Heavy Buying And Selling Reported On These 5 Stocks

by: Investment Underground

The market eagerly anticipated President Obama’s job speech on Thursday, and popular ETFs like DIA, QQQ, and SPY finished down for the day. Here are 5 stocks that saw a particularly high amount of action:

Caliper Life Sciences, Inc. (NASDAQ:CALP) was up over 40% on Thursday on news that PerkinElmer (NYSE:PKI) will acquire the company. For those that don’t know, Caliper Life Sciences is a provider of products and services to biotechnology and pharmaceutical companies. While shareholders across the country are thrilled to see this type of price appreciation, a variety of law firms are planning an investigation. Specifically, the concern is that CALP executives didn’t shop around for a better deal, although there are other possible problems with the transaction. Prior to today’s announcement, the most recent news for the company was a partnership with Yale University’s Center for Genome Analysis. President and CEO Kevin Hrusovsky had this to say: “Caliper is excited to partner with the Yale Center for Genome Analysis as we enhance our NGS sample preparation suite to accelerate sample preparation for each of the leading sequencing instrumentation and reagent platforms.” Companies similar to CALP include Life Technologies (NASDAQ:LIFE) and Nordion (NYSE:NDZ). CALP has negative trailing twelve-month income, while price to earnings ratios for these two other companies are 20.60 and 42.71, respectively. Also, CALP’s price/earnings to growth and price to sales are significantly higher than LIFE and NDZ. Another concern for CALP is its operating margin: -2.18% for the past 12 months.

Altria Group (NYSE:MO) – This tobacco giant was up just barely in Thursday’s trading. As usual, investors are thrilled with this company’s dividend yield, currently 6.1%. The most recent news for MO though has been a reiteration of outlook for 2011 adjusted EPS. Specifically, the company expects that number to be between $2.01 and $2.07, with the quarterly version of that number being heavily impacted by inventory. Company estimates for reported EPS also stayed the same: between $1.70 and $1.76. In fact, as discussed here, Altria’s earnings have come from a variety of sources, and they are quite stable. Other important cigarette companies to consider are Lorillard (NYSE:LO) and Reynolds American (NYSE:RAI). Both of these competitors offer a lower price to earnings ratio as well as a lower price/earnings to growth ratio. Only RAI offers a lower price to sales ratio though – that number is 2.53. Operating margin for MO is about at middle of the pack, while gross margin is strong at 53.78%. Surprisingly however, year over year quarterly revenue growth is -7.8%. Cash flows for MO have been mixed: $443 million came in during 2010 while $250 million has left the company during the first half of 2011. The company’s large dividend is one important factor that has hurt cash flows lately.

Merck & Co. Inc. (NYSE:MRK) was down a bit on Thursday, and regulators in the United Kingdom are questioning the effectiveness of the company’s Daxas drug. The treatment is for patients with chronic obstructive pulmonary disease, and the argument being made is that it’s simply not cost-effective for the National Institute for Health and Clinical Excellence to use it for the National Health Service. Not all the government-related news is bad for Merck though, as a lawsuit against the company for its Vioxx drug was recently dismissed. Specifically, the claim was that the painkiller had caused a heart attack in one of its users. The Texas Supreme Court responded by saying that there was not enough evidence to hold Merck responsible. Important competitors for Merck include Bayer (OTCPK:BAYRY), GlaxoSmithKline (NYSE:GSK), and Pfizer (NYSE:PFE). These stocks are all cheaper than Merck on a earnings basis: their price to earnings ratios are 20.36, 20.84, and 17.57, respectively. Price/earnings to growth and price to sales for MRK are closer to the middle of the pack, however. Gross margin (65.22%) and operating margin (21.25%) are also about average. As for cash flows, $1.589 billion came in for 2010 and $1.442 billion came in for the first half of 2011.

U.S. Bancorp (NYSE:USB) was up 0.75% on Thursday, and the company has recently been in the news for lawsuits that it is filing. Specifically, the company is suing WMC and Equifirst (two companies that no longer operate) for improperly underwriting subprime mortgage loans. In fact, U.S. Bancorp is also suing Bank of America’s (NYSE:BAC) Countrywide subsidiary for mortgage loans as well. In that case, USB hopes to force BAC to buy back the loans that it sold to USB. One piece of legal action that U.S. Bancorp is not involved in is FHFA’s recent spree of lawsuits. (The full list of companies being sued by FHFA can be found here). Important competitors for U.S. Bancorp include Bank of America, JPMorgan Chase (NYSE:JPM), and Wells Fargo (NYSE:WFC). Bank of America has negative trailing twelve-month earnings, while those other two companies offer a lower price to earnings ratio and lower price/earnings to growth ratio than USB. USB’s price to sales ratio is also pretty high, currently 2.90. At 38.18%, operating margin is fairly strong, and quarterly revenue growth is 23.30% year over year. Cash flows for USB have been strong - $8.281 billion came in for 2010 and $763 million came in for the first half of 2011.

Xerox Corp. (NYSE:XRX) – This office mainstay fell sharply in Thursday’s regular hours but bounced back a bit after that. The company recently contributed some stock to its pension plan, and other news includes FDA compliance that will allow the company to make more food packaging. The details can be found here, and the move was also important for its cost-cutting implications. Investors are also excited about what Xerox will present at Graph Expo 2011. Specifically, a “high-speed waterless production inkjet device” is one thing that shareholders are quite interested in. XRX-related options have also been in the news, and current action suggests that the stock may be due for a downtrend. Another possibility is that the stock moves sideways for a while. Companies similar to Xerox include Canon (NYSE:CAJ), Hewlett-Packard (NYSE:HPQ), and Ricoh (OTCPK:RICOY). All of these except HPQ have higher price to earnings and price to sales ratios. Price/earnings to growth is low for XRX though at 0.35. Margins for Xerox have been about average – operating margin is 33.4% and gross margin is 8.26%. Cash flows have been weak though - $2.588 billion left the company in 2010 and $113 million left the company in the first half of 2011. Paying down of debt was one big factor for that 2010 cash outflow.

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