Seeking Alpha

danielosborne's  Instablog

danielosborne
Send Message
I am an investment professional currently working for the amazing Wall Street Bad Boys.
My company:
NextCandle.com
My blog:
Nextcandle.com
  • Economic News February 23: Home Builder Stocks Are Rising Ahead Of Friday
    On Friday morning, the Census Bureau of the Department of Commerce will release its New Home Sales for February report after the National Association of Realtors (NAR) released its report for existing home sales for January on Wednesday.

    The NAR report, which is considered a decent indicator of the state of the housing market, revealed that home resales rose 4.3% to a 1-1/2-year high last month while the supply of houses on the market is now at its lowest level in nearly seven years. Moreover, sales were up in all four regions of the country with the biggest gain of 8.8% coming from the West.

    This data was interpreted positively as a sign that the housing market may be coming of its floor but there is some suspicion that part of the rise was due to unseasonably warm winter weather while news about Europe overshadowed the report - meaning the market did not react much to it. Nevertheless, confidence among homebuilders is reportedly nearing five-year highs as they break ground on new housing projects.

    Hence, the Friday report from the Census Bureau of the Department of Commerce will be interesting to hear - especially for anyone investing in or trading homebuilder stocks as this report will provide an indication of the number of new privately owned one-family houses sold and for sale.

    Moreover and on Thursday, most homebuilder stocks were already making respectable gains by the middle of the trading day - perhaps making up for Wednesday and in anticipation for Friday's new home sales report. Otherwise its worth noting that the SPDR S&P Homebuilders ETF (XHB) is up around 17% since the start of the year, up 32% over the past three months and up 48% over the past six months but up only 13% over the past year and is down 46% over the past five years.

    Of course, there are plenty of other ways to play any recovery in the housing sector without investing in risky home building stocks. This includes focusing on home improvement retailers or building material stocks like Home Depot (HD) or Lowe's Companies (LOW) plus other home related stocks like furniture retailer Williams-Sonoma (WSM), reclining chair maker La-Z-Boy (LZB) and mattress maker Tempur-Pedic International (TPX) - all of which will benefit from any sign of a housing sector recovery.

    Nevertheless, it's also important to remember that both reports from the Census Bureau of the Department of Commerce and the National Association of Realtors (NAR) are often subject to major revisions in the weeks or months after their release and they are not perfect gauges of market sentiment. This means that homebuilder stocks along with stocks in related industries may or may not make a move on Friday.

    Either way and if you are trading stocks that could make a move, it would be a good idea to check you NextCandle.com stock forecasts for these stocks to find out what direction they may move in - especially in the wake of the more optimistic existing home sales report on Wednesday.

    NOTE: THIS PIECE WAS JUST POSTED ON OUR BLOG AT www.nextcandle.com/blog

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Feb 23 4:19 PM | Link | Comment!
  • Stock Market Watch Starting February 21

    For the new but shorter than usually trading week, our top stock watch list includes both General Motors (GM) and Apple (AAPL) - two stocks that were also topping the headlines last week when NextCandle.com correctly predicted that both would be making higher highs.

    Starting with General Motors (GM), it surged almost 9% to above $27 last Thursday after reporting record profits of $7.6 billion - 62% above its 2010 net income. The news meant that 2011 was the first year since 2004 that Chrysler, Ford (F) and General Motors (GM) have all managed to be profitable at the same time. On the other hand and while all automakers have reported higher sales, this could be due to having to offer more discounts to customers in order to produce those sales plus its worth noting that General Motors' (GM) stock still ended the week down 20% from its 2010 IPO.

    Nevertheless, Bloomberg has reported that US auto sales per dealership could rise to a record this year thanks to both higher demand and to the stabilization of automakers' dealership networks after General Motors (GM) and other car makers shrunk and consolidated their dealership networks to boost the profitability of remaining dealers. Hence, this means that General Motors (GM) stock forecasts should have the stock heading higher in the near term.

    However and over the long term, some analysts have expressed concerns that car makers like General Motors (GM) might be encouraged to boast and sustain car sales by adding to their dealer networks - reversing the profitability gains achieved over the past few years. In other words, keep General Motors (GM) and other automakers on your stock watch list while also keeping a close eye on both car sales statistics and how those car sales are achieved.

    Finally, it's worth having Apple (AAPL) again on your stock watch list for this week. At the start of last week, NextCandle.com's Apple (AAPL) stock forecast correctly predicted that the stock would make a new high and break above the $500 level. However and later that week after surging to a 52 week high of $526.29 on Wednesday, Apple (AAPL) dropped below the $500 level on apparently unsubstantiated rumors that the Nasdaq 100 index would adjust its components to give the tech giant less weight. On Friday, Apple (AAPL) closed at $502.12 - still above the $500 level but not by much. Hence, it will be interesting to watch and see if Apple (AAPL) manages to stays above the $500 level for the duration of this week.

    However and over the medium and longer-term, any Apple (AAPL) stock forecast could be impacted by new product releases along with growing concerns over China - specifically tussles over iPad trademarks there along with labor conditions at the factories of its suppliers with the later having the potential of turning into a PR nightmare for the company. Already, the Fair Labor Association (FLA) has reportedly uncovered "tons of issues" that need to be addressed at a Foxconn plant supplying Apple (AAPL) with many of its products.

    In other words and over the longer term, keep an eye out for any embarrassing revelations - especially any news about Apple (AAPL) executives having known about any "issues" that are sub sequentially revealed. After all, investors with a longer memory might remember how labor issues turned into a PR nightmare for NIKE (NKE) some years ago.

    NOTE: THIS PIECE WAS JUST POSTED ON OUR BLOG AT www.nextcandle.com/blog

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Feb 22 2:43 AM | Link | Comment!
  • The Truth Behind Facebook’s IPO

    THIS PIECE WAS POSTED ON OUR BLOG www.nextcandle.com/blog BACK IN NOVEMBER 2011:

    Facebook, the social network giant, plans to make an initial public offering in early 2012. Facebook's privately held shares were split in early October, which usually occurs pre-IPO, and further confirmed circling rumors. Of course, the public has every right to be skeptical of this common stock. Recent dot-com IPOs such as Groupon and Pandora couldn't live up to the hype, and the stocks swiftly fell below IPO prices. The recent busts in web-based corporations have been compared to the dot-com bubble of the late 90s.

    However, there are some redeeming qualities to Facebook, compared to its online ancestors: Facebook has proven extremely profitable. In 2010, Facebook made about $600 million. In 2011, it's expected to triple profits and more, and generate $2 billion in EBITDA.

    On the Flip Side While Facebook is profitable now, it has nowhere near the revenue momentum Google had when going public in 2004. Additionally, Facebook has the real possibility of being replaced by copycats or new fads, just as it replaced MySpace. Facebook relies only on ad revenue and commissions from social gaming (such as Farmville by Zynga). Facebook needs growing use for growing profits. And growing popularity is difficult to achieve when 500 million users already log in each day. Facebook has been valued by experts at around $100 billion, and plans to have an IPO for approximately $10 billion. This may prove a good investment, but if history is any indicator, the social network may be a little overrated.

    Trading It Barring a few exceptions, most stocks fall below their IPO price fairly soon after coming out. Buying Facebook stock on the initial hype and surge upwards may prove profitable. Regardless, a stock with so much buildup is bound to disappoint in the long run, especially with such an ambitious IPO.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Feb 08 2:13 AM | Link | Comment!
Full index of posts »
Latest Followers

Latest Comments


Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.