By Larry Gellar
We’ve identified 5 stocks that have their 20-day simple moving average crossed above their 50-day simple moving average. These stocks could have some upward momentum, and many have compelling stories that make them a buy right now. Halliburton (HAL), Las Vegas Sands (LVS), and U.S. Steel (X) have all issued new debt that could propel future growth. Meanwhile, Alcoa (AA) and Regions (RF) are doing well despite a tough economy. Let’s see what specifically has been affecting these stocks:
Alcoa, Inc. has declined a bit lately, although a new deal with Embraer could prove to be quite lucrative. Alcoa will provide aluminum and aluminum-related technologies to Embraer, which will be used as part of its newest fleet of aircraft. Alcoa also released an earnings report recently. Earnings missed expectations despite the fact that revenues grew. While some of Alcoa’s cost-cutting measures are going well, the company is being hurt by higher costs for basic materials.
Management is still quite optimistic about growth in aluminum demand over that next decade, however. Additionally, some divisions within the company are doing quite well. Beverage cans remain an important product, and transportation clients are also important customers. Construction and building remain a work in progress, however. Alcoa’s biggest competitor might be Aluminum Corporation of China (ACH). That stock is significantly higher in both price to earnings and price/earnings to growth ratio but lower in price to sales. On the other hand, it offers lower margins – gross margin is 4.66% and operating margin is 3.78%. As for cash flows, Alcoa brought in $62 million during 2010 but had $211 million flow out during the first 9 months of 2011. Capital expenditures have played a large role in the recent outflows.
Halliburton Company has fallen significantly, and a new debt issuance has caught the attention of many investors. The company is putting out $500 million of 10-year notes and $500 million of 30-year notes, which will be used for general corporate purposes. Those purposes include Halliburton’s acquisition plans amongst other things.
Halliburton also declared its fourth-quarter dividend recently. Shareholders of record on December 2 will receive $0.09 per share on December 23. Meanwhile, Halliburton may be on the hook for some pollution in Oklahoma. The full details can be found here, but an SEC filing from Halliburton does say: “The radiological impacts from this discrete area are not believed to present any health risk for off-site exposure.”
Important competitors for Halliburton include Baker Hughes (BHI), Schlumberger (SLB), and Technip (OTCQX:TKPPY). Halliburton offers the lowest price/earnings to growth ratio, although price to earnings and price to sales ratios are closer to average. Meanwhile, Halliburton margins are pretty strong, with gross margin at 19.86% and operating margin at 18.66%. As for cash flows, $684 million flowed out during 2010, while $377 million flowed in during the first 9 months of 2011. Strong amounts of cash from operating activities have helped to turn around the cash flow situation.
Las Vegas Sands Corp. stock hasn’t done very well lately, although a debt rating upgrade from Moody’s should help to ease the pain. Many of the company’s debt offerings are now classified as Ba2, and Moody’s said the upgrade was due to both recent success as well as predictions of a strong future. On the other hand, a new article from Fortune discusses some of the troubles that Las Vegas (the city) is currently having. In fact, one major project being put on hold is the St. Regis Residences at the Venetian Palazzo. That condominium building is expected to cost Las Vegas Sands $600 million.
In other news, owners of Las Vegas Sands Preferred A shares have received one last dividend before being bought back by the company. That dividend amounted to $2.50 per share and was given on November 15 to shareholders of record from November 3. Important competitors for Las Vegas Sands include MGM (MGM) and Wynn (WYNN). Las Vegas Sands has the highest price to earnings, price/earnings to growth, and price to sales ratios, although operating margin of 25.02% is quite strong. As for cash flows, $1.918 billion flowed out during 2010, while $914 million flowed in during the first 9 months of 2011.
Regions Financial Corp. was up big in the most recent trading session, and a sale of the company’s Morgan Keegan subsidiary could be imminent. Stifel Financial (SF) is bidding aggressively, and Regions has dropped talks with private equity groups that were interested. Regions has also been involved in the recent debacle regarding monthly fees for debit cards. Intended as a response to the Dodd-Frank Act, many customers were quite disgusted regardless. Regions will in fact stop charging those fees, although it will need to find other ways to bring in revenue.
Regions also came out with a good earnings report not too long ago, and some analyst firms have adjusted their outlook as a result. In fact, BMO Capital is initiating coverage at Outperform with a price target of $6. This comes at a time when Regions appears to be doing a fine job of running its business and trying new cost-cutting measures. Important competitors for Regions include Bank of America (BAC), BB&T (BBT), and SunTrust (STI). Regions has the highest price to earnings and price/earnings to growth ratios out of those stocks, although price to sales is a bit below average at 0.98. That can partly be explained by a weak operating margin of 7.06%.
United States Steel Corp. (X) has been unusually volatile lately, and the departure of Graham Spanier from U.S. Steel’s board of directors could be one reason. Note that Graham Spanier was fired as president of Penn State University a little while ago. On the other hand, the economic problems in Europe are more likely what’s affecting this company. As discussed here, at least one team of analysts sees U.S. Steel moving down to $24. The Flat Rolled and Tubular segments are doing well, but other divisions are having trouble.
In fact, the company plans to shut down a Serbian plant, which is suffering from costly raw materials and competing imports. Meanwhile, U.S. Steel also recently issued $196 million worth of tax-exempt conduit bonds through eight municipalities. That’ll allow U.S. Steel to refinance other debt incurred during creation of some pollution-related operations.
Important competitors for U.S. Steel include AK Steel (AKS), Arcelor Mittal (MT), and Nucor (NUE). U.S. Steel has an extremely high price/earnings to growth ratio, although price to sales ratio is quite low. Gross margin of 8.11% and operating margin are signs of the company’s struggles. As for cash flows, $640 million flowed out during 2010 and $308 million flowed out during the first 9 months of 2011.