Author: ToddSullivan

Like I said a month ago, “get used to it.”

Net Sales Growth, April.
Wal-Mart Stores 6.5%
Sam’s Club 10.4%
International 18.4%
Total Company 9.8%

4 Week Comp Sales:
Wal-Mart 2.6%
Sam’s Club 6.6%
Total Company 3.2%

Sales Strength:
* Flat-panel TVs, with additional strong performance in April for video games and gaming systems.
* Food, dry grocery and consumables
* Allergy season helped drive sales of prescription and over-the-counter medications.
* Apparel sales continued to recover, despite cold weather, with strengths in basics and consumables.

Guidance:
“We estimate U.S. comparable store sales, excluding fuel, for the May four-week period to be between flat and two percent,” said Tom Schoewe, executive vice president and chief financial officer,

Like I have said before, ignore the guidance as a “news event”. It has been the same for over a year now month after month. If it ever changes then you have something.

Now, Wal-Mart is know as the bargain place to shop. In past slowdowns this has helped the chains customers. What has hurt is that Wal-Mart was not necessarily a “nice place” to shop. When customers felt more secure financially, they abandoned the stores for alternatives like Target (TGT). Wal-Mart is rectifying that. Those who live near a store that has been remodeled know what I am talking about. The shopping experience is leaps and bound better than what is was prior.

The current slowdown will draw more people to the stores and unlike post recoveries, the changes in them will keep them.

Disclosure (“none” means no position):Long WMT, None

↑ Grab this Headline Animator

Visit the ValuePlays Bookstore for Great Investing Books

This work is licensed under a Creative Commons Attribution 2.5 License.

The Owens Corning (OC) earnings call gave investors even more reason to be optimistic that the earnings release did.

2008 Stated Goals Being Met:
* Will reduce our costs by $100 million. That program is fully implemented.
* Composites operating margins would approach double digits for 2008. They were 9.6% in the first quarter.
* Achieve $30 million in acquisition synergies. That’s on track.
* Continue to manage a strong balance sheet. Finished the quarter with net debt of slightly more than $2 billion, a good result.
* Remain confident in guidance of annual adjusted EBIT of $240 million for 2008.

Results:
* Composite Solutions business grew more than 80% representing about half of Owens Corning’s total sales
* Are close to expanding composites presence in Russia and also in China. You’ll hear more about those opportunities in the future.
* If you went down to your local, retail big box, Home-Depot (HD) or Lowe’s (LOW) and buy insulation there, you can probably reinsulate your attic for $200 or $300 worth of material.
* Some of the pricing actions for the late first quarter and second quarter are beginning to show up and they are starting to see some positive pricing in their books. This is the same theme stated in the Sherwin Williams (SHW) call.

Like Sherwin, Owens has diversified its earnings profile from one dependent on US housing to one with an international profile. While the decimation of the US housing market has hurt earnings, the evisceration of them that would have taken place without management’s moves has been avoided.

While housing still hurts, Sherwin has continued to grow earnings in spite of it and Owens (about a year behind SHW in diversifying) suffered only an 8% decline. As housing both stabilizes and then turns, we can expect significant upside for both.

Disclosure (“none” means no position):Long OC, SHW, None

↑ Grab this Headline Animator

Visit the ValuePlays Bookstore for Great Investing Books

This work is licensed under a Creative Commons Attribution 2.5 License.

Workers, The Market, Disney, BK

– No recession here

– Or here

– Or here

– Or here

↑ Grab this Headline Animator

Visit the ValuePlays Bookstore for Great Investing Books

This work is licensed under a Creative Commons Attribution 2.5 License.

Workers, The Market, Disney, BK

– No recession here

– Or here

– Or here

– Or here

↑ Grab this Headline Animator

Visit the ValuePlays Bookstore for Great Investing Books

This work is licensed under a Creative Commons Attribution 2.5 License.

Thursday’s Picks
Jeff Macke recommends trimming any position in the United States Oil Fund (USO) $99.8

Guy Adami prefers to bet against the Dow by getting long Short Dow30 ProShares (DOG0 $60.71

Karen Finerman suggests Yahoo (YHOO0 $25.64 for 3 days only.

Pete Najarian thinks the United States Natural Gas Fund (UNG) $54.25 is a buy.

Wednesday’s Results
Jeff Macke recommends the Financial Select Sector SPDR (XLF) $27.52 Close $26.53 LOSS

Guy Adami prefers Merck (MRK) $38.84 Close $39.01 GAIN

Pete Najarian suggests Apple (AAPL) $186.66 Close $182.59 LOSS

Karen Finerman thinks Kaiser Aluminum (KALU) $70.87 is a buy ahead of earnings. Close $73.94 GAIN

2008 Records:
Brian Schaeffer= 0-1
Carter Worth= 1-1
Jon Najarian= 4-3
Jeff Macke= 34-28-1
Tim Seymore= 16-13
Guy Adami= 36-30
Pete Najarian= 34-29
Karen Finerman= 29-29-1
Joe Terrenova= 1-1

2007 Results (Since 6/21):
Guy Adami= 58-46 = 56%
Jeff Macke= 60-40 = 60%
Pete Najarian= 49-41 = 54%

↑ Grab this Headline Animator

Visit the ValuePlays Bookstore for Great Investing Books

This work is licensed under a Creative Commons Attribution 2.5 License.

Jane Genova has poster the details on how to tune in the RISC webcast of oral arguments in the the State v Sherwin Williams (SHW) and NL Industries (NL).

Follow this link:

Disclosure (“none” means no position):Long SHW, none

↑ Grab this Headline Animator

Visit the ValuePlays Bookstore for Great Investing Books

This work is licensed under a Creative Commons Attribution 2.5 License.

Why is he doing it? Back in early April after Merrill Lynch’s (MER) CEO John Thain first made the same remarks, I wondered what good he thought they would do considering “no one believes what comes out of a banker’s mouth today anyway”.

Now, he is at it again telling anyone who will listen that Merrill will not need additional funds. If the last 10 months have tough us anything, it is that a CEO of a company tied to the financial system ought not be making proclamations about about its health.

Thain’s predecessor Stan O’Neil made them, Chuck Prince at Citigroup (C) did and today they are spectators. Recently GE’s (GE) Jeff Immelt and Wachovia’s Ken Thompson did and both were lambasted by both the media and shareholders when the statements proved to be less than accurate. Thompson is hanging on to his job by a thread. This is not to say there anything nefarious going on, it is just that with the system being so interdependent, events at Goldman Sach’s (GS) or Morgan Stanley (MS) could have a very detrimental effect on Thain’s firm.

If that were to happen, Thain may be force fed his words on a pink slip. Like I said a month ago, Thain gains nothing from making the statements, no one believes him. The only thing they will actually believe at this point are results and even those may be questioned at first.

What Thain is doing is setting himself up for a tremendous fall should events beyond his control turn against him.

Consider Merrill Lynch posted a $2 billion first-quarter loss last month. That just happened to be the third consecutive quarterly loss due to losses in subprime mortgages and collateralized debt obligations.

Also consider Merrill Lynch has recorded more than $30 billion of write-downs since the third quarter, and Thain has said they were planning for slower, more difficult next few quarters.

The bottom line is Thain ought to have learned by now that just because it is sunny today does not mean it will not rain tomorrow.

Disclosure (“none” means no position):Long C, WB, none

↑ Grab this Headline Animator

Visit the ValuePlays Bookstore for Great Investing Books

This work is licensed under a Creative Commons Attribution 2.5 License.

Why is he doing it? Back in early April after Merrill Lynch’s (MER) CEO John Thain first made the same remarks, I wondered what good he thought they would do considering “no one believes what comes out of a banker’s mouth today anyway”.

Now, he is at it again telling anyone who will listen that Merrill will not need additional funds. If the last 10 months have tough us anything, it is that a CEO of a company tied to the financial system ought not be making proclamations about about its health.

Thain’s predecessor Stan O’Neil made them, Chuck Prince at Citigroup (C) did and today they are spectators. Recently GE’s (GE) Jeff Immelt and Wachovia’s Ken Thompson did and both were lambasted by both the media and shareholders when the statements proved to be less than accurate. Thompson is hanging on to his job by a thread. This is not to say there anything nefarious going on, it is just that with the system being so interdependent, events at Goldman Sach’s (GS) or Morgan Stanley (MS) could have a very detrimental effect on Thain’s firm.

If that were to happen, Thain may be force fed his words on a pink slip. Like I said a month ago, Thain gains nothing from making the statements, no one believes him. The only thing they will actually believe at this point are results and even those may be questioned at first.

What Thain is doing is setting himself up for a tremendous fall should events beyond his control turn against him.

Consider Merrill Lynch posted a $2 billion first-quarter loss last month. That just happened to be the third consecutive quarterly loss due to losses in subprime mortgages and collateralized debt obligations.

Also consider Merrill Lynch has recorded more than $30 billion of write-downs since the third quarter, and Thain has said they were planning for slower, more difficult next few quarters.

The bottom line is Thain ought to have learned by now that just because it is sunny today does not mean it will not rain tomorrow.

Disclosure (“none” means no position):Long C, WB, none

↑ Grab this Headline Animator

Visit the ValuePlays Bookstore for Great Investing Books

This work is licensed under a Creative Commons Attribution 2.5 License.

Owens Corning (OC) reported results today and they were better than expectations, primarily because of the company’s intentional move to a more international model .

Owens posted a net loss of $15 million, or 12 cents a share, compared with a profit of $1 million, or 1 cent a share, a year earlier. Sales rose 20 percent to $1.35 billion, ahead of estimates for $1.22 billion. Adjusted earnings from continuing operations were 7 cents per share, which was 4 cents ahead of forecasts.

In the first quarter of 2008, Composite Solutions, Insulating Systems, Roofing and Asphalt and Other Building Materials and Services represented 48%, 26%, 22% and 4% of our total reportable segment net sales, respectively.

Net sales by end market in the first quarter were 18% U.S. and Canada new residential construction, 23% U.S. and Canada residential repair and remodeling, 20% U.S. and Canada commercial and industrial and 39% international. This marks the lowest level of reliance in US housing for the company.

In the first quarter, Composite Solutions represented 107% of Owens Corning’s total reportable segment earnings (loss) from continuing operations before interest and taxes. Sources of revenue for Composite Solutions in the first quarter were 6% U.S. and Canada residential construction, 20% U.S. and Canada commercial and industrial and 74% international. The worldwide composite market is expected to grow 1.5 to 2 times the rate of global GDP.

Sales outside the United States represented 43% of total sales for the first quarter of 2008 compared to 27% for 2007. The increase is due to incremental sales outside the United States related to the acquisition of the Saint-Gobain Group’s reinforcements and composite fabrics businesses and increases related to favorable foreign exchange rates combined with lower sales of building materials products in the United States in 2008.

On February 21, 2007, the Board of Directors had approved a share buy-back program under which Owens is authorized to repurchase up to 5% of outstanding common stock. During the three months ended March 31, 2008, there were no repurchases of stock under the share repurchase program.

Owens is struggling principally because of US housing. The good news is that due to the earnings diversification to more international business, that pain is muted. It also means that when housing stops the decline and begins its turn, earnings will jump. Let’s also not forget we have had two years plus now of zero hurricanes. The number one repair from even a moderate storm? Roofing. With production across the industry low, a rapid increase in demand due to a storm will cause rapid price increases and expanding margins.

While I do not wish for a severe storm, we do have to look at reality when it comes to this stuff.

Disclosure (“none” means no position):Long OC

↑ Grab this Headline Animator

Visit the ValuePlays Bookstore for Great Investing Books

This work is licensed under a Creative Commons Attribution 2.5 License.

The likes of Research in Motion (RIMM), Apple (AAPL) and Nokia (NOK) are going to prefer Sprint’s new network for their web-enabled phones.

Sprint (S), Clearwire (CLWR)and cable companies Comcast Corp and Time Warner Cable Inc are set to announce a joint venture using WiMax, a technology that promises to support Internet access at speeds up to five times faster than traditional wireless networks, and can support a range of mobile and video applications.

Contribution to the JV are expected to be: Comcast (CMCSA), $1 billion, Time Warner Cable (TWC) will $550 million, Intel (INTC) $1 billion, Google (GOOG) $500 million and Bright House Networks, the sixth-largest U.S. cable provider, $200 million.

What Sprint has done with this is created, for the makers of web phones, which is clearly the future of devices, the preferred network. For users of the products, Sprint ought to see a migration of them to the network as the incrementally faster speeds will trump any past issues the company might have had.

Now, until we know how the JV is formed and the timing of any release of it, investing in Sprint simply because of the announcement is very premature. There still is that nagging Nextel issue. It just may be the Clearwire is the way to go. Without knowing details, it is a guess.

One thing is for sure though. Sprint has gone from the scrap heap of history to potentially the industry leader in a very, very short time…

Disclosure (“none” means no position):None

↑ Grab this Headline Animator

Visit the ValuePlays Bookstore for Great Investing Books

This work is licensed under a Creative Commons Attribution 2.5 License.

Recession, College, Jerry Yang, Berkshire (BRK.A)

– Documenting the “recession” we are not in..

– Am I the only one who hopes that the last place my kids want to go is Ivy? I mean, the only “exchange of ideas” these folks want are those they agree with… Witness the Friedman pie incident last week..

– Just sell to Microsoft (MSFT) and fade away already…

– “Woodstock” meeting notes

↑ Grab this Headline Animator

Visit the ValuePlays Bookstore for Great Investing Books

This work is licensed under a Creative Commons Attribution 2.5 License.

Recession, College, Jerry Yang, Berkshire (BRK.A)

– Documenting the “recession” we are not in..

– Am I the only one who hopes that the last place my kids want to go is Ivy? I mean, the only “exchange of ideas” these folks want are those they agree with… Witness the Friedman pie incident last week..

– Just sell to Microsoft (MSFT) and fade away already…

– “Woodstock” meeting notes

↑ Grab this Headline Animator

Visit the ValuePlays Bookstore for Great Investing Books

This work is licensed under a Creative Commons Attribution 2.5 License.

Upgrades
Comerica (CMA)- FTN Midwest Neutral » Buy
Comstock (CRK)- BMO Capital Markets Market Perform » Outperform
Advent Software (ADVS)- Needham Buy » Strong Buy
Agrium (AGU)- RBC Capital Mkts Sector Perform » Outperform
Wachovia (WB)- Stifel Nicolaus Hold » Buy
Sprint Nextel (S)- Cowen & Co Neutral » Outperform
INX Inc. (INXI)- Brean Murray Hold » Buy
Methanex (MEOH)- UBS Neutral » Buy
TEPPCO Partners (TPP)- Citigroup Hold » Buy
Omniture (OMTR)- Piper Jaffray Neutral » Buy
Citizens Rep Bancorp (CRBC)- Oppenheimer Perform » Outperform
Ness Tech (NSTC)- Susquehanna Financial Neutral » Positive
Citizens Rep Bancorp (CRBC)- Keefe Bruyette Mkt Perform » Outperform
Preferred Bank (PFBC)- Friedman Billings Underperform » Mkt Perform
SLM Corp (SLM)- Lehman Brothers Equal-Weight » Overweight
Stellent (STEL)- Robert W. Baird Neutral » Outperform

Downgrades
Cutera (CUTR)- Maxim Group Buy » Hold
Texas Industries (TXI)- BB&T Capital Mkts Buy » Hold
Gafisa SA (GFA)- Deutsche Securities Buy » Hold
Ryanair Hldgs (RYAAY)- Deutsche Securities Hold » Sell
Leapfrog (LF)- BMO Capital Markets Outperform » Market Perform
Verenium (VRNM)- Broadpoint Capital Buy » Neutral
Lev Pharmaceuticals (LEVP)- Susquehanna Financial Positive » Neutral
Harrington West Financial (HWFG)- RBC Capital Mkts Outperform » Sector Perform
ProLogis (PLD)- RBC Capital Mkts Top Pick » Outperform
MTS Medication (MPP)- Broadpoint Capital Strong Buy » Neutral
Sunoco (SUN)- JP Morgan Neutral » Underweight
Valero Energy (VLO)- JP Morgan Overweight » Neutral
HSBC Holdings (HBC)- UBS Buy » Neutral
Southern Copper (PCU)- HSBC Securities Overweight » Neutral

↑ Grab this Headline Animator

Visit the ValuePlays Bookstore for Great Investing Books

This work is licensed under a Creative Commons Attribution 2.5 License.