BloggingStocks

Comfort Zone Investing: Overweight doesn't mean speculate

Ted Allrich — 2008-08-16T10:30:00+00:00

Filed under: Dell (DELL), General Motors (GM), Sony Corp ADR (SNE), CIT Group (CIT), Amer Intl Group (AIG), Washington Mutual (WM), U.S. Steel (X), Deere and Co (DE), Wells Fargo (WFC), Comfort Zone Investing

Ted Allrich is the founder of The Online Investor and author of: Comfort Zone Investing: Build Wealth And Sleep Well At Night. In this weekly column, he'll offer advice to investors who are just getting started.

You may see a recommendation to "overweight" a stock or sector. An analyst is bullish on a stock or group and feels buying more than usual will be rewarded. It may or may not come true. While it's a good idea to overweight at times, it should never be done in excess, to a point where you're putting too much of your portfolio in one stock or group of stocks. That's when overweight turns into speculate.

A rational approach to building a portfolio is to have at least five different sectors, ones that aren't correlated. There are different definitions of sectors but there are usually between 10 and 15, depending on what publication or expert you use. These sectors are categorized into broad groups, such as Healthcare, Technology, Manufacturing, etc. Within each sector are many industries. Value Line defines 98 different industries, ranging from Coal to Auto Parts to Water Utility to Beverages. Healthcare, as one example of a sector, has pharmaceutical companies, hospitals, medical devices, anything associated with health. Technology has a broad spectrum as well, encompassing everything from computers to wireless communication.

By holding at least five different, uncorrelated sectors, an investor will minimize risk. When interest rates go higher, it will hurt housing but won't affect drug stocks. Or if commodity prices go up, such as corn, raw materials for food makers increases, but housing prices won't feel it. The idea is to balance investments so that no one sector will cause too much damage if it's coming under siege.

Sectors are sometimes divided into "defensive stocks" and "cyclical stocks." Defensive stocks are ones that aren't hurt as much by a falling market because they have a large capital base and a strong market position. Cyclical stocks, by far the majority, are ones that move with the cycle of the market. When the economy is booming so are these stocks. When it's faltering, these stocks stumble along with it.

Within each of the five or more sectors well-balanced investors own are many stocks from which to choose. Take the Financial sector. Investors can buy Wells Fargo & Co. (NYSE: WFC), Washington Mutual Inc. (NYSE: WM), AIG (NYSE: AIG) and Citigroup Inc. (NYSE: C). That's a bank, a thrift, an insurance company and a financial services company. If you consider manufacturing, you could own General Motors (NYSE: GM), Deere & Co. (NYSE: DE), US Steel Corp. (NYSE: X), Sony Corp. (NYSE: SNE), and/or Dell Inc. (NASDAQ: DELL). That would put an auto company, a tractor maker, a steel company, an electronics firm, and a computer manufacturer in your portfolio.

Smart investors have a balance within these sectors, putting equal amounts of money into each stock. However, when they want to overweight the sector, they will stretch the boundaries, investing more into one sector than normal, perhaps going from 20% of the portfolio to 25%. Then within the overweighted sector they will add more stocks or increase existing positions equally. In other words, they don't buy one stock and yell "Yeehaw!" That's not overweighting. That's stupid.

Keep the idea of balance always in mind. Overweighting is good, but it shouldn't be done with abandon. Put more money than normal in one sector or stock when it appears oversold and ready for a bounce. But not so much that if it isn't, the consequences aren't devastating to your portfolio's performance or to your psyche.

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Blue chip bank buys

Steven Halpern — 2008-08-07T11:00:00+00:00

Filed under: Newsletters, Bank of America (BAC), BB and T (BBT), Wells Fargo (WFC), Stocks to Buy

Financials have staged an impressive rally from extremely oversold levels," says Kelley Wright, editor of the top-rated IQ Trends, which focuses on high quality, blue chip, dividend-paying stocks. Here's his top long-term buys among banks.

"It is increasingly evident that the banking sector is dividing into two distinct camps; the have's and the have not's. The 'have's' are:

Bank of America (NYSE: BAC) and Wells Fargo (NYSE: WFC) among the big cap area;
SunTrust (NYSE: STI) and BB&T Corp. (NYSE: BBT) in the larger regional banking sector;
Bank of Hawaii (NYSE: BOH) and Southwest Bancorp (NASDAQ: OKSB) in the smaller cap area.

"The impressive rally to date notwithstanding, it still remains to be seen whether another retracement will develop should crude oil, gold and other commodities reverse course.

"A strong rally in these sectors could send the market down again. While Mr. Market can do whatever he pleases, it is highly unusual for stocks to bottom in the summer.

"It would not be imprudent to see what September and October have to offer before anyone begins to talk seriously about the bottom. For investors with an appetite for the financials, however, we would suggest dusting off that old tried and true tactic of dollar cost averaging as a prudent means to establish positions."

Each day, Steven Halpern's TheStockAdvisors.com offers the latest market commentary and favorite investment ideas from the nation's leading financial newsletter advisors.

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Comfort Zone Investing: Sifting for winners in the financials

Ted Allrich — 2008-07-26T10:30:00+00:00

Filed under: Citigroup Inc. (C), Bank of America (BAC), Wachovia Corp (WB), Wells Fargo (WFC), Comfort Zone Investing

Ted Allrich is the founder of The Online Investor and author of the just released book: Comfort Zone Investing: Build Wealth And Sleep Well At Night. In this weekly column, he'll offer advice to investors who are just getting started.

There are clearly some banks, thrifts and other financial institutions doing better than others. That became clear in the most recent earnings releases. Wells Fargo & Co. (NYSE: WFC) showed a profit. True, lower than last year but that was expected. What wasn't expected was better revenues and lower losses. JPMorgan & Chase & Co. (NYSE: JPM) had a similar story. So did Bank of America Corp. (NYSE: BAC). Citigroup (NYSE: C) gave better than predicted numbers. Those were the good announcements.

Not doing so well is Wachovia Bank (NYSE: WB). That loss was much larger than analysts projected. The bank cut the dividend, as expected. The stock gave up more ground.

If this truly is an investing once-in-a-lifetime opportunity, as some think but not all, then which financials warrant investors' time and eventually money? Here are some guidelines.

Clearly the old rule applies: follow the money. It will tell you which banks or thrifts or insurance companies are going to prosper when the economy recovers. Which ones will those be? The ones who are still making profits when the worst credit crunch has hit since the Depression. The ones who have reserved generously for future losses. The ones whose dividend hasn't changed. In the case of Wells, it was actually increased in the last quarter by 10%.

The dividend is a good indicator of management's optimism or pessism. Companies are loathe to cut a dividend. They know some investors buy their stocks for the quarterly payout. If they cut it, those investors will sell, adding more pressure to the stock price. On the other hand, to raise the dividend is to suggest the future looks so bright that a higher dividend is not a stretch and that paying it for quite some time seems very probable.

Another indicator is forward looking statements, forecasts of future revenues and/or earnings. At this time, most will be very conservative. It doesn't pay to set up investors for disappointment by forecasting strong numbers. Most CEO's will give a worst case scenario, one that suggests tempering one's enthusiasm is warranted given current conditions. The more conservative the future predictions, the more likely the company will beat them.

The stocks to watch out for are the ones where management is singing a completely different tune from the rest of the industry. If the leaders in a group are all singing "The Eve of Destruction" and a smaller firm is belting out "Happy Days Are Here Again", then complete and total scrutiny of why is in order. More than likely what affects one financial institution will affect all of them which are in the same business.

That's a distinction to make as well. Just because a company has the word "bank" in its name doesn't mean its portfolio is full of subprime mortgages. Some banks only focus on Trust services. Others make construction loans. Investors need to know what a bank does to secure its niche. That doesn't mean these institutions are exempt from selling pressure. They will feel some of the downdraft but not as much as banks or thrifts or insurance companies loaded with bad mortgages. Therein lies the opportunity for the studious investor.

Pick through the financials with these criteria in mind: positive earnings (not necessarily increasing, just positive), large loan loss reserves, conservative forward statements, industry niche. And don't be concerned about any rallies some of them have already seen. These stocks have been battered to levels that haven't been touched in decades. There's still plenty of upside left for smart investors.

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Cramer on BloggingStocks: Banks fail to raise money when they could

Jim Cramer — 2008-07-25T09:55:00+00:00

Filed under: Industry, Market matters, Citigroup Inc. (C), JPMorgan Chase (JPM), Bank of America (BAC), Chesapeake Energy (CHK), Merrill Lynch (MER), Wells Fargo (WFC), Lehman Br Holdings (LEH), Cramer on BloggingStocks, U.S. Bancorp (USB)

TheStreet.com's Jim Cramer says we're back in the same predicament, and more bank runs could be the result.

No one did a deal. The financials rallied gigantically, there was tremendous enthusiasm, and yet no bank was ready with an offering. It is amazing, especially when you consider that the natural gas companies, like Chesapeake Energy (NYSE: CHK) (Cramer's Take) and XTO Energy (NYSE: XTO) (Cramer's Take) were ready, despite horrible declines in their stocks.

The moment that Citigroup (NYSE: C) (Cramer's Take) got through $20 or Merrill (NYSE: MER) (Cramer's Take) through $30 or Lehman (NYSE: LEH) (Cramer's Take) through $20, they should have peddled billions more in preferred stock or even common stock.

Just spot 'em right out there. For about a week, people decided the rally could - and would - last if these banks had built up some fortresses. They didn't.

And that's why we are back in the same predicament. I don't want to write here which bank is next to fail. There are enough of them (particularly one that just changed its CEO) that the FDIC will have to have a plan to keep the bad loans and sell the banks, maybe not even with the branches because all that's worth anything is the deposits.

But if we only have Wells Fargo (NYSE: WFC) (Cramer's Take), Bank of America (NYSE: BAC) (Cramer's Take), JPMorgan (NYSE: JPM) (Cramer's Take) and US Bancorp (NYSE: USB) (Cramer's Take) as possible buyers, we are not going to be able to get through this period without some major runs on the banks.

The other day, the head of the FDIC was on Squawk on the Street and Mark Haines playfully asked her to give him the names of banks that they might have to seize. She was coy. I wanted to throw up.

Everyone that knows how to read a balance sheet knows there are some banks with non-performers that are skyrocketing past where the banks can be saved. And we should expect bank lines.

The math will be done: Indymac knocked off a bunch of capital, leaving less capital for other banks. People will freak out. We don't have emergency funding in place for the FDIC. So we could be right back to where we were that weekend when Indymac collapsed without a plan, which led to an aggressive seizure and more bank-raised capital.

That's what could have occurred. Now the shorts are back in control and nothing got done.

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RELATED LINKS:
All You Need to Know About Financials
Cramer: Housing Bill to Move Builders, Banks
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Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer had no positions in the stocks mentioned.

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'Insider' expert sticks with Wells Fargo (WFC)

Steven Halpern — 2008-07-23T11:12:00+00:00

Filed under: Newsletters, Wells Fargo (WFC), Stocks to Buy

"The financial sector got a boost after our Wells Fargo (NYSE: WFC), a buy recommendation in our model income portfolio, reported better-than-expected earnings," notes Jack Adamo.

The editor of Insiders Plus, explains, " While Wells, like virtually every other bank, is dragging its heels a bit on recognizing losses on bad mortgages, there were elements of the report that were unquestionably great.

"In its latest quarterly report, Wells Fargo reported:

o. Revenues were up 16% year-over-year.
o. Average loans were up 18% year-over-year.
o. Net interest margin was 4.92%, up 23 basis points from Q1
o. Net interest income increased 21% year-over-year.

"The fact that Wells is one of the few banks that is still well-capitalized enough to write loans was a large contributor to its increase in revenues.

'According to the CFO, ''The crisis itself has created opportunities to add assets to our balance sheet at much wider spreads than two or three years ago.' That's a condition that should continue for a few quarters at very least.

"Unfortunately, large increases in loan charge-offs and loss reserves more than outweighed those factors; so, EPS fell 21% year-over-year to 53¢ per share. Still, given what most banks were doing, this was a grand slam, and the stock acted accordingly.

"As a show of strength, the company also boosted its dividend by 10%, continuing a long tradition of increases. The company's dividends have risen at a 15% compound annual rate since 1988.

"I would love to be able to assure you we've seen the bottom in all our bank stocks, but I can't do that. The fact is they've acted pretty much in concert with their nefarious kin, who will continue to bleed red ink for at least the rest of the year, and probably longer.

"Hence, it's possible that when the next round of disappointments in the sector comes, Wells shares may slide with the rest of the group, although not nearly as badly. But that's part of the market madness that I can't judge.

"What I can say is that Wells is well-positioned, despite higher than normal write-offs, to outperform its peers, and probably the market. I mentioned last week that, adjusted for inflation, I thought the market would have zero net growth over the next 10-years.

"I think WFC is one of the few places where your total return will definitely be positive, and even respectable, even in a worst-case scenario. Wells Fargo is a buy up to $32."

Each day, Steven Halpern's TheStockAdvisors.com offers the latest market commentary and favorite investment ideas from the nation's leading financial newsletter advisors.

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Earnings highlights: Google, Intel, JPMorgan, Coca-Cola, Nokia and others

Trey Thoelcke — 2008-07-19T14:40:00+00:00

Filed under: Earnings reports, Google (GOOG), Coca-Cola (KO), Intel (INTC), Nokia Corp. (NOK), JPMorgan Chase (JPM), Yum Brands (YUM), Mattel, Inc (MAT), Sun Microsystems (JAVA), Eaton Corp (ETN), Wells Fargo (WFC)

Here are some highlights from this past week's earnings coverage from BloggingStocks:

Altera Corp. (NASDAQ: ALTR) beat Q2 estimates, offered guidance, and announced a quarterly dividend.
Capital One Financial Corp. (NYSE: COF) profit tumbled as consumers stopped paying off credit cards.
Coca-Cola Co. (NYSE: KO) mixed Q2 results were boosted by international operations.
Eaton Corp. (NYSE: ETN) reported strong Q2 numbers but shares still fell afterward.
Genentech Inc. (NYSE: DNA) did not meet analysts' estimates but lifted its full-year outlook (see transcript).
Google Inc. (NASDAQ: GOOG) posted strong results that fell short of Wall Street expectations.
Intel Corp. (NASDAQ: INTC) better-than-expected Q2 results lifted other tech stocks as well (see transcript).
JPMorgan Chase & Co. (NYSE: JPM) posted better-than-expected Q2 results (see transcript).
Lawson Software Inc. (NASDAQ: LWSN) net income fell due to an auction-rate securities related charge.
Mattel Inc. (NYSE: MAT) Q2 results topped expectations despite lower profits on weak demand for Barbie.
Nokia Corp. (NYSE: NOK) posted better-than-estimated Q2 earnings on strong sales growth.
Overstock.com Inc. (NASDAQ: OSTK) fell nearly 30% after reporting earnings for the second quarter.
Rockwell Collins Inc. (NYSE: COL) posted strong Q3 results due to long-term government contracts.
Sun Microsystems Inc. (NASDAQ: JAVA) preliminary Q1 results sparked an after-market rally.
Wells Fargo & Co. (NYSE: WFC) beat low earnings expectations and also raised its quarterly dividend.
Yum! Brands Inc. (NYSE: YUM) beat Q2 expectations due in part to strength overseas, but shares fell.

For more highlights from this week, see: Citigroup, eBay, IBM, Merrill Lynch, Microsoft and others

The earnings crunch continues next week. Among companies scheduled to report are Apple (NASDAQ: AAPL), Bank of America (NYSE: BAC), Merck (NYSE: MRK), Texas Intruments (NYSE: TXN), Caterpillar (NYSE: CAT), Halliburton (NYSE: HAL), United Parcel Service (NYSE: UPS), Wachovia (NYSE: WB), Yahoo! (NASDAQ: YHOO), Amazon (NASDAQ: AMZN), Anheuser-Busch (NYSE: BUD), AT&T Inc. (NYSE: T), McDonald's (NYSE: MCD), PepsiCo (NYSE: PEP), Pfizer (NYSE: PFE), Boeing (NYSE: BA), Hershey (NYSE: HSY), and Southwest Airlines (NYSE: LUV).

Visit AOL Money & Finance for more earnings coverage.

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Barron's: Are banks a "once-in-a-generation opportunity"?

Tom Taulli — 2008-07-19T13:40:00+00:00

Filed under: Citigroup Inc. (C), JPMorgan Chase (JPM), Washington Mutual (WM), Wells Fargo (WFC), Lehman Br Holdings (LEH)

Back in the early 1990s, the U.S. was mired in a recession and the money center banks were in dire straits. But, of course, it was a great opportunity for investors.

So, are we seeing a repeat? Perhaps so, although, you still need to tread carefully. This is according to a front-page piece in Barron's [a paid publication].

And yes, this week has been particularly encouraging, as seen with a widespread rally in the financials. It certainly helped that there was strength from Wells Fargo (NYSE: WFC) and JPMorgan (NYSE: JPM). At the same time, the results from Citigroup (NYSE: C) weren't as bad as expected.

By any measure -- such as price-to-book values and P/Es -- the financials look extremely cheap. Besides, these companies are taking quick medicine in terms of write offs. In other words, once financials report next year, the comparisons should look strong.

Something else: the Securities and Exchange Commission has implemented new rules on short selling (regarding 19 financial companies). Ultimately, this may relieve some of the volatility.

So what are some interesting possible investments? Barron's mentions a variety of companies, such as JPMorgan Chase, Lehman Brothers (NYSE: LEH), Bank of New York Mellon (NYSE: BK), Wells Fargo, and PNC Financial (NYSE: PNC). Though it might be smart to avoid companies like Fannie Mae (NYSE: FNM), Freddie Mac (NYSE: FRE) and Washington Mutual (NYSE: WM).

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

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Analyst downgrades: EBAY, WFC and ASML

Eric Buscemi — 2008-07-17T11:02:00+00:00

Filed under: Analyst reports, Analyst upgrades and downgrades, eBay (EBAY), Starbucks (SBUX), Wells Fargo (WFC)

MOST NOTEWORTHY: eBay (EBAY), Wells Fargo (WFC) and ASML Holdings (ASML) were today's noteworthy downgrades:

Thomas Weisel downgraded shares of eBay (NASDAQ:EBAY) following the company's Q2 results, as they did not see an improvement in the underlying fundamentals. Goldman lowered eBay to Neutral from Buy and cut its target to $30 from $38.
UBS downgraded Wells Fargo (NYSE:WFC) to Neutral from Buy citing valuation and reduced capital flexibility.
Merrill downgraded shares of ASML Holdings (NASDAQ:ASML) to Underperform from Neutral as they believe the company's demand slowdown could carry into next year.

OTHER DOWNGRADES:

Starbucks (NASDAQ:SBUX) was cut to Neutral from Buy at Piper.
Wachovia downgraded Ashford Hospitality Trust (NYSE:AHT) and Strategic Hotels & Resorts (NYSE:BEE) to Underperform from Market Perform.
AMB Property (NYSE:AMB) was lowered at JP Morgan to Neutral from Overweight.

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Cramer on BloggingStocks: Just a squeeze -- at least for now

Jim Cramer — 2008-07-17T09:22:00+00:00

Filed under: Market matters, JPMorgan Chase (JPM), Bank of America (BAC), Wells Fargo (WFC), Housing, Cramer on BloggingStocks

TheStreet.com's Jim Cramer says if we get fed support for a housing bottom, we can really turn things around.

If I were at Wells Fargo (NYSE: WFC) (Cramer's Take), today would be a day where I issued several billion in preferred stock or I issued a multibillion equity offering. Why? Because the deed is done; the shorts panicked and covered and took the stock up where it could now be worth doing a deal.

If things are so great at WFC, why do they have to do a deal? Simple: They have a big increase in nonperformers, and when you have a big increase in nonperformers ,you raise capital. Period.

Yesterday's relief rally was not about housing prices bottoming -- I think that will happen next year, not this year -- it was about getting the shorts. The shorts had had their way all over everything. Suddenly you get this surprise smackdown by Chris Cox of the so-called naked shorts -- it's really not at all about that if these stocks aren't hard to borrow -- and you get a dividend boost, something that shorts don't like to pay.

I think today's "upside surprise" from JP Morgan (NYSE: JPM) (Cramer's Take) will generate more short-covering. So will Bank of America (NYSE: BAC) (Cramer's Take) when it declares its dividend.

Which it will.

Both quarters are good enough to attract more capital. If I were in a shaky California bank like Downey (NYSE: DSL) (Cramer's Take), I would pull my money out and put it in Wells. I might do the same with a shaky bank in the East, and choose JPMorgan. I am glad I keep my money there, for heaven's sake.

But none of this cures what was a problem for both banks: house price depreciation. Without something that makes it so there are fewer foreclosures and without a mortgage trust to take the bad mortgages off people's hands, all the good banks can do in this environment is beat the shorts up enough to have their stocks rally so they can raise money for the next wave of nonperforming loans to hit their books. They will have to raise capital until those bad loans crest, and they can't crest as long as house prices keeps coming down.

So enjoy the squeeze, but remember it is only not a squeeze when we get a relief bill from Washington and a way to crest nonperformers and neither JPM nor WFC has produced it.

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RELATED LINKS:
Merrill to Sell Bloomberg Stake: Report
Don't Bank on More Dividend Boosts
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Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer had no positions in the stocks mentioned.

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Earnings roundup: Merrill to lose, tech to win?

Peter Cohan — 2008-07-17T08:57:00+00:00

Filed under: Earnings reports, Google (GOOG), Microsoft (MSFT), International Business Machines (IBM), JPMorgan Chase (JPM), Merrill Lynch (MER), Wells Fargo (WFC)

Reuters reports that today is a big one for bank and technology earnings. It looks like Merrill Lynch (NYSE: MER) will lose big and will try to soften the blow with an announcement about selling its 20% of Bloomberg LP for $4.5 billion to its founder, New York mayor, Michael Bloomberg. JP Morgan Chase (NYSE: JPM) and a handful of big technology companies are expected to report profits. But will they be enough?

Meanwhile, how can we make sense of yesterday's 276 point rally on Wall Street? Nobody knows what happened, but theories abound: the price of oil fell -- possibly due to anticipation that the Fed would raise interest rates to deal with inflation that is roaring out of control. Higher interest rates would strengthen the dollar, which would drive down the price of oil since it's traded in dollars. But I think yesterday's market was a short-covering frenzy. With the SEC foolishly squeezing the shorts, they needed to cover their bets that financials would fall further. Of course good news from Wells Fargo (NYSE: WFC) didn't hurt.

Today's earnings -- with estimates courtesy of a Reuters analyst survey -- are likely to move the market. Here's a roundup:

Merrill Lynch is expected to lose $1.94
JPMorgan was expected to make $0.44, down 63% from 2007. At a Price/Earnings to Growth (PEG) ratio of 0.4 and a P/E of 12 on earnings forecast to grow 31% to $3.34 in 2009, it looks cheap. CNNMoney reports it made 54 cents -- well ahead of expectations and its shares are up 5% in premarket.
Microsoft Corp. (NASDAQ: MSFT) will earn 47 cents a share, a 21% increase from last year. At a PEG ratio of 1.1 and a P/E of 15 on earnings forecast to grow 14.3% to $2.16 in 2009, it looks reasonably priced.

Google Inc. (NASDAQ: GOOG) is likely to earn $4.72, up 61% from last year. At a PEG ratio of 1.7 and a P/E of 36 on earnings forecast to grow 25% to $21.57 in 2009, it looks expensive.
International Business Machines (NYSE: IBM) is anticipated to earn $1.82, 21% higher than 2007. At a PEG ratio of 1.3 and a P/E of 16 on earnings forecast to grow 12% to $9.57 in 2009, it looks priced about right.

As always, I predict the market will boost the shares of companies that beat these expectations and raise their revenue and profit growth forecasts. For those that fail to beat and raise, investors could slash their shares. JPMorgan beat expectations this morning and the upside surprise is rewarding those who bet on it prior to the announcement.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He owns Wells Fargo shares and has no financial interest in the other securities mentioned.

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Before the bell: NOK, CAL, YUM, AAPL, GM, F, UTX, AMD, SBUX, WFC

Melly Alazraki — 2008-07-17T08:18:00+00:00

Filed under: Earnings reports, Analyst reports, Analyst upgrades and downgrades, Apple Inc (AAPL), Starbucks (SBUX), Ford Motor (F), General Motors (GM), Nokia Corp. (NOK), Advanced Micro Dev (AMD), Yum Brands (YUM), United Technologies (UTX), Wells Fargo (WFC)

Before the bell: Futures higher ahead of housing data and a wave of earnings; JPM, KO already reported

Nokia Corp. (NYSE: NOK) shares are up over 7.4% in premarket trading after the world's largest maker of handsets said second-quarter profit fell 61% to $1.75 billion, or 46 cents per share, while sales rose 4% to $20.87 billion. Excluding items, Nokia's profit rose 8% to $2.18 billion. Nokia beat estimates of earnings of 56 cents per share on $20.05 billion in revenue, according to Thomson Financial. The mobile phone maker slightly raised its forecast for the mobile phone industry, saying volume would grow 10% or more in 2008.

Continental Airlines (NYSE: CAL) are up again this morning after climbing 38% Wednesday with the rest of the airline stocks. Continental swung to a second-quarter loss, hurt by record high fuel prices and weakening economic conditions. Still the losses of $3 million, or 3 cents per share, or excluding one-time items totaled $25 million, or 25 cents per share, beat expectations of a loss of 49 cents per share.

Yum Brands (NYSE: YUM) shares are down 4.3% in premarket trading after it reported a second-quarter profit of $224 million, or 45 cents a share. Revenue rose to $2.65 billion from $2.37 billion a year ago. While this beat estimates, and while the company raised its earnings growth forecast for the full year to 12% from 11%, investors were concerned about rising food costs which hurt profit margins in the second quarter.

It seems that Apple Inc. (NASDAQ: AAPL)'s new 3G iPhone was sold out in Germany after less than a week. Deutsche Telekom AG's T-Mobile division sold 15,000 iPhones and it's not clear when Apple will be able to deliver more iPhones for the German market, Financial Times Deutschland reported.

The city of New York is trying to replace its entire fleet of yellow cabs with hybrid vehicles and Nissan North America, General Motors (NYSE: GM) and the Ford Motor Co. (NYSE: F) promised Wednesday to deliver 300 cars a month each.

United Technologies (NYSE: UTX) reported an 11% gain in profit in the second quarter to $1.28 billion, or $1.32 per share and increased its full-year guidance on revenue and per-share earnings. Earnings beat estimates by 2 cents. Shares are up 2.2%

Also reporting today is Advanced Micro Devices (NYSE: AMD), which is projected to report second-quarter earnings of 53 cents a share, according to analysts surveyed by FactSet Research.

Notable analyst calls:

Piper Jaffray downgraded Starbucks (NASDAQ: SBUX) from Buy to Neutral.
UBS downgraded Wells Fargo (NYSE: WFC) from Buy to Neutral.

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Early analyt calls (WFC) (DNA) (CMCSA)

Douglas McIntyre — 2008-07-17T07:58:00+00:00

Filed under: Before the bell, Analyst upgrades and downgrades, Comcast Cl'A' (CMCSA), Genentech Inc (DNA), Wells Fargo (WFC)

UBS downgraded Wells Fargo (NYSE:WFC) from "neutral" from "buy', according to Briefing.com. The new service reports that Citigroup initiated Genentech (NYSE:DNA) at "buy" with a $91 price target.

Comcast (NASDAQ:CMCSA) raised to Buy at Goldman Sachs, according to 24/7 Wall St. The financial news site also said that Starwood Hotels & Resorts (NYSE: HOT) Raised to Outperform at Wachovia.

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Before the bell: Futures higher ahead of housing data and a wave of earnings; JPM, KO already reported

Melly Alazraki — 2008-07-17T07:38:00+00:00

Filed under: Before the bell, Earnings reports, Google (GOOG), Microsoft (MSFT), eBay (EBAY), Coca-Cola (KO), International Business Machines (IBM), JPMorgan Chase (JPM), Merrill Lynch (MER), Economic data, Wells Fargo (WFC), Housing

U.S. stock futures edged higher Thursday morning, a day after market staged a big rally. Investors this morning are bracing for some housing data, but more importantly, a wave of earnings. Already better-than-expected earnings from J.P. Morgan Chase boosted stock index futures from earlier declines this morning.

On Wednesday, bulls finally came back in drove to but equity as oil price continued its decline and airlines and Wells Fargo (NYSE: WFC) reported results that Wall Street found encouraging, sending airline and financials stocks through the roof. The Dow Jones Industrial Average ended a three-day losing streak, jumping 276.74 points, or 2.5%. The S&P 500 climbed 30.45 points, or 2.5%, and the Nasdaq Composite gained 69.14 points, or 3.1%.

Still, all this sentiment might yet evaporate, or be seriously damped after housing data is released at 8:30 a.m. EDT. Building permits and housing starts for June are due out at that time. Also, weekly jobless claims will continue to paint the picture of the goings on in the labor market. At 10:00 a.m., the Philadelphia Fed index for July will be reported.

It would be interesting to see how the data and earnings play out. Already, J.P. Morgan Chase (NYSE: JPM) reported it profit sank 53% in the second quarter to $2.00 billion, or 54 cents per share. That beat estimates of 44 cents share. JPM shares are up over 5.5% in premarket trading.

Meanwhile Coca-Cola (NYSE: KO) shares are also rising 2.2% in premarket trading despite reporting a 23% decline in second-quarter profit to $1.42 billion, or 61 cents per share. Excluding one-time items, per-share earnings were $1.01, beating estimates of 96 cents per share. Revenue rose 17%.

Still due to report today are: From financials, Merrill Lynch (NYSE: MER) is due to post earnings after the market close. Then we also have a wave of heavyweight tech companies reporting today like Google (NASDAQ: GOOG), Microsoft (NASDAQ: MSFT) and IBM (NYSE: IBM), all reporting after the close as well.

On Wednesday, online auctioneer giant eBay (NASDAQ: EBAY) reported a 22% jump in quarterly profit, but gave a soft outlook for the current third quarter. EBAY shares are declining over 9% in premarket trading.

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Closing Bell: Bulls finally win on lower fuel and better earnings

Jon Ogg — 2008-07-16T16:18:00+00:00

Filed under: After the bell, Major movement, Earnings reports, Intel (INTC), AMR Corp (AMR), Wells Fargo (WFC)

Today was a clear win for the bulls, although the bears aren't forgotten by any measure. Oil fell another $4.00 today and to around $134/barrel. The CPI report also came in less timid than some PPI watchers were expecting, although it is still very high. Today's rally is probably more attributable to pricing action in banking and transportation stocks. Even the stodgy FOMC minutes didn't hurt today.

Below are the unofficial closing bell levels for index levels today:

DJIA 11240.02 (+277.48)
S&P500 1244.98 (+30.07)
NASDAQ 2284.85 (+69.14)
10YR T-Note 3.934 (+0.09%)
52-Week Lows
Top Analyst Upgrades
Top Analyst Downgrades

Airline earnings came out very cautiously but not as bad as many would have guessed and didn't have the ring of any immediate death sentences for the industry. AMR Corp. (NYSE: AMR), the parent of American Airlines, managed to post better than expected gains before items even if its losses were near $1 billion. Its shares were up over 33% at $5.90 in today's final minutes. This may have actually been the best day ever for major airline stocks.

Chicago Bridge & Iron (NYSE: CBI) was one of the big losers after warning that issues in the U.K. were going to chop off earnings estimates. Its shares were down over 16% at $30.53 in today's final minutes.

Intel Corp. (NASDAQ: INTC) managed to hold on to gains today after it beat earnings expectations, despite some signaling of prudent caution here. Shares were up 0.7% at $20.85 in today's final minutes.

Wells Fargo & Co. (NYSE: WFC) actually came out with much better than expected earnings, and even raised its dividend. Shares were up a sharp 32% at $27.11 in today's final minutes. This report lifted most financials with waves of short covering and waves of traders hoping to catch the bottom.

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Did Wells Fargo's earnings report signal a turnaround?

Sheldon Liber — 2008-07-16T13:23:00+00:00

Filed under: Major movement, Earnings reports, Rants and raves, JPMorgan Chase (JPM), Bank of America (BAC), Charles Schwab Corp (SCHW), Wells Fargo (WFC), IndyMac Bancorp (IMB), U.S. Bancorp (USB)

Yesterday's Major League All-Star Game went into extra innings (15 total) before the American League won 4 to 3, earning the home field advantage when the World Series rolls around in October. Yesterday was also the day I called the bottom of our economic woes (see Will Bush throw a change-up at Yankee Stadium?).

Calling the bottom should not be confused with the end of the pain. It could get worse but I see signs of the turn, and today the market, for the moment, is up. Oil prices are down, as I write, to $132 per barrel and I do not think we will be seeing $200 oil any time soon, as some have opined.

Today's Wells Fargo (NYSE: WFC) earnings report set things off in the right direction. Wells Fargo: Beating expectations by my colleague Steven Halpern will give you the details, but the highlights are lower earnings, a 10% increase in the dividend yield, and a tolerable and understandable charge for bad loans and to increase reserves.

If Bush's change-up marks the bottom, then WFC is the slugger that hit the ball back over the fence. Can one report from one bank make a difference? Yes it can, if people read it as a sign of things to come. At the same time, the capitulation I describe in IndyMac (IMB) turns to dust is another sign that we may be at the turning point.

Most of the bank deposits that are being withdrawn from the weaker banks are moving to the stronger ones. It is not much of a stretch to think that Wells Fargo, along with J. P. Morgan Chase (NYSE: JPM), Charles Schwab (NASDAQ: SCHW) (yes, they do banking), U.S. Bancorp (NYSE: USB) and even Bank of America (NYSE: BAC), which has to work through its acquisition of Countrywide Savings, will soon report very significant increases in their deposits.

There will also be fewer competitors for all types of loans and bank services and I expect profit margins will be higher too. Wells Fargo closed yesterday at $20.51 is currently trading up by $4.64, passing through $25.00 this morning. UPDATE: closing price $27.23, up $6.72 (32.76%)

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own(ed) shares of IMB and do own WFC.

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Wells Fargo (WFC): Beating expectations

Steven Halpern — 2008-07-16T09:43:00+00:00

Filed under: Earnings reports, Newsletters, Wells Fargo (WFC), Stocks to Buy

"Wells Fargo (NYSE: WFC) absolutely surprised Wall Street, which had downbeat expectations for lower earnings," reports Richard Rhodes, trading expert and editor of The Rhodes Report.

"WFC earned $1.75 billion or $0.53/share for the April to June period, which is down just a bit from $2.28 billion or $0.67 per share for the same period last year. Provisions for credit losses were $3 billion, which included increase in reserves for future losses of $1.5 billion.

"But what really surprised the market was that fact that WFE raised their quarterly dividend to $0.34/share per quarter from $0.31, a near +10% increase. In a world where most, if not all, banks are raising capital and slashing dividends - WFC sees fit to stand on the Left Coast and shout that 'all is fine in the water, come on in!'

"This should support the banking community today, which given yesterday's better-than-expected earnings out of First Horizon (NYSE: FHN), has tended to cause a bit of short covering in the banks.

"In our view, this will be a large test for the banking sector. We are interested in how it trades today given the good WFC news - WFC is higher by nearly +10% as we finish up writing, for if they can rally and hold their gains, we are apt to put on an aggressive long position to capture a sharper short covering rally that may cause value managers to 'dip their toe' into the water and become buyers.

"Expectations have been inordinately low; the regional banks are showing there are managing their businesses relatively well."

Each day, Steven Halpern's TheStockAdvisors.com offers the latest market commentary and favorite investment ideas from the nation's leading financial newsletter advisors.

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What to do in today's iffy market, when to spot a housing rebound & what your gadget really costs - Today in Money 7/16

Allan Halprin — 2008-07-16T08:46:00+00:00

Filed under: Google (GOOG), Microsoft (MSFT), Yahoo! (YHOO), Time Warner (TWX), Intel (INTC), Sprint Nextel Corp (S), Money and Finance Today, Wells Fargo (WFC), Delta Air Lines (DAL)

In the News

· Consumer Prices Take Biggest Monthly Jump in 26 Years in June

· Delta Posts a $1.2 Billion Quarterly Loss, But Tops Projections

· Intel Earnings Top Estimates, Reassure Investors

· Oil Posts Biggest 1-Day Price Drop in 17 Years

· SK Telecom Reportedly Interested in Buying Sprint Nextel

· Fed Chief Bleak on U.S. Economic Outlook

· Iron & Coal Miner Cleveland-Cliffs Buys Alpha for $10 Billion

· Congress Explores Google-Yahoo Antitrust Issues

· AOL Talks With Yahoo, Microsoft Heat Up Ahead of Yahoo's August 1 Shareholder Meeting

· Bankruptcies Loom for Airlines After Labor Day

· Wells Fargo Tops Estimates, Hikes Dividend

· E.Coli Linked to Beef in 5 States

What to Do With Your Investments in Today's Iffy Market
When the financial world is panicking, you probably will, too. The best advice, though, is this: When you're nervous, don't actually do anything with your investments - and, most especially, don't throw all your money into whatever investment is soaring at the moment.
What should you do about investments? - USATODAY.com

Don't Put All Your Dollars in One Bank
Spread your money among several banks, and several FDIC-insured accounts, to stay protected.
Spread your money among several banks to stay fully protected - MarketWatch

Housing Rebound: When to Spot One
Nationally, there's still a dark cloud hanging over housing. But to check the health of your local region, look for a few key clues.
Housing rebound: When to spot one - CNNmoney

What Your Gadget Really Costs
Market researcher iSuppli digs into your Xbox, iPod, and more to find out how much they cost the makers to make. You may have paid less for it. The cost to make an iPod, Xbox, and other electronics has big bottom-line implications at Apple, Microsoft, and their peers. Some companies are willing to swallow losses on some gadgets-for instance, gaming consoles-in hopes that they'll make up the difference, and then some, on sales of related gear, such as video game software. Other companies, including Apple, are able to sell many products for a healthy profit from the get-go.
http://images.businessweek.com/ss/07/01/0118_teardown/index_01.htm?technology+slideshows

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Before the bell: Futures lower ahead of data, earnings, despite Intel

Melly Alazraki — 2008-07-16T07:39:00+00:00

Filed under: Before the bell, Earnings reports, eBay (EBAY), Intel (INTC), Market matters, Economic data, Wells Fargo (WFC), Oil, Delta Air Lines (DAL), Federal Reserve

The plunge in oil prices and Intel's good earnings report from Tuesday were not enough to lift mood on Wall Street this morning. Investors, worried about a wave of data, earnings and Bernanke's second day of testimony, pushed U.S. stock futures lower. However, after yesterday's wild swings in the market, we may yet see futures change directions several times before the open.

On Tuesday, the session was marred by wild and volatile trading, induced by concerns over financials in general and Fannie Mae and Freddie Mac in particular. The steep drop in oil prices -- over $6 a barrel -- offset somewhat Federal Reserve Chairman Ben Bernanke's bleak testimony. Sill, the Dow Jones Industrial Average ended 92 points, or 0.84%, lower to close under the 11,000 mark. The S&P 500 dropped 13 points, or 1.09%, while the Nasdaq Composite, in anticipation of Intel's earnings, rose 2 points, or 0.13%.

Today, more economic data and earnings will affect the Street's sentiment.
At 8:30 a.m. EDT, consumer price index -- inflation at the consumer level -- for June is due out. Again, there is a big difference between expected CPI and core CPI, which excludes food and energy prices.
At 9:00 a.m., May net foreign purchases will be reported and shortly after, June industrial production and capacity utilization.
At 2:00 p.m., investors could go over the released minutes from the last Federal Reserve meeting.

Meanwhile, Bernanke will continue his testimony that is due to start at 10 a.m. EDT.

So far today, oil prices are steady after crude futures decline Tuesday, plunging more than $6 a barrel - the biggest one-day drop in 17 years. But at 10:30 a.m. EDT, the U.S. Department of Energy is due to release its weekly report on crude inventories. Traders could react to the report.

Earnings:
Chipmaker Intel (NASDAQ: INTC) reported solid profit gains Tuesday after the close, topping Wall Street's estimates. INTC shares are marginally higher in premarket trading so far despite rising 2% in Frankfurt.

Reporting this morning: Delta Air Lines, Inc. (NYSE: DAL) and Wells Fargo (NYSE: WFC), both could give more insight into two very troubled sectors.

Online auctioneer, eBay Inc. (NASDAQ: EBAY) will report earnings after the close and is expected to see second quarter revenue growth of 18% and earnings of 42 cents per share.

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Will Bush throw a change-up at Yankee Stadium?

Sheldon Liber — 2008-07-15T14:45:00+00:00

Filed under: Other issues, Rants and raves, JPMorgan Chase (JPM), Charles Schwab Corp (SCHW), Merrill Lynch (MER), Southwest Airlines (LUV), Wells Fargo (WFC), Politics, Presidential elections, Commodities, Lehman Br Holdings (LEH), Federal Reserve, Recession

There are many ironies in the fact that President George W. Bush will throw the first pitch at Major League Baseball's All-Star Game in New York. For one, President Bush is the first managing general partner of a Major League team (the Texas Rangers) to become President of the United States.

President Franklin Roosevelt was the first to attend an All-Star Game and throw out the first pitch, starting the tradition. He too had to deal with a poor economy and by the time he threw out that first ball the groundwork was being laid for World War II. President Bush has had to contend with his own war.

While there are differing views as to whether we should have gone into Iraq and whether we should stay or get out, this will always be viewed as George's war, fair or not. And the state of our economy in 2008 will also be viewed as George's economy, fair or not.

The ultimate irony for me is that Yankee Stadium is scheduled to be torn apart at the end of the season. This is YANKEE Stadium and the last president to set foot in it will be George W. Bush. The stadium with the greatest heritage in baseball, the 'House That Ruth Built', is going to be torn apart while our economy is also being torn apart. It is being torn out at its roots.

Major manufacturing jobs are being lost every day. But that's not the roots. The financial sector is crumbling to dust, but that is not the roots. Housing and construction are gasping for air. But that is not the roots. The roots of the United States of America have been and always will be the people and their ideas. We are a nation founded on ideals and ideas. These are being tested severely.

The negativity in the marketplace creates a dampening of our spirit but not the end of our reign as a nation of ideals and ideas. The confidence that people are lacking and that the Federal Reserve is trying to shore up will be restored, even as things are at their worst.

In my mind, President Bush has been a man with ideals. Unfortunately, he has not been a man with many ideas nor has he had much respect for people of differing ideas. This was underscored by the trio of "my way or the highway" guys -- Dick Cheney, Donald Rumsfeld and Karl Rove.

However, when Bush throws that baseball it will symbolize to me the rounding of third base for his administration, the end of a grand piece of Americana and the bottom of our recession. A new president, be he Democrat or Republican, will bring new ideas and a new stadium and be the beginning of a new era. The bottoming out of our bad situation does not mean a rapid rise but we are a nation of success stories and the new stories will soon be set in motion even as the old ones wear on. But it is hard to see it sometimes when you are in the middle of the storm.

Food for thought:

When folks are taking money out of one bank they are usually putting it in another. That we have not read about. Are deposits increasing at J. P. Morgan Chase (NYSE: JPM) or Wells Fargo (NYSE: WFC)? A quick call to my Wells Fargo VP, Sherry, informed me deposits have been on the rise, significantly.
Brokerage houses and investment banks like Merrill Lynch (NYSE: MER) and Lehman Brothers (NYSE: LEH) are suffering but Charles Schwab (NASDAQ: SCHW) did not stick its neck out and looks to clean up going forward.
After the airlines go down for the third time, what will emerge? Is the stage being set for Southwest Airlines(NYSE: LUV) to make another three decade run?

While the economy is doing poorly, many sectors are built to last and have the cash to back it up. Pharmaceuticals, energy, software, metals, defense, food, communications and many more are down but will continue to prosper even if it is at a slower pace.

By the time the "Boys of Summer" start spring training next year everything will look very different.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of WFC.

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