by Larry Gellar
Let’s take a look at the top five NYSE stocks that saw the most trading at the end of the week. What is happening with these companies? As always, use our list below as a starting point for your own due diligence.
Bank of America Corporation (BAC) has been volatile lately, and now it appears that California’s attorney general is going to investigate the company. Specifically, mortgage practices of the infamous Countrywide subsidiary will be under scrutiny. Bank of America had actually tried settling with California as part of a deal that includes other states and agencies, but California decided to go independent on this one. That could make things more complicated for Bank of America, which has investors rather worried. Additionally, the Countrywide settlement will be considered in federal court now rather than New York state court.
Also of interest is a report from Bloomberg that some of Bank of America’s clients want the company’s derivatives moved to a subsidiary. That’s the type of news that got Lehman Brothers and Bear Stearns into so much trouble, so that story’s definitely something to keep an eye on. Note that Bank of America hasn’t confirmed anything yet, however. Important competitors for Bank of America include Citigroup (C), JPMorgan Chase (JPM), and Wells Fargo (WFC). Price to earnings and price/earnings to growth for Bank of America are currently negative, although price to sales is significantly lower than those other stocks. Operating margin is only 1.91%, however, and quarterly revenue growth is -52.6%.
Nokia Corporation (NOK) is up big after a good earnings report, and many analysts are excited about the number of units that the company sold. Phone prices fell, although this is mostly due to Nokia’s increased focus on lower-end headsets. Nokia was also optimistic about the fourth quarter, and the company’s partnership with Microsoft’s (MSFT) Windows Phone figures to be quite lucrative. Additionally, Nokia is doing a great job in the emerging markets. Phones with two SIM cards in India are one important innovation, and performance in China is improving as well.
Overall, Nokia is enjoying success with Symbian Belle. This operating system enhancement has allowed Nokia to make great smartphones with certain specifications such as small size or bright screens. Some investors have raised concerns about the company’s restructuring plans, although these should go away once the phone manufacturer starts putting out profitable quarters again. Important competitors for Nokia include Apple (AAPL), Research In Motion (RIMM), and Google (GOOG). Nokia has by far the highest price/earnings to growth ratio, but it also has the lowest price to sales ratio. Margins are rather weak though – those numbers are 29.93% gross and 3.55% operating. On the other hand, this could be a good choice for dividend investors, with its 7.9% dividend yield.
Boston Scientific Corporation (BSX) is getting hit hard after a weak earnings report. Net income dropped about 25% from this time a year ago, although adjusted earnings were a bit better, actually beating analyst forecasts. Reduced demand for the company’s medical devices are what hurt the most, although some investors are excited about interim CEO Hank Kucheman. He’ll be filling that position until the former head of Johnson & Johnson’s (JNJ) medical devices division takes over next year. It could be tough for Kucheman though, as declining sales have many investors very worried. The company did raise its outlook a bit, and the stents business could be one important way that Boston Scientific does better going forward. Other important topics mentioned at the earnings release included the company’s plans for the emerging markets as well as research and development. Both figure to play a significant role in Boston Scientific’s future, and management appears to have the situation under control. As for value metrics, Boston Scientific has lower price to earnings and price to sales ratios than competitors like Johnson & Johnson and St. Jude Medical (STJ). Margins for BSX are a bit low though – those numbers are 64.99% gross and 14.77% operating.
General Electric Co. (GE) has been pretty flat lately, although the company has some exciting new products coming out. Specifically, it is introducing the largest free-standing gas double-oven range on the market, which will have a capacity of 6.7 cubic feet. Here’s what Julie Muennich, one of GE’s product managers, had to say:
“Increased cooking capacity and the ability to simultaneously prepare multiple dishes at different temperatures means multitasking has never been easier. Home cooks can get more creative with their menus, cook more items, and still spend more time with their family or guests.”
Other parts of GE’s conglomerate are also getting a lot of attention. For example, many investors have noted that GE Capital could have some serious exposure to the European debt problems. GE’s energy business is worth keeping an eye on too, especially with the U.S. current macroeconomic concerns. One important competitor for General Electric is Siemens (SI). That stock is a bit more expensive using price to earnings, although significantly cheaper looking at price/earnings to growth and price to sales. Siemens does have lower margins though – those numbers are 29.85% gross and 9.86% operating. Dividend investors in particular should keep GE in mind with its 3.6% dividend yield.
Ford Motor Co. (F) has been up as investors have become increasingly excited about its deal with United Auto Workers. Ford was able to keep labor costs down in this agreement, which was a primary concern. In fact, rating agencies have already adjusted their debt ratings higher for Ford as a result. That’ll allow Ford to borrow at lower interest rates, which is critical for its future success. Other parts of the United Auto Workers deal also bode well for Ford. Ford’s factories will now be able to use shifts of 10 hours a day for 4 days a week, which could reduce costs significantly. Essentially, it’ll allow factories to run for more time. Here’s what Ford’s president of American operations Mark Fields had to say:
“This agreement is proof that by working together with our UAW partners and local communities, we can significantly create new jobs, invest in our plants and people, and make a very positive impact on the U.S. economy.”
In fact, this UAW pact is so good for Ford that many analysts believe that a dividend could be on the way. (Note that Ford had to rescind its dividend due to problems a few years ago). General Motors (GM) and Toyota (TM) remain tough competition, however. Ford falls in the middle for price to earnings, price/earnings to growth, and price to sales, but it has the best margins - 15.23% gross and 6.61% operating.