This morning we are seeing a bit of red in the futures markets as Asia was mixed and Europe is lower at this time. The German economy looks like it is weakening, and many of the assets which moved higher on the back of central bank moves appears to have run their course higher - although we are still bullish of oil and precious metals at this time. Remember, we have been talking about a moderate pullback with a rally into the end of the year so this price action was expected. We are looking towards iDevice hardware makers, oil, precious metals and a handful of retailers to lead the way higher moving forward. Remember we view the next month or so as a stock picker's market and shall invest accordingly.
We have no economic news out today, the next batch will be out on Tuesday.
Looking at Asian markets we see markets are mixed:
- All Ordinaries - down 0.49%
- Shanghai Composite - up 0.32%
- Nikkei 225 - down 0.45%
- NZSE 50 - down 0.01%
- Seoul Composite - up 0.05%
In Europe markets are lower:
- CAC 40 - down 1.32%
- DAX - down 0.61%
- FTSE 100 - down 0.54%
- OSE - down 0.38%
Shares in Skyworks Solutions (SWKS) have been moving higher as news about record sales for the new iPhone spread. It seems that all of the suppliers to the iPhone have been rising in recent sessions, and rightfully so. The iPhone 5 should go down as the most popular version yet, and we also anticipate a strong holiday season to go along with our belief that the American consumer is slowly beginning to return to the marketplace so to speak. The economy is not great, but has shown resiliency and we believe that all things iPhone shall rise going into the close of the year. Shares in Skyworks Solutions finished at $24.81/share after rising $0.78 (3.23%) during Friday's session. We would look for the strength to continue and for shares to potentially test their highs over the next few months.
Friday saw shares in Sprint (S) rise $0.21 (3.86%) to close at $5.65/share on volume of 89.4 million shares, which is above the three month daily average. The stock nearly hit a new 52-week high on Friday, but fell just short. The new iPhone sales are as strong as ever according to numerous parties around the world selling the devices, and it is important for investors to remember that all of this upfront success will hurt operating results near term, but will drive long-term growth as customers are moved to these higher margin devices. We are bullish of Sprint and think that the iPhone will not be their only hit this year as we also see the company being invited to be included as a carrier for the next generation iPad.
We have discussed Michael Kors Holdings (KORS) a few times in this daily article and the shares have been solid performers after the company's initial public offering this year, constantly delivering for investors. Friday was just another example of that as the company raised their second quarter and full year 2013 guidance smartly higher. This continues along with the trend showing that companies at the top of their game are able to capture consumer spending right now, and Michael Kors is doing just that. Investors pushed the stock up to a new 52-week high on Friday and shares actually closed at the highs, which we can only view as extremely bullish. This is on our list of retailers to own right now.
We have been bullish of the US economy for a while now, showing faith when others did not due to our belief that the American consumer was coming back and that housing would rebound - and rebound it has. As a side note, we just purchased a new home to take advantage of low rates and what we perceive as a bottom in housing prices country-wide. KB Home (KBH) confirmed this on Friday by reporting a surprise profit for the quarter along with bullish news regarding rises in their backlog. Net orders rose again this quarter and the company is seeing growth on both the top and bottom lines as the market improves. We are coming out of the traditionally strong summer months, but we believe that quarter-over-quarter and year-over-year results will be like night and day moving forward. KB Home hit a new 52-week high in Friday's trading with shares closing at $15.26/share after rising $2.15 (16.40%) with volume spiking to 33.2 million shares on the news. Being bullish of the homebuilders is a must, but as we have previously stated, you have to play individual names here and not the entire sector if you are trying to capture the highest returns.
Vivus (VVUS) saw shares head lower Friday as investors fear that the Europeans will not approve the company's weight loss drug. Shares closed at $21/share after falling $2.72 (11.47%) during Friday's session. Volume spiked along with the share price volatility and to be honest this is simply a bettor's game when it comes to the approval process on a diet drug. We speculated on the results here in the U.S., however at this point we will refrain from taking sides on the European approval because we are honestly not all that familiar with it and know from past experience that European approval does not guarantee U.S. approval and vice-versa. For those interested in trying to trade around this news we would recommend valuing the business based on the U.S. market only, and should the Europeans deny access to their markets and shares fall below your valuation then buy shares. Otherwise we do not feel comfortable speculating on an approval or disapproval. In simple terms we would rather trade the news than the rumor here.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.