Posts Tagged ‘stock prices’
Traditionally, the first big American public company to kick off each new corporate earnings season is Alcoa Inc. (NYSE/AA). For the current quarter, Alcoa reported a net loss of $178 million, or $0.16 per diluted share. The company stated it had some special restructuring costs in the quarter; if you were to exclude them, its corporate earnings were $0.09 per share. (Source: Alcoa Inc., April 8, 2014.)
As usual, investors grasping for any good news as a reason to push stock prices higher didn’t hold back. The chart below shows what happened as soon as the market for Alcoa shares opened after its corporate earnings release.
Alcoa’s stock prices gapped up almost five percent on its news that “it lost money but really didn’t lose money if restructuring charges were excluded.”
But how did Alcoa really do? The first thing I would do as an investor is see if sales at Alcoa are rising. In this case, Alcoa reported its revenue fell 6.5% in the quarter from the same quarter last year.
Then I would look at stock buybacks. Did Alcoa buy back any of its stock in the quarter that would have the effect of boosting its quarterly per-share earnings? Well, lo and behold, in the first quarter, the number of Alcoa’s diluted shares declined by more than five percent!
Please don’t get me wrong. I’m not saying Alcoa shares are a sell. In fact, I don’t follow the company at all. But when I see the stock market pushing the stock price of a company higher despite the company reporting a corporate earnings loss, … Read More
I was looking at the chart of priceline.com Incorporated (NASDAQ/PCLN) the other day, as the stock surpassed the $1,000 level. But why would I consider paying so much for a stock when there are cheaper comparables in the same online travel space?
It’s true; there are less expensive online travel stocks than priceline.com. But when you are stock picking, you should look at the comparative valuation and growth metrics, and not simply stock prices. The problem is that many investors will tend to base their stock picking on the share price, but the reality is that determining which stock to buy is not like shopping for goods—you don’t always go for the lowest-priced item. It’s like the old adage, “You get what you pay for.” This also applies to stock picking.
Online travel provider priceline.com beat Google Inc. (NASDAQ/GOOG) to become the first company to break the $1,000-a-share barrier (excluding Berkshire Hathaway Inc.). This is an amazing accomplishment for a stock that debuted at $75.25 on March 31, 1999.
The key to priceline.com is that it was the first company to really drive the online travel segment and innovate its service offering along the way in spite of a growing number of competitors. This is why it is tops in the online travel sector.
Chart courtesy of www.StockCharts.com
Of course, there are competitors such as Expedia, Inc. (EXPE) that you could consider when stock picking, but the company is over seven-times smaller than priceline.com, based on market cap.
Chart courtesy of www.StockCharts.com
Based on comparative valuations, however, Expedia is more attractive, trading at 14.4X its 2014 earnings per share … Read More
Big bank stocks have had a tough year in 2011. They’ve been beaten and bruised. Some big banks, like Belgian financial giant Dexia, have needed a government bailout. During the past week, all of the big banks have had a strong rally due to the added liquidity provided by the Federal Reserve and world central bankers, but do we really know what’s going on behind the scenes?
How do I feel this morning? Vindicated.
I’ve been writing on these pages for months that the stock market has been in a bear market rally that started in March 2009 and that stock prices would move higher before Phase III of the bear market ultimately sets in and brings stocks back down to their March 2009 lows. Over the past few weeks, I’ve been getting e-mails from my readers telling me that I’ve been in “bear market rally” mode for too long and that the markets were done…the bear market rally was over. And, presto, what do we get? A single-day 490-point jump for the Dow Jones Industrial Average yesterday—its biggest one-day gain in years!
The European debt crisis has not gone away. The fix comes only at the end of the debt crisis’ beginning. Frankly, I’m kind of annoyed it took this long for policymakers to act. The domestic stock market has suffered long enough because of a lack of firm action on the European sovereign debt crisis. It isn’t going away anytime soon, but thankfully, the debt crisis is now being addressed.
The Dow Jones Industrial Average blew past the psychologically important 12,000 level yesterday. What a feat! Less than a month ago, on October 4, 2011, the Dow Jones Industrial Average was at its lowest level since September 2010: 10,400. The widely followed stock index has gained 1,800 points, or 17.3%, in less than a month.
What a difference a couple of months make! If we think back to early August of this year, we can remember several days in which the Dow Jones Industrial Average fell 400 to 500 points in a single day. As the stock market continued to deteriorate, stock advisors started throwing in the proverbial towel and turned big-time bearish.
As I have been saying for the last few years, the auto sector in the U.S. and around the world remains terrible; it’s a bad place to have placed your capital. Even with the recent decline in stock prices of automakers to decade lows, we are still not buyers and will not be in the near future. General Motors Corporation (NYSE/GM) recently fell to its lowest point since the 1950s. Its current market- ap is a mere $3.7 billion, which is quite amazing given the company once was the darling of Wall Street and the institutional crowd, and has long been considered a “widow” stock with a nice dividend. That was then. I would not touch GM. Its current ividend yield of 15.30% looks attractive, but stay away, as it is
based on a weak stock price. And given that GM has about $23.0 billion in net debt, it would not be a surprise to see management cut the dividend out partially or entirely to economize.
Now some of you may be looking at the distressed auto sector and wondering if it is time to enter into positions. Our advice is a sound “No.” The sector is struggling with declining demand and the need for a major industry restructuring. Major car dealers are offering no interest financing, yet even this is having some problems in attracting buyers given the economic uncertainties. Even Japanese automakers are cutting estimates for car sales and you know this is a major red flag.
News circulated today that billionaire investor Kirk Kerkorian cut his holding in troubled Ford Motor Company (NYSE/F) to 6.1% and added … Read More
Without getting too technical, investors have two ways to bet on the price direction of stocks. They can go “long” the market, which means they believe that stock prices will rise. Or they can go “short” the market, which means they are betting that stock prices will fall. Going “long” is easy; all investors need to do is buy stocks. And usually, when investors have a strong general consensus that the stock market will move higher, like they last did in October of 2007, stock prices go the opposite way and fall.
Stocks have become severely oversold. The stock market is acting as if we are already in a recession. The dividend yields on many major corporations are back up over four percent…in an environment where the 10-year U.S. Treasury is yielding 1.9%.
You might not know it, but there is real strength in this market from a number of well-managed, dividend-paying stocks. When the broader market is gyrating and investor sentiment is weak, outperformance comes in the form of stability. Plenty of stocks in this market are outperforming the broader stock market and, in spite of all the worries about the sovereign debt crisis and the outlook for economic growth, the earnings picture continues to look good.
Chinese stocks continue to struggle given the stalling in the Chinese economy. Yet this does not mean we should all run way from Chinese stocks. There are numerous strong Chinese companies with a worldwide presence. For instance, to take advantage of the country’s massive cell phone market of over 800 million users, I like China Mobile Limited (NYE/CHL).
After months of patient waiting, the gold stocks came to life yesterday. Right across the board, whether it was junior or senior gold producers, the stock prices of gold companies were up sharply Wednesday. Hopefully, my readers have been following my guidance and seeking refuge in the gold-mining companies. Since the spring of this year, gold bullion prices have been rising sharply, while gold stocks stood pat. I have been writing that the leaders of the gold bull market would shift from the actual bullion to the gold stocks, and that’s what started happening Wednesday.
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