By Larry Gellar
We’ve identified 5 NYSE stocks that are seeing very heavy volume. Here’s the big news that may impact your portfolio this week:
Tyco International Ltd. (TYC) has been up the past week, and now the company is announcing that it will split up into 3 publicly traded companies. Interestingly, the company already did a 3-way split a few years ago, when the Covidien (COV) and Tyco Electronics (NYSE:TEL) were spun out. Regardless, the new companies will each have one of three goals: home security (ADT), pipes/valves, and fire protection. This is a move that should certainly add value to all 3 of these divisions.
Here’s what CEO Edward Breen had to say:
We thought these sets of businesses could be run better than they were being run…The businesses now are all performing well. There's nothing wrong with any of them. We're doing this from a position of strength.
Needless to say, this breakup puts to rest the recent rumors that United Technologies (NYSE:UTX) would acquire the company. Besides United Technologies, important competitors for Tyco include General Electric (NYSE:GE) and Honeywell (NYSE:HON). Measures like operating margin, price to earnings ratio, price/earnings to growth ratio, and price to sales ratio all put Tyco at about the middle of the pack, while gross margin for the company is rather high at 37.93%. Quarterly revenue growth (year over year) has been less impressive – that number is at 0.40%.
Citigroup, Inc. (NYSE:C) has been about flat the past week, but The Wall Street Journal is reporting that famous hedge fund manager John Paulson is still a fan of this stock. In fact, he likes banks overall right now, including Bank of America (NYSE:BAC). Interestingly, banks like Citigroup have been reporting strong earnings lately, mostly because they’re simply letting go of some of their loan loss reserves. This has caused FDIC chairman Martin J. Gruenberg to note that banks will eventually need to start lending again in order to keep turning a profit.
Citigroup has also made headlines for the record numbers it is posting in the area of credit card offers. In fact, Citigroup apparently mailed 346 million offers for credit cards this quarter. Important competitors for Citigroup include Bank of America (BAC), HSBC Holdings (HBC), and JPMorgan Chase (NYSE:JPM). Citigroup falls about in the middle of those companies for measures like price to sales, price to earnings, and price/earnings to growth, although Bank of America is notable for its recent lack of profitability. Gross margin of 20.41% lags behind some peers. As for cash flows, $2.5 million came in during 2010 and $206 million flowed out during the first half of 2011.
MetLife, Inc. (NYSE:MET) has been down significantly lately, as worries abound that the Federal Reserve will flatten the yield curve, which could hurt insurance companies significantly. In other news, MetLife is hiring Credit Suisse’s (NYSE:CS) Adam Hodes. Hodes helped MetLife acquire American Life Insurance in his role at Credit Suisse, and now will lead MetLife’s mergers and acquisitions unit.
Here’s what CFO William Wheeler had to say:
With more than 20 years of experience in financial services transactions, Adam will provide strong leadership of this important area for MetLife…Adam has an ideal background for his new position at MetLife.
There’s also talk that MetLife is looking to expand in Latin America. Rumors speculate that Hodes would facilitate such a transaction. Important competitors for MetLife include Allianz SE (OTCPK:AZSEY), American International Group (NYSE:AIG), and Prudential Financial (NYSE:PRU). These other stocks offer significantly lower price-to-earnings ratios, but they also all have lower margins than MetLife. Price/earnings to growth and price to sales for MET are about average. As for cash flows, MET brought in $2.934 billion during 2010 but had $3.373 billion flow out during the first half of 2011. Recent outflows can be attributed to some acquisitions the company has made.
The road for Textron Inc. (NYSE:TXT) has been bumpy lately, as investors keep trying to figure out the odds of United Technologies (UTX) buying the company. Goodrich (NYSE:GR) seems a more likely target though, and many analysts are speculating that Textron is too small to be of interest to United Technologies. Other news for Textron has centered on its offered buyback of some convertible notes it put out recently. Earnings too came out recently for Textron; those were better than expected and in line with results from last year at this time. Regardless, some analysts are worried about this company since many politicians are interested in cutting defense spending right now. Furthermore, demand for the company’s corporate jets has also suffered.
Important competitors for Textron include General Electric and United Technologies. Those companies offer much lower price-to-earnings ratios but also have much higher price/earnings to growth and much higher price to sales. Margins for Textron are notably weak: Gross margin is 15.86% and operating margin is 4.35%. Cash flows too have been poor: $961 million flowed out in 2010 and $280 million flowed out in the first half of 2011. Paying down of debt has played a significant role in this.
Las Vegas Sands Corp. (NYSE:LVS) has been up significantly, and Credit Suisse has reiterated its outperform rating on the stock in addition to raising EPS estimates. Price target is currently set at $60, over 10 dollars higher than what it is trading for now. Las Vegas Sands has also been involved in some messy legal disputes lately. Specifically, the company alleges that Steven Jacobs, the fired CEO of Macau operations, is holding onto confidential documents that belong to the company. Says the company’s lawsuit, “Jacobs was privy to a host of sensitive LVSC company information that, if revealed, could and would harm LVSC's business and gaming operations.” Jacobs, on the other hand, accuses Las Vegas Sands of wrongful termination and says that the company wanted him to misuse officials in the Macau government.
Important competitors for Las Vegas Sands include MGM Resorts (NYSE:MGM) and Wynn Resorts (NASDAQ:WYNN). MGM’s price to earnings ratio is below 2 right now, while WYNN’s is over 50. Numbers like price/earnings to growth and price to sales are somewhat for LVS right now. Margins are pretty good: gross margin is 47.02% and operating margin is 23.75%. Cash flows have been mixed with $1.918 billion flowing out in 2010 and $442 million flowing in during the first half of 2011.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.