Minyanville Professor Quint Tatro dares to share the kind of keen insight and actionable information you won't find in any prospectus. For more original thought, visit www.minyanville.com.
There are a few things I am watching for today to give me better clues as to the internal character of the market.
Wal-Mart (NYSE: WMT): It's off on retail numbers after the stock broke out of a four-month consolidation pattern on good volume. If the stock catches a bid, it is an indication that institutional investors are back stalking retail plays and would be bullish for the general market.
Energy ETF (AMEX: XLE): Energy has recently broken a longer term trend going back to mid-2006. It is bouncing off recent lows on very light volume. If money continues to rotate out of this sector, finding a home in the likes of retail, housing and financials, again a bullish sign. I initiated a short position in XLE this morning.
Financial ETF (AMEX: XLF): Financials have been and will continue to be the key to the market's future. After recapturing the 50-day moving average, this ETF is being brought down by AIG (AIG) and needs to regain its footing. Some consolidation is fine, but anything back below $20 would have me heading back towards the bunker.
Homebuilders ETF (AMEX: XHB): The homebuilders continue to perk up and also remain a key to the future of the tape. They are probing green today above their 50-day moving average on decent early volume. A break here above yesterday's high going on to attack the $19.00 level is also a bullish sign.
These are things I am watching for which will give me my clues to start wading back into the market with real capital.
(Prof. Tatro has positions in WMT, XLE, XLF, XHB).
Of course not. The 15-year old billion dollar phenomenon won't appear "because of a scheduling conflict, the company said." The Wall Street Journal owes its readers an explanation for its faulty reporting. And the way to do that would be to investigate the scheduling conflict. Here are some questions for the Wall Street Journal's reporters to ask Wal-Mart and Miley:
What was the exact scheduling conflict that came up so suddenly between Thursday and this morning?
Did Miley decide to book another concert appearance on Thursday just so she could have an excuse to cancel her appearance with Wal-Mart?
Or did Wal-Mart suddenly decide that Miley's Vanity Fair photos made her "inappropriate"?
Can't Rupert Murdoch hire any competent journalists? We need to know what Miley's scheduling conflict was. A one line correction won't do.
Retailer Target Corp. (NYSE: TGT) joined the earnings parade this morning when it reported its first quarter numbers. Despite a 7.5% drop in net income, the company was still able to come in above Wall Street estimates.
Going into today's earnings report, analysts had been looking for earnings for the quarter of 71 cents per share, and the company actually was able to post earnings of 74 cents a share, on net income of $602 million. During the same period last year, the company was able to show net income of $651 million.
Revenues came in slightly under analyst estimates, with a reported $14.8 billion, compared to Wall Street's expectations for $14.92 billion. Same store sales were down by 0.7% in the quarter, but revenue was actually higher by 5.4% as the company's new stores were able to overshadow the decrease in revenue that the company witnessed in its stores open more than a year.
Day one of the two-day FDA Anesthetic/Life Support Drugs & Drug Safety/Risk Management Advisory Committees meeting: Purdue Pharma's NDA for Oxycontin.
Anadarko Petroleum (NYSE:APC) to report Q1 earnings; conference call Tuesday at 10:00am.
Tuesday, May 6
Day two of the two-day FDA Anesthetic/Life Support Drugs & Drug Safety/Risk Mgmt Advisory Committees meeting: Cephalon's (NASDAQ:CEPH) sNDA for Fentora.
Molson Coors (NYSE:TAP) to report Q1 earnings; conference call at 12:00pm.
MOST NOTEWORTHY: ComScore, Duke Realty, Nordstrom and Sun Healthcare were among today's noteworthy upgrades:
ComScore (NASDAQ: SCOR) was upgraded to Outperform from Perform at Oppenheimer to reflect the strong Q1 report and strong customer additions.
Duke Realty (NYSE: DRE) was upgraded to Outperform from Market Perform at Wachovia upgraded based on valuation.
Nordstrom (NYSE: JWN) was upgraded to Outperform from Neutral at Credit Suisse.
Sun Healthcare (NASDAQ: SUNH) was upgraded to Outperform from Market Perform at Friedman Billings based on valuation and notes the Medicare rate cuts will be as drastic as feared.
OTHER UPGRADES:
MedAssets (NASDAQ: MDAS) was upgraded to Buy from Neutral at Piper, which thinks the company's acquisition of Accuro will strengthen its revenue cycle management offering, and the firm believes the tight credit markets make the company's MedAssets a compelling product in the short-term. In addition, Piper notes that the company has recently had success with large hospital systems.
Jones Apparel (NYSE: JNY) was upgraded to Buy from Neutral at Merrill citing sales expectations for the l.e.i. brand at Wal-Mart (NYSE: WMT) and margin improvements from leaner inventories.
Affiliated Computer (NYSE: ACS) was upgraded to Buy from Hold at Jefferies based on valuation and expectations for better bookings.
Food inflation is getting out of control. Prices for everything from cereal to pastries have jumped. Pizza shop owners are getting squeezed by soaring costs for milk, flour and cheese. Rice prices alone have soared 68 percent since the start of the year, according to Reuters. Think of that the next time you order takeout from your favorite Chinese restaurant. No wonder demand for Food Stamps is at a record.
Welcome to the 56th installment of The Wal-Mart Weekly, a column dedicated to bringing you insight, wit, facts, results, opinions, and just a bit of everything else when it comes down to a very hot topic these days: Wal-Mart.
This week's Wal-Mart Weekly will be focusing in one a rather high-stakes claim Wal-Mart Stores Inc. (NYSE: WMT) is now advertising into the mainstream media. The claim? The retailer saves the average American family $2,500 per year. To coin a phrase, them's fightin' words, yes?
Either Wal-Mart likes abuse from the media or it has substantiated facts to back up such a claim. In fact, there's so many variables that could conclude (or disprove) the retailer's claim that it could boggle all our minds collectively. So with that, let's start boggling.
As a family, we try to sit down together every night for dinner. It's a small thing, but it's the only time all day that the seven of us can both talk and listen. I walk in from work listening to my iPod and the kids ask me, "Whattya listening to?". The answer, I explained, is Yael Naim, recent holder of a top single New Soul.
Turns out that Apple (NASDAQ: AAPL)'s Steve Jobs personally picked her tune to launch the new MacBook Air, which seemed to have launched her status. Almost overnight, New Soul became the top selling song on Apple's music download site/software, iTunes. It turns out that this stint at the top was short lived as Apple, it seems, enjoyed its own form of New Years present as users rushed to redeem iTunes gift certificates. Nevertheless, while Apple has contributed to Yael Naim's success, she has also contributed to Apple's as well.
And with this surge of continuing sales for Apple's music division, Apple has recently ousted big-boy Wal-Mart (NYSE: WMT) as the #1 music retailer in the U.S. Ars Technica breaks out the numbers: 30% of retail music is now purchased online, and Apple has the largest share of retail sales including Wal-Mart and walmart.com sales.
Pretty impressive, eh?
"I'm a new soul, I came to this strange world hoping I could learn a bit bout how to give and take..."
Zack Miller is the managing editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund.
"Wal-Mart (NYSE: WMT) delivers amid the recent retail meltdown," says Richard Moroney, editior of Dow Theory Forecast, a blue chip service that has been published for over 50 years.
The advisor adds, "The company stands to benefit as cost-conscious shoppers shift away from convenience in favor of value." Here is his review of the stock, which earns his "long-term buy" rating.
"As evidence of strain on the U.S. consumer mounts, Wal-Mart Stores continues to post solid results.The nation's biggest retailer delivered U.S. same-store-sales growth of 2.4% excluding gasoline sales in December, while rival Target (NYSE: TGT) saw same-store sales fall 5% and other discounters and department stores also delivered bad news.
"With decent operating momentum and solid long-term growth prospects, Wal-Mart shares seem reasonably valued at 14 times the consensus profit estimate for the year ending January 2009. Meanwhile, the company is getting bigger and better.
Back in my hedge fund days, we did a TON of work on U.S. egg prices. This was back in 2003-2004 in the throes of the Atkins craze. Pasta companies, companies with a lot of exposure to grain, and anything anti-Atkins was taking a hit. Even the great, Weight Watchers (NYSE: WTW), with just a great business model and brand, was getting whacked. It looked like Atkins, and its seemingly lethal blend of high fat and high protein, was going to stay.
We decided to play this trend by purchasing Cal-Maine Foods (NYSE: CALM), a huge distributor of eggs to the likes of Wal-Mart (NYSE: WMT) and other huge grocery outfits. Based in Jackson, Mississippi, and run by an effervescent CEO, Fred Adams, Cal-Maine rode record egg prices those couple of years. In 2003 alone, the stock was up almost 1000%.
What Mr. Adams told us then was that although Atkins was helping to increase demand for eggs, the egg itself was making a comeback. Once shunned as solely a cholesterol-delivery device, the egg is back in fashion and recognized for its overall health benefits.
CVS Caremark (NYSE: CVS) is no longer looking for new acquisitions, but rather will focus on assimilating recent acquisitions, Chairman and Chief Executive Thomas Ryan said on Wednesday. While speaking to the Reuters Health Summit in New York (check out the blog for the conference here), Ryan said, "It's most important that we stay focused on the integration, the execution and getting our balance sheet in order, and then we will have the opportunity to look at opportunistic acquisitions."
CVS acquired giant pharmacy benefits manager Caremark in March and continues to integrate recent drugstore chain purchases.
It sounds like the company has its hands full given the amount of M&A work CVS has done over the past couple of years combined with the organic growth the firm is seeing. While fierce competitor, Walgreen (NYSE: WAG), is considering applying the brakes in terms of opening up new doors, CVS is in full-throttle mode right now.
Wal-Mart (NYSE: WMT) is reducing the amount of capital expenditures for 2007 in light of reduced expansion of the company's Supercenters in the domestic market as it attempts to eke out more sales from existing stores.
Well, as I've stated for over a year here at BloggingStocks, this is a strategy that the retailer was forced to take. It's already saturated many U.S. markets, and opening stores for the sake of opening them just won't cut it for growth any longer. The problem is that I still don't see the changes that will make sales growth happen in existing stores. Doug McIntyre even wrote about the retailer closing some stores about a year ago. What's in store for the retailer is anyone's guess at this point.
As a result, the world's largest retailer will cut its capex amount down in the range of $14.7 billion to $15.4 billion, down from a figure of $17 billion earlier in the year. Wal-Mart's chief administrative officer, John Menzer, stated that the retailer still has a goal to "beat" the $15.5 billion figure, however. With Wal-Mart's recent unwavering plan to continue opening stores in the face of declining same-store sales at existing locations, this admission was a bit overdue, to put it mildly.
The retailer also reiterated capex plans for fiscal years 2009 and 2010, saying it would spend $13.5 billion to $15.2 billion each year. Along with that, the retailer expects square footage growth (new stores, in other words) to come in at 6% for the current fiscal year, with a 5% to 6% figure for the 2009 and 2010 fiscal years as well.
Energizer (NYSE: ENR) is a defensive stock that may end up posting growth stock-quality results in the immediate years ahead.
Again, Energizer is not a defensive play, strictly speaking, as one could argue that batteries are a discretionary purchase -- an option consumers can cut back on during tougher economic times.
Still, powerful cultural and secular trends belie the above thesis. Think: MP3 players, iPods, iPhones, the text messaging generation, cameras, and remotes for almost everything. The net result: More portable energy use, globally, in the years ahead, which means more revenue for Energizer.
Energizer has revenue streams in the alkaline, carbon, zinc, miniature and specialty battery lines, with an impressive +35% U.S. market share. The company sells batteries in more than 150 countries, a more-than-decent defense against U.S. economic doldrums. ENR's shares fell $1.15 to $110.86 in Wednesday afternoon trading.
The qualifiers? Intensifying competition, and a high concentration of sales, 18%, to its largest customer, Wal-Mart (NYSE: WMT). But so long as teenagers and downloads exist, and Apple (NYSE: AAPL)'s Steve Jobs is thinking of something new/portable/cool, these two negatives can be overlooked.
Technically, Energizer's chart is strong. With a P/E of 23 ENR is not cheap, but projected near-20% annual EPS gains account for that.
Stock Analysis: Energizer is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than one year should be rewarded from ENR's shares.
This past week, I discussed Wal-Mart (NYSE: WMT) Stores, Inc.'s entry into the non-protected digital music file download business. With the retailer selling non-protected songs from its website for a maximum of $0.94, will this action dent into Apple (NASDAQ: AAPL)'s iTunes market share? Who knows at this point.
Wal-Mart has been in the news quite a bit this past week in regards to a European competitor entering a market Wal-Mart is already in (just not in a big way) -- California. Tesco (LSE: TSCO) said it will be opening smaller-concept stores soon that feature the opposite of the big-box retail feeling of the standard 100,000-square-foot Wal-Mart Supercenter. Tesco's stores will average about 10,000 square feet. What will Wal-Mart do in response?
Minyanville Professor Quint Tatro dares to share the kind of keen insight and actionable information you won't find in any prospectus. For more original thought, visit www.minyanville.com.
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Reports that
Back in my hedge fund days, we did a TON of work on U.S. egg prices. This was back in 2003-2004 in the throes of the Atkins craze. Pasta companies, companies with a lot of exposure to grain, and anything anti-Atkins was taking a hit. Even the great, 
Wal-Mart
Energizer
Apple (AAPL) iTunes loses artists - an antitrust problem?
U.S. Q2 GDP of 3.3% likely to be fleeting
Cramer on BloggingStocks: Don't bother with the private-equity chatter 
