Author: ToddSullivan

Thursday’s Upgrades and Downgrades

Post author By ToddSullivan
Post date October 11, 2007

UPGRADES

Microchip MCHP Lehman Brothers Underweight » Equal-weight
Volvo AB VOLV JP Morgan Underweight » Neutral
Royal Caribbean RCL Lehman Brothers Equal-weight » Overweight
Carnival CCL Lehman Brothers Equal-weight » Overweight
Audiocodes AUDC Lehman Brothers Equal-weight » Overweight
MGI Pharma MOGN JP Morgan Neutral » Overweight
Tesoro Petroleum TSO Bernstein Mkt Perform » Outperform
Everest Re RE Banc of America Sec Neutral » Buy
PartnerRe PRE Banc of America Sec Neutral » BuY

DOWNGRADES

Omniture OMTR Pacific Growth Equities Buy » Neutral
NovaTel NGPS Canaccord Adams Buy » Hold
Arch Chemicals ARJ Wedbush Morgan Strong Buy » Hold
Omnicell OMCL BB&T Capital Mkts Buy » Hold
Capella Education CPLA Stifel Nicolaus Buy » Hold
Cambridge Heart, Inc. CAMH Boenning & Scattergood Market Outperform » Market Perform
Aurora Oil & Gas AOG KeyBanc Capital Mkts Buy » Hold
Qwest Q UBS Buy » Neutral
Thornburg Mortg TMA Keefe Bruyette Mkt Perform » Underperform
Novellus NVLS Lehman Brothers Equal-weight » Underweight
LTX Corp LTXX Lehman Brothers Overweight » Equal-weight
KLA-Tencor KLAC Lehman Brothers Overweight » Equal-weight
NRG Energy NRG Calyon Securities Buy » Neutral
Oxford Industries OXM Morgan Joseph Buy » Hold
Applied Materials AMAT Lehman Brothers Overweight » Equal-weight
Genworth Financial GNW Banc of America Sec Buy » Neutral
BEA Systems BEAS Banc of America Sec Buy » Neutral
Microchip MCHP Banc of America Sec Buy » Neutral
General Maritime GMR Bear Stearns Outperform » Peer Perform
Alnylam Pharmaceuticals ALNY Piper Jaffray Outperform » Market Perform
Tuesday Morning TUES JP Morgan Overweight » Neutral
Target TGT Piper Jaffray Outperform » Market Perform
Endurance Specialty ENH Credit Suisse Outperform » Neutral
Aspen Insurance AHL Credit Suisse Outperform » Neutral
Western Union WU Sun Trust Rbsn Humphrey Buy » Neutral
Dynamic Materials BOOM Jefferies & Co Buy » Hold
AMEDISYS AMED Deutsche Securities Buy » Hold
Jones Lang LaSalle JLL Wachovia Outperform » Mkt Perform

Tags dow

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"Fast Money" for Thursday

THURSDAY’S PICKS

Jon Najarian liked Google (GOOG).Open $625.39

Jeff Macke recommended Merck (MRK).Open $53.23

Tim Seymour preferred ConocoPhillips (COP).Open $86.73

Karen Finerman said Tyco Electronics (TEL) is a buy.Open $36.84

Pete Najarian likeed ValueClick (VCLK). Open $29.32

WEDNESDAY’S RESULTS

Jeff Macke liked Johnson & Johnson (JNJ). Open $66.25 Close $65.83 LOSs

Carter Worth recommended shorting Black & Decker (BDK). Open $82.64 Close $82.08 LOSS

Pete Najarian said Cypress (CY) is a buy. Open $30.91 Close $30.86 LOSS

Ned Riley, The CEO of Riley Asset Management said his pick is Power Shares QQQ Trust (QQQQ). Open $53.38 Close $53.51 GAIN

Since my tracking began on 6/21 (1-1 means one up pick and one down pick and no results from my vacation weeks). The percentage is the percentage of successful picks

Guy Adami= 29-19 = 59%
Eric Bolling= 10-11 = 48%
John Najarian= 13-3 = 81%
Jeff Macke= 36-26 = 56%
Pete Najarian= 23-20 = 51%
Tim Seymore= 4-2 = 66%
Karen Finerman= 14-8 = 63%
Stacey Briere-Gilbert= 3-0 = 100
Ned Riley= 1-0 = 100%
Carter Worth= 0-1 = 0%

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Wednesday’s 52 Week Lows

Post author By ToddSullivan
Post date October 10, 2007

OXM Oxford Industries, Inc 27.37
OLCB Ohio Legacy Corp 8.00
NUHC Nu Horizons Electroni … 8.12
NOVN Noven Pharmaceuticals Inc 12.78
DWRI Design Within Reach Inc 4.60
DRAM Dataram Corporation 3.22
CSCD Cascade Microtech Inc 8.83
COLM Columbia Sportswear Co 52.01
CMRG Casual Male Retail Gr … 8.56
CALC California Coastal Cm … 11.26

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Wednesday’s Links

Post author By ToddSullivan
Post date October 10, 2007

Auto’s, Homebuilders, Google Phone, Angry Former Apple Fans

– Here is an interesting argument about the auto industry

– Thinking of investing in homebuilders?

– More info on a Google Phone

– More rage on the degeneration of Apple into what it once mocked.

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Cigarettes and Beer

Post author By ToddSullivan
Post date October 10, 2007

The announcement that SAB Miller (SAB) and Molson Coors (TAP) would combine US operations is music to Altria (MO) shareholders ears.

The joint venture, now known as MillerCoors is designed to create cost savings in the US, where SAB is the second biggest brewer and Molson the third behind
Anheuser Busch (BUD). The combines company will have annual net revenues of approximately $6.6bn and earnings before interest, taxation and depreciation of about $842m.

The deal is expected to close by the middle of 2008 and SAB Miller will have a 58% economic interest to Molson Coors’ 42% interest. This means that $490 million will go to SAB and with Altria’s interest in SAB, 4 to 5 cents a share will flow to Altria’s bottom line.

All the numbers are preliminary of course and I am thinking on the low side. The cost savings from the deal, currently estimated at $500 million a year pale when one considers the muscle to combined entity will have now in terms of pricing, placement and promotional activities. One could argue that with the diversity of brands in both the US and Canada, the JV is poised to be able to take advantage of a wider spectrum of event and activities than Anheuser Busch.

While its effect on Altria bottom line at this point is modest, I would look for it to grow significantly in the coming years. I also would not be surprised, once the PMI spin from Altria is complete to look for Altria to use some it’s new founded balance sheet flexibility to attempt to expand its stake on the brewer.

For Altria who owns 27% of SAB Miller

Tags MO

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McDonald’s Keeps Turning the Screws on Starbucks

Post author By ToddSullivan
Post date October 10, 2007
1 Comment on McDonald’s Keeps Turning the Screws on Starbucks

Mcdonalds (MCD) announced they are going to provide free WIFI in its 1200 UK restaurants. Why does Starbucks (SBUX)care?

Doesn’t the Green Mermaid also provide its customers WIFI? Yes they do but in Starbucks customers have to pay for it. Is this a huge deal that will sink the House that Schultz built? No. But, it is yet another reason for people not to go to Starbucks.

What McDonalds is doing is offering people another cheaper alternative to the pricey Starbucks. Since January Starbucks has seen milk and coffee cost spiral upward. They came in third in a taste test between them and McDonalds and Dunkin Donuts. Ignored the improved coffee and value proposition McDonalds offered customers. Increased prices, the second such action in less than a year and sat by and watch its customers defect to McDonalds who sales are up 15% to date this year and has never sold more coffee than it is now.

Now WIFI. If anyone thinks this will not happen in the US very soon, guess again. What will happen is the legions of salespeople out there who rely on their laptops will be frequenting the Golden Arches for a meal, a cup of coffee and free WIFI. Cost conscious college students will forgo their starbucks WIFI for the freebi at McDonald’s.

Will Starbucks then be forced to give it away? Maybe they will. But even of they do, they still do not come out the winner because folks do now have another option AND another revenue stream for Starbucks is choked off. It won’t amount to a huge amount but when when you are sticking by your 18% to 20% EPS growth, trade at 32 timer those earnings and face the aforementioned challenges, every single penny counts…

Just how long will it be before management comes clean and dials back EPS expectations?

Tags mcd, sbux

Articles

Wednesday’s Upgrades and Downgrades

Post author By ToddSullivan
Post date October 10, 2007

UPGRADES

Massey Energy MEE Stifel Nicolaus Hold » Buy
Cyberonics CYBX Collins Stewart Market Perform » Buy
Spectrum Pharma SPPI Brean Murray Hold » Buy
Century Casinos CNTY Brean Murray Hold » Buy
Winnebago Inds WGO RBC Capital Mkts Sector Perform » Outperform
CyberSource CYBS JMP Securities Mkt Perform » Mkt Outperform

DOWNGRADES

China Mobile CHL Deutsche Securities Buy » Hold
Microchip MCHP AmTech Research Buy » Neutral
U.S. Xpress XPRSA Stifel Nicolaus Buy » Hold
Universal Truckload Services UACL Stifel Nicolaus Buy » Hold
Sprint Nextel S Stifel Nicolaus Hold » Sell
Aon AOC Stifel Nicolaus Buy » Hold
Lihir Gold LIHR HSBC Securities Neutral » Underweight
State Auto Fin STFC KeyBanc Capital Mkts Buy » Hold
Ntelos Holdings NTLS UBS Buy » Neutral
Elizabeth Arden RDEN Sun Trust Rbsn Humphrey Buy » Neutral
Business Objects BOBJ Jefferies & Co Buy » Hold
Cognos COGN Jefferies & Co Buy » Hold
Cooper Cos COO JP Morgan Neutral » Underweight
DRDGOLD DROOY HSBC Securities Neutral » Underweight
Meridian Gold MDG HSBC Securities Overweight » Neutral
Kinross Gold KGC HSBC Securities Overweight » Neutral
Harmony Gold HMY HSBC Securities Overweight » Neutral
Royal Gold RGLD HSBC Securities Overweight » Neutral
Randgold Resources GOLD HSBC Securities Overweight » Neutral
Goldcorp GG HSBC Securities Neutral » Underweight
Buenaventura SA BVN HSBC Securities Overweight » Underweight
F5 Networks FFIV RBC Capital Mkts Outperform » Sector Perform
Business Objects BOBJ UBS Buy » Neutral
Wimm-Bill-Dann Foods WBD Citigroup Buy » Hold
Health Care REIT HCN UBS Buy » Neutral
Nationwide Health NHP UBS Buy » Neutral
Ventas VTR UBS Buy » Neutral

Articles

"Fast Money" for Wednesday

Post author By ToddSullivan
Post date October 9, 2007

WEDNESDAY’S PICKS

Jeff Macke liked Johnson & Johnson (JNJ). Open $66.25

Carter Worth recommended shorting Black & Decker (BDK). Open $82.64

Pete Najarian said Cypress (CY) is a buy. Open $30.91

Ned Riley, The CEO of Riley Asset Management said his pick is Power Shares QQQ Turst (QQQQ). Open $53.38

Tuesday’s Results

Jeff Macke liked McDonald’s (MCD). Open $56.87 Close Close $57.38 GAIN

Tim Seymour recommended selling Banco Itau (ITU). Open $27.41 Close $28.48 GAIN

Stacey Gilbert preferred Titanium Metals (TIE). Open $33.06 Close $33.89 GAIN

Pete Najarian said ValueClick (VCLK). Open $25.52 Close $28.19 GAIN

Since my tracking began on 6/21 (1-1 means one up pick and one down pick and no results from my vacation weeks). The percentage is the percentage of successful picks

Guy Adami= 29-19 = 59%
Eric Bolling= 10-11 = 48%
John Najarian= 13-3 = 81%
Jeff Macke= 36-25 = 58%
Pete Najarian= 23-19 = 53%
Tim Seymore= 4-2 = 66%
Karen Finerman= 14-8 = 63%
Stacey Briere-Gilbert= 3-0 = 100%

Articles

Tuesday’s 52 Week lows

Post author By ToddSullivan
Post date October 9, 2007

TSH Teche Holding Company 38.61
SHRP Sharper Image Corporation 3.58
SHOO Steven Madden Ltd 17.28
RNGY Renergy Holdings Inc 7.12
PLCE Childrens Pl Retail S … 23.29
OXM Oxford Industries, Inc 28.44
MSSR Mccormick & Schmicks … 18.56
MNI McClatchy Newspapers, Inc 19.31
LARK Landmark Bancorp Inc 25.50
GGC Georgia Gulf Corporation 13.09
EPEX Edge Petroleum Corpor … 8.99
DEIX Directed Electronics Inc 3.42
CALC California Coastal Cm … 11.36
BMJ Birks & Mayors Inc 6.33
ITU Banco Itau S.A. 28.35

Articles

The Romney Plan

Post author By ToddSullivan
Post date October 9, 2007

If you are an investor or just a dabbler in the market, a statement made by Mitt Romney the other day ought to get your attention.

Romney stated “When I am President, the capital gains and dividend tax rate for middle class American’s will be reduced to zero”. The ramifications of that are huge. If you own stocks in companies like Altria (MO) or Citigroup (C), wouldn’t it be nice to have a 15% increase in your dividend check? If you have held them for less than a year, that instant jump would be a sweet 28%.

The question that now begs to be asked is, who is the middle class? In the Romney plan , middle class is defined families with less than $200,000 in taxable income. That covers a huge swath of people. The reasoning is simple. Savings and investment is done with monies that were already taxed. By taxing them again when they are returned in the form of dividends is “double taxation”? What this tax rate would do is encourage savings in people who ordinarily would not save. It also would push those already investing and saving to increase that activity.

Now the naysayers will say it will be too big of a draw on the treasury and the gov’t will just raise taxes in other areas to offset the loss here. If one thing has been proven is that cutting taxes on people has always lead to increasing revenues to the gov’t. The reason is simple, cutting taxes increases economic activity. Currently we are experiencing before unseen revenues flowing into our gov’t coffers. The problem has never been a “we do not have enough money” scenario but “we spent too much”.

Romney’s track record in Massachusetts is one that no other candidate can match. He increased revenues, decreased taxes and did them both working with an overwhelmingly Democratic legislature. If he can manage to get thing accomplished in the “blue-est of blue” states, working with the other party in a Congress that only has a narrow majority will be easy.

Tags MO

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Tuesday’s Links

Post author By ToddSullivan
Post date October 9, 2007

Wall St.Journal, Ackman, Weight Loss, Kid’s Colds

– Another thank you to David Gaffen at the Wall St. Journal for the mention.

– Chad Brand agrees with my assessment that Ackman can’t do much at Sears Holdings

– The Stockmasters have some thoughts on trimming down

– If you are afraid to use cold medicine on your little one, here is what to do

Tags ackman, SHLD

Articles

Another Victory for Lead Paint Defendents

Post author By ToddSullivan
Post date October 9, 2007

Another blow to plaintiffs, this time in Milwaukee

Jane Genova Reports
Yet another setback for the plaintiff bar and the issue of public nuisance: Circuit Judge John Franke denied the plaintiff’s motion for a new trial in City of Milwaukee v NL Industries.

In a 16-page Memorandum Decision dated October 7, 2007, Judge Franke dismissed the plaintiff’s arguments. They included seven challenges to the instructions, the violations of the collateral source rule, the trial court’s decision not to submit a nuisance theory based on recklessness, the court’s grant of summary judgment on the issue of future costs, and that the court improperly denied three of its motions in limine.

In the conclusion to the ruling, Judge Franke writes, “For these reasons, and for reasons set forth before and during the trial, the plaintiff’s motion for a new trial is without merit. Because more than 90 days have passed since the verdict, the motion must be denied, and pursuant to Wis. Stat. 805.16(3) it is ordered that judgment shall be entered for the defendant.

Complimentary copy of Judge Franke’s Memorandum Decision available from Mgenova981@aol.com.

The legal cloud is lifting from this litigation on defendants Sherwin Williams (SHW), NL Industries (NL) and even DuPont (DD) and it clear its has no merit.

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Festival of Stocks: Submit Your Articles to ValuePlays

Post author By ToddSullivan
Post date October 9, 2007

ValuePlays will be hosting the 10/15 edition of the “Festival of Stocks”. Please submit your articles..

Articles

It’s Lampert Rumor Season Again

Post author By ToddSullivan
Post date October 9, 2007
1 Comment on It’s Lampert Rumor Season Again

It been a few months since the last round so I guess it is time for people to begin guessing what Sears Holdings (SHLD) Eddie Lampert will buy next. My guess?

One rumor says: Lampert could respond by teaming up with Steven Roth of Vornado Realty Trust to take over Macy’s (M) department-store chain — a recurring rumor that most recently pushed up Macy’s share price on Sept. 14, said Davidowitz, chairman of Davidowitz & Associates, a New York-based retail consulting and investment banking firm.

Vornado has reportedly been interested in making a bid for Sears Holdings since 2005.

A Macy’s takeover by Lampert and Roth would be intelligent because Vornado has unlimited capital, Roth is a successful shopping-mall developer, and Macy’s would give Lampert a new opportunity to slash costs and sell off real estate, Davidowitz said.

“Lampert would save a fortune” in a Macy’s takeover by combining Sears, Kmart and Macy’s functions and saving costs on items such as accounting, distribution, administration and merchandising.

Lampert also would gain tremendous power because he would own two department-store anchors at shopping malls nationwide, Davidowitz said.”

All of the above is true, but one thing gets me. Lampert has never had a partner, why would he want one now? The reason Lampert owns over 50% of Sears shares (after the current buyback is finished) is that he wants autonomy. If it is true Vornado has been after Sears since 2005 and Lampert has not budged, why would he now? When you consider he could pull off the deal by himself (Macy’s has a market cap 1/2 that of Sears and Sears is virtually debt free at the moment)the chances of a Vornado partner ship seems even less remote.

The next prognostication has new shareholder Bill Ackman pressuring Lampert into dumping Sears valuable real estate holding. Does anyone really think Lampert would let a 3.5% holder pressure him into selling real estate during a real estate slump?

Personally I presume he would rather remove his eye with a dinner fork than have Ackman tell him what to do with his company. A more reasoned guess would be Ackman sees the value in Sears and is hopping on for the ride. Ackman is no dummy and I am giving him some credit here for not being such an egomaniac that he would expect to be able to pressure Lampert into doing anything he does not want to.

What people who believe in this scenario do not understand is the patience of Lampert. If this summer has proven anything, a dramatic drop in the price of the stock will not push him into making a move he does not want to make. What was his reaction this summer? Gobble up shares as fast as he could.

Alas rumor mongers, there most likely is nothing there. But I will admit that the exercise is a ton of fun… keep the rumors coming…

Tags ackman, SHLD

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Buy Sprint on Forsee’s Departure?

Post author By ToddSullivan
Post date October 9, 2007

Sprint (S) said Monday that Chief Executive Gary Forsee is stepping down, effective immediately. It the stock a buy now?

Forsee, who has also served as chairman and president, has come under fire as telecommunications giant Sprint’ subscriber growth and share price have disappointed investors since 2003. The last straw was today when the company announced it expects to report a net loss of approximately 337,000 post-paid subscribers in the third quarter. Paul Saleh, Sprints current CFO, will serve as acting CEO until a permanent replacement is named.

Saleh, 50, has served as chief financial officer since the merger of Sprint and Nextel. Prior to the merger he had been EVP and CFO for Nextel since joining the company in 2001. Before joining Nextel, Saleh was SVP and CFO at Walt Disney International from 1997 to 2001, and also served as SVP and treasurer for The Walt Disney Company. Prior to Disney, Saleh served as treasurer of Honeywell, where he spent 12 years in various leadership positions in finance, treasury, investor relations, strategic planning and operations.

Last week, The Wall Street Journal reported that the company has been actively seeking a replacement for Forsee, who has served since 2003. That news followed a report in the same newspaper that activist investor Ralph Whitworth had lost confidence in Forsee, and was threatening a proxy fight for board seats unless Sprint dealt with the situation “immediately.” Whitworth is best known for ending the reign of Home Depot’s (HD) Robert Nardelli, only to watch the stock price tumble.

Why is this a good thing? Aside from Forsee’s departure Sprint did say the search for selecting its next chief executive “will focus on candidates outside the company,” said Hockaday. “We fully expect that the search will be concluded in a timely manner and we are focused on selecting the right candidate to guide the company to achieve its full potential. Sprint Nextel has the assets, spectrum, customer base and technology to be the leader in wireless mobility services.” said non executive chairman, Irvine Hockaday.

This means that Sprint is looking to change the culture and bring in fresh ideas to the company currently suffering an abysmal deterioration of customer service rankings for almost three years running now. If you are a shareholder (I am not) this can only be good news for you as without it, your investment is going nowhere except maybe down.

As for buying shares? Not yet. Let’s wait to see who takes over and what their plans are first. Unless he or she makes customer service priority one, expect more customer defections and further deterioration of share price.