Aug. 17, 2013, 9:02 AM
- The market's more richly valued than you think, writes Jack Hough in Barron's, as Q4 S&P 500 (SPY) earnings are expected to rise 10.5% on just a 0.6% increase in revenue. "Where's that margin growth going to come from," asks S&P's Howard Silverblatt. "Most of us aren't exactly napping on the job as it is."
- Avoid sectors particularly prone to estimates cuts like consumer discretionary (XLY) and telecom (IYZ), suggests Hough, but favor safer groups like tech (XLK, though Cisco last week calls "safe" into question) and health care (XLV).
- A stock screen scoring companies by free cash yield as well as ability to still boost margins yields 5 top picks:
- Pfizer (PFE) trades inline with a slow-grower like Merck (MRK) but maybe deserves a multiple closer to a fast-grower like Bristol-Myers Squibb (BMY).
- Danaher (DHR) - it trades at what seems like a pricey 18x earnings, but just 15x projected free cash.
- Lear (LEA) at 10x earnings is growing faster than the auto market as a whole as it picks up market share and electrical content in cars is rising.
- Oracle (ORCL) and Qualcomm (QCOM) have both seen earnings growing faster than their share price of late, leaving them attractively priced.
- The screen also yielded 3 to avoid:
- Tiffany (TIF) at 20x earnings is pricing in faster earnings growth in 2014. Praxair (PX) expectations are for a near-doubling in earnings growth to 13%. Lennar (LEN) with 32% projected earnings growth remains pricey even as the housing recovery appears to be slowing.
Jul. 4, 2013, 3:28 AM
The FDA intends to allow generic pharmaceutical companies to alter the safety labels on their products if they become aware of new risks. The change could make the firms liable if they don't warn patients about the concerns about a product. Generic makers have been protected from such liability since 2011, when the Supreme Court said they couldn't be sued because they had to use the same labels as as their brand name counterparts. (PR)| Jul. 4, 2013, 3:28 AM
Jul. 3, 2013, 8:41 AM
Some health insurers are suffering moderate losses premarket following the government's decision to delay a rule that requires companies with more than 50 workers to provide health coverage, although many appear to be untraded at the moment. Aetna (AET) -1.1%, UnitedHealth (UNH) -1.2% and Humana (HUM) -0.3%.| Jul. 3, 2013, 8:41 AM
Jul. 2, 2013, 11:07 AM
GE's (GE -0.7%) healthcare unit released secondary research findings today, indicating that bad habits and lifestyle choices are contributing approximately $33.9M annually to costs related to cancer. Furthermore, the same research revealed that by reducing bad habits, global healthcare systems could potentially save $25B each year.| Jul. 2, 2013, 11:07 AM | 4 Comments
Jul. 2, 2013, 7:02 AM
The market for biotech IPOs is experiencing its best run in nine years, with 16 companies raising $1.1B in H1. An increase in FDA drug approvals, a strong performance by some biotech firms that are already listed, and the JOBS Act, which allows companies to privately "test the waters" before publicly launching an IPO process, are some of the factors behind the trend. Companies to benefit include heart-drug company Esperion Therapeutics (ESPR), and Prosensa Holding (RNA), a developer of treatments for rare diseases.| Jul. 2, 2013, 7:02 AM
Jun. 26, 2013, 10:40 AM43 out of 45 global markets are oversold, according to BAML's "Breadth Buy" indicator. These extreme signals tend to be followed by a short-term 6-7% bounce, but, cautions chief investment strategist Michael Hartnett, a sustained rally would require a shift in policy behavior. What's more, the 2 markets not in oversold territory are the U.S. (SPY) and Japan (EWJ, DXJ) and they're kind of important. Most oversold: Brazil (EWZ), Turkey (TUR), South Africa (EZA), Mexico (EWW), Materials (XLB), China (FXI, CAF). Least oversold (in addition to the U.S. and Japan): Health Care (XLV, IYH), and Consumer Discretionary (XLY). | Jun. 26, 2013, 10:40 AM
Jun. 25, 2013, 3:19 AM
In a major victory for the generic pharmaceuticals industry, the Supreme Court yesterday ruled that patients can't sue firms over copycat drugs that are allegedly unsafe. The court quashed a New Hampshire jury's decision to award $21M to a woman who developed a debilitating skin disease after she took a generic version of the pain treatment sulindac made by a unit of India's Sun Pharmaceutical.| Jun. 25, 2013, 3:19 AM | 5 Comments
Jun. 21, 2013, 9:29 AM
Jun. 17, 2013, 2:47 PMStocks give up more than half of their earlier gains 75 minutes before the bell, the S&P 500 (SPY +0.4%). It's those interest rates again. Quiet for most of the day, rates began turning higher (TLT -0.4%) just after lunch, and the 10-year yield is now up 4 bps to 2.17%. Favorites of the dividend players, health care (XLV) and utilities (XLU) underperform - just flat on the session. | Jun. 17, 2013, 2:47 PM | 3 Comments
Jun. 17, 2013, 12:56 PM
More from Zulauf at Barron's: Taking issue with the gathering consensus of a stronger economy and the Fed pulling back, Zulauf suggests bond yields (TLT, TBT) may have stopped rising and could be set to fall. In conjunction with that view, noncyclical names (XLU, XLV) could be set for a comeback at the expense of cyclical sectors (XLV, XLB, XLE).| Jun. 17, 2013, 12:56 PM
May 31, 2013, 2:49 PM
Stocks turn lower (DIA -0.5%) 90 minutes ahead of the bell as Treasury prices tumble anew (TLT -1.2%), the 10-year yield gaining another 9 bps to 2.20%. The levered Treasury short ETF (TBT +2.5%) hits a 52-week high. Again hardest hit are the previously hot defensive sectors whose yields no longer stand so tall over Treasurys. Health care (XLV -1.1%), Consumer staples (XLP -1.1%). Utilities (XLU +0.1%) however, get a respite from an ugly month.| May 31, 2013, 2:49 PM | 6 Comments
May 29, 2013, 11:15 AM
Stocks tumble to session lows in late-morning trade, the DJIA (DIA -1%) off 168 points. Gravity continues to take hold of the previously-leading defensive sectors as their dividends are starting to face competition from Treasurys - Healthcare (XLV -1.7%), Utilities (XLU -1.9%), Consumer staples (XLP -1.8%). Residing in tech, but favored for its high dividend, Verizon (VZ -2.9%) is off about 5% from its gap open yesterday.| May 29, 2013, 11:15 AM | 3 Comments
May 17, 2013, 8:13 AMThomas Lee lifts his year-end S&P 500 (SPY) forecast to 1,715 from 1,580 as the bull has already outrun his expectations. His team sees clues economic performance is picking up, including the outperformance of semiconductors (XSD) vs. transports (IYT), and the steepening of the 10 year/30 year Treasury curve. Risk/reward is particularly appealing in tech (XLK), healthcare (XLV), and financials (XLF). | May 17, 2013, 8:13 AM
May 16, 2013, 11:42 AMThe Dow and S&P 500 are flat, but the Nasdaq gains 0.4% late morning behind a 12.5% jump in Cisco post-earnings and Apple bouncing from the last 2 days' drubbing, up 1.5%. Dragging the Dow is a 2.1% decline in Wal-Mart post-earnings. The notably weak sector today is the year's hottest, healthcare (XLV -0.8%). | May 16, 2013, 11:42 AM | 1 Comment
May 6, 2013, 1:36 PM
Merck (MRK -1.3%) gets no love today from the FDA's approval of Liptruxet late Friday, as the stock is likely dragged down with the rest of the big pharma names on the back of a CNBC report that criticizes their earnings so far. The article points to the fact that pharmaceutical companies have seen a 4.7% contraction in earnings, and a 3.2% drop in revenue this quarter. Why? Morningstar's Damien Cover says there are two primary reasons: FX impact, especially from the yen, and intensified generic competition from patent losses.| May 6, 2013, 1:36 PM
May 6, 2013, 7:27 AMThe S&P 500 (SPY) is fairly valued, says Goldman, but opportunity lies in cyclicals (XLY, XLE, XLI, XLB) which are more undervalued vs. defensives (XLU, XLP, XLV, XTL) than at any time in the last 15 years. "Given the 4 P/E multiple point head start, even a slight valuation normalization should translate into outperformance of cyclicals over defensives during the next 12 months." | May 6, 2013, 7:27 AM | 1 Comment
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