Category: Articles

Friday’s Picks
Jeff Macke recommends Cypress Semiconductor (CY) $36.02

Guy Adami likes Intelb(INTC) $24.67

Tim Seymour prefers Tata Motors (TTM) $19.65

Jon Najarian says short Valero (VLO) Open $66.43

Thursday’s Results
Jeff Macke recommends shorting Bed Bath & Beyond (BBBY) Open $28.36 Close $27.40 GAIN

Guy Adami likes Intel (INTC) Open $25.35 Close $24.67 LOSS

Tim Seymour prefers Posco (PKX) Open $146.46 Close $147.74 GAIN

Jon Najarian recommends shorting KLA-Tencor (KLAC) Open $46.54 Close $45.81 GAIN

2008 Records:
Brian Schaeffer= 0-1
Carter Worth= 0-1
Jon Najarian= 1-1
Jeff Macke= 1-0
Tim Seymore= 1-0
Guy Adami= 0-1

2007 Results (Since 6/21):
Guy Adami= 58-46 = 56%
Jeff Macke= 60-40 = 60%
Pete Najarian= 49-41 = 54%
Karen Finerman= 40-30 = 57%

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It looks like Sherwin Williams (SHW) will finally get a court date in Rhode Island. Expect them to lose.

Jane Genova reports:

Tomorrow, January 4th, will be a day of hearings at Rhode Island Superior Court before Judge Michael Silverstein on the arguments presented by the lead paint defendants in four motions. The hearings begin at 9:30 AM.

Judge Silverstein has set aside the entire day for the four motions filed in December 2007 by Sherwin-Williams, which NL Industries (NL) and Millennium Holdings also joined. Specifically, those motions are:

* Motion to strike the state’s proposed lead paint abatement plan
* Motion for Clarification of procedures
* Motion to value DuPont (DD) settlement, determine appropriate offset and disgorge misallocated settlement funds
* Motion to stay abatement proceedings pending Cyanamid trial.

Why will they lose? Fortunately, it has nothing at all to do with the law. Silverstein all but directed the verdict obtained against the defendants and has essentially acted as a prosecutor throughout the trial. That being said, the defendants are in front of him arguing motions against an abatement plan he asked for and was fast tracked in accordance to his wishes and the disgorgement of a settlement he blessed.

Essentially the defendant are going through this dog a pony show to better determine and document the breadth of his incompetence and judicial malfeasance prior to their date with the RI Supreme Court or US Federal Court.

Should the defendants get ANY relief as a results of the hearings that is huge news. Other than that, same ole’ story…..

Disclosure:Long Sherwin Williams

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Web Privacy,Ebay Fraud, Dick’s,Mac’s

– Is privacy on the web finally here?

– Beware, at least Ebay is trying to fight it.

– This is a great store and just may be an even better stock.

– And the beat goes on for the Mac.

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In a recent interview, Sherwin Williams (SHW) CEO Christopher Connor reassured shareholders that despite the US housing situation, his company would post another solid year.

Highlights:

* For 2007, the company expects to earn $4.70 to $4.75 a share, a more than 12% increase from 2006 earnings of $4.19 a share.
* Expects double digit EPS growth in 2008
* Management will recommend a dividend increase for 2008 to the area of $1.40 to $1.42 a share for a 2.5% yield at current prices.
* 2008 inventories will be below year-ago levels despite the housing slowdown
* The Global Group had strong sales and earnings gains in 2007 and the prospects for 2008 are good.
* The Paint Stores Group: Will produce about 62% of the company’s sales in 2007. A net of about 100 stores were opened in 2007 and an additional 170 were acquired through acquisitions. Sherwin will end the year with more than 3,300 stores and 8% increase from 2006.
* Through Q3, the company repurchased 10.2 million shares for about $650 million,

There were two key takeaways. One for the market, and one for shareholders. for the market, Connor said that while there is still some effect of the housing situation for Sherwin and while tighter credit may make it more difficult for homeowners to finance major home remodeling, “a few gallons of paint is the cheapest and most dramatic change in a family’s living environment.” While folks may not do a major remodel, that will slap a fresh coat of pain on a room to change it.

The markets seem to be missing this point as Sherwin now trades at 12 times 2007 earnings and 10 times next years anticipated. Can anyone name another company out there growing EPS at double digit rates, acquiring other businesses, increasing the dividend and buying back stock WITHOUT adding more debt that is seeing its multiple slashed? Me either. Sherwin is becoming laughingly undervalued…

For shareholders Connor added this tidbit when he said the company has spent $248 million of that cash to acquire six companies and “there could be another acquisition before year-end.”

That seems to have gone unnoticed by everyone out there. Sherwin is able to use the weakness in its industry now to increase its footprint in it a very attractive prices. That, is very good news…

Oh yea, lead paint? Done….

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I wonder when American investors will finally realize Chinese and Middle Eastern investors are on to something?

After the recent Abu Dhabi (investment in Citigroup (C) and China’s investment in Merrill Lynch (MER), word out of Kuwait is that KIA, the Kuwait Investment Authority is set to “speed up” its decision making process in order to beat rivals to investments in financial services firms. This is notable at the KIA sits on $213 billion in funds.

“Perhaps we are at the eye of the storm and close to the peak of the problem” said Bader Al-Sa’ad its investment head.

All this must lead one to remember the S&L crisis and Saudi Prince Alwaheed’s investment in Citigroup at a split adjusted $2 a share. Middle Easterners have proven deft investors in US securities over the years. One must contrast them to the Japanese who during the same time frame where running around buying golf courses and buildings at inflated prices.

When you are not at the vortex of the panic, it is far easier to see through to the the other side of it. Eastern investors are placing massive bets on US banks and financial services firms while US investors are running scared from them. The reason? My guess is that these foreign firms see the international operations of a Citigroup and recognize they are still earning money in their other areas of operations and that the US housing issue is a temporary one. They are not watching a friend try to sell a house or are hearing about another losing theirs and from that getting sucked into the panic. The nightly newscast they see does not recount story after story about the “housing crisis”. Because they are so detached, they are able to take a completely antiseptic look at the bank’s operations and invest accordingly.

That being said, temporary disruptions often times lead to mis-priced assets that can then be bought a bargain prices.

That is exactly what is happening in US financials now..

Disclosure:Long Citi

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No sleep, Tuition, Death by Texting, Another List

– Just what we need, less sleep.

– Why are the nations so call “enlightened” only now figuring this out?

– A driver texting kills a 13 year old.

– Here is a good one on the “5 Dumbest Things on Wall St. for 2007”
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Wachovia (WB) CEO Ken Thompson said last week the bank currently only has about $700 million in exposure to the dreaded collateralized debt obligations, or CDOs.

We bought Wachovia a while back in October because of a business model at Wachovia that Thompson has called “low-risk.” Almost 60% of Wachovia’s earnings come from general banking or simply put, checking and savings accounts, retirement services, auto financing and other retail and small business products. That area of the banking business remains healthy.

For 2008 Thomnpson said “We believe that 2008 will be a much better year for us than 2007, and we think the market will recognize that as we go more and more through the year,” he said. When you consider the stocks yields 6.7% and trades at 8 times earnings, once people realize the world is not ending, there is substantial upside.

We have been saying essentially the same thing for months now and Thompson’s comments should give those looking at financials some confidence.

I am confident that when we all do those “Best of” lists for 2008, those who are buying financial currently will be at the top…

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Back in September I commented Wal-Mart’s (WMT) new ads were “simple and brilliant”. It would seem I am not alone.

For the first time in recent memory, Wal-Mart has won the Holiday sales battle with Target (TGT). There are two simple reasons. The new ad campaign started in time for the holidays and the success of Walmart.com’s “site-to-store” program.

“Save Money, Live Better”
In May I lamented “I have been in 4 Wal-Mart the past 2 weeks and one thing sticks out. They have not changed at all the past 7 years. Everything feels the same, the look , the merchandise, the people, everything.” I continued, “Wal-Mart’s image has taken a hit. When people want something “cheap” they think Wal-Mart, when the want a value, they think “Target”.”

With one simple phrase (and a few billion invested in the stores), Wal-Mart changed that. Going from “Always Low Prices” which to be honest was a line best suited for the Dollar Stores to Save Money, Live Better Wal-Mart changed the perception of their operations. The commercials, which focused on family trips and gave an emotional element to their advertising that had never been there before. Guess what? It worked. Credit the Martin Agency, ranked by Advertising Age as one of the top five agencies of the year in 2006.

Site-To-Store
In July, after my first try at the program, I posted “Wal-Mart said that “more than 50 percent of Site-to-Store orders [came] from new customers who make their first purchase at Walmart.com using the service.” The chain also reported a 20 percent increase in the number of Site-to-Store “customers who spend an additional $60 on purchases in the store when picking up their orders.”

This clearly spilled over into the holidays. I actually was one of these folks as were ordered items for the kids on “Black Friday” picked them up in the store 7 days later and while there, picked up several other items. This option, for some inexplicable reason is not available at Target. The best part of the program is that I can buy thousands of items not in the stores, making my local Wal-Mart even larger.

The thing about retail is that it is hard to change perceptions once they are set in consumers minds. Now that Wal-Mart has managed to finally do that, as the economy slows, any hope Target had to turn the tide anytime soon is all but lost. Shoppers have clearly bought into Wal-Mart’s tag line and as times get tougher, this will become even more apparent.

If all this is not bad enough for Target, the death comparison was recently made. Craig Johnson, president of retail consultancy Customer Growth Partners said “As a merchandiser, you can’t ignore the customer experience. The level of helpfulness in Target stores is approaching Home Depot (HD) territory.” OUCH

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