Popular ETFs like DIA, SPY, and QQQ were all up last week, as the situation in Europe appears to be stabilizing. Here are 5 NYSE stocks that could trade heavily again in the coming week. Our list includes companies involved with telecom services, pharmaceuticals, banking, semiconductors, and communications hardware.
Sprint Nextel Corp. (S): The news is not necessarily good for Sprint as there now appear to be signs that the AT&T (T) acquisition of T-Mobile USA is gaining strength. In fact, 15 Democrats signed a letter to President Obama stating that the acquisition would create tens of thousands of jobs. Additionally, AT&T has promised to bring back some jobs it sent overseas as well as increase the area served by its high-speed Internet services. Additionally, there are other uncertainties affecting Sprint Nextel right now.
As discussed here, the company is heavily relying on 4G capabilities from LightSquared. On the other hand, LightSquared is having difficulty proving to the government that its service won’t overly interfere with GPS devices currently in use. Currently, Sprint Nextel is enlisting the services of Clearwire (CLWR), but that company’s service has been less than stellar and financing problems are making its future look rather dim. The fact that Sprint Nextel owns a large portion of Clearwire also hurts.
Due to negative trailing twelve-month earnings, price to earnings and price/earnings to growth ratio for S are currently incalculable. Price to sales is only 0.32 though, which is a mere fraction of what AT&T and Verizon (VZ) are trading for. Operating margin for S is only 0.15%, although gross margin is better at 45.43%.
Pfizer Inc. (PFE): This week's news for the company may center on one of Pfizer's divisions that makes baby formula. As discussed here, Bloomberg is reporting that the company may opt to spin out the unit as opposed to original plans to sell it. The unit may be worth over $10 billion, and Danone (OTCQX:DANOY), Abbott Laboratories (ABT), and Nestle (OTCPK:NSRGY) are said to be possible buyers. For comparison’s sake, it’s worth noting that Mead Johnson Nutrition (MJN), formerly part of Bristol-Myers Squibb (BMY), is now worth nearly $15 billion.
In other news, rumors have it that Pfizer will lay off over 500 employees in Germany. More importantly though, Pfizer is still pursuing Icagen (ICGN). Icagen is an important provider of treatments for pain disorders, and this is a wise move that would certainly add value to Pfizer. Important competitors for Pfizer include Merck (MRK) and Novartis (NVS). Pfizer boasts a lower price to earnings ratio than both of these firms, although Pfizer’s price/earnings to growth and price to sales ratios are higher. Margins for PFE are quite strong – operating margin is 25.17% and gross margin is 75.85%. On the other hand, quarterly revenue growth (year over year) is -0.90%.
UBS AG (UBS): UBS may continue to be plagued by news that a “rogue trader” lost approximately $2 billion for the Swiss bank. The former employee was arrested in London, although the question now is what the future of UBS’s investment bank will be. Note that UBS was already considering some big changes to its investment bank prior to this news. Shareholders are also concerned that UBS’s private bank will suffer due to the scandal. Clearly, investors around the world are shook up by the events, although even Jay Leno was making jokes about it on The Tonight Show.
Prior to Thursday’s news, UBS was also involved with a crackdown on the part of the United States on those who avoid taxes by holding their money in Swiss banks. That situation will probably affect Credit Suisse (CS) more, however. Other important competitors for UBS include Citigroup (C) and HSBC Holdings (HBC). Price to earnings for UBS is quite low right now, although price/earnings to growth and price to sales ratios are about average. Operating margin too is average – that number is 23.42%. As for cash flows, UBS lost $24.151 billion Swiss francs in 2010 and 22.153 billion Swiss francs in the first half of 2011.
Advanced Micro Devices, Inc. (AMD): Rumor is that CEO Rory Read is working on a new long-term strategy for the company. Such a strategy would presumably focus more on smartphones and tablets, which is an area that AMD could have some serious success. The enormous growth potential for those products is also significant. AMD’s prowess in the notebook market is also worth mentioning. At the same time, many investors are concerned about reduced demand for PCs. Regardless, chief marketing officer Nigel Dessau said, “We will focus on the ultra-thin laptops.”
A former AMD employee has also been in the news for a recent insider trading case that he was involved in. Essentially, he leaked some information while working as a consultant for Primary Global Research. Important competitors for AMD include IBM, NVIDIA (NVDA), and of course Intel (INTC). AMD has the lowest price to earnings and price to sales ratios of the bunch, although it also has the highest price/earnings to growth. Margins for the company are weak though – operating margin is 6.54% and gross margin is 44.9%. Additionally, quarterly revenue growth (year over year) is -4.8%. As for dividends, IBM and Intel offer dividends, while Nvidia and AMD do not.
Nokia Corporation (NOK) was up last week, but that didn’t really have anything to do with Nokia's intrinsic value. The big news was actually in regards to Research In Motion (RIMM). That company announced earnings that disappointed quite a few shareholders. Specifically, expectations for earnings per share and revenue were not met. Additionally, gross profit and units shipped were also lower than expected. Co-CEO Jim Balsillie had this to say: “Overall unit shipments in the quarter were slightly below our forecast due to lower than expected demand for older models.”
The PlayBook in particular is one Research In Motion product that is not going very well. Balsillie did have some optimistic remarks though saying
[Research In Motion] successfully launched a range of BlackBerry 7 smartphones around the world during the latter part of the second quarter and we are seeing strong sell-through and customer interest for these new products.
Another important competitor for Nokia is LM Ericsson (ERIC). Nokia offers the cheaper price to earnings and price to sales, although LM Ericsson’s price/earnings to growth ratio is substantially better. Nokia also has lower margins: gross margin is 29.93% and operating margin is 3.55%. Quarterly revenue growth for Nokia has also been problematic: that number is -7.3% year over year.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.