Stocks and Sectors

Calafia Beach Pundit submits:

Over time, one would expect the average selling price of used cars to climb in line with inflation and in line with new car prices. As this chart shows, that is indeed the case, if your time horizon is sufficiently long. Notable exceptions to this occurred in the early 2000s, and then in 2008. The first period was one in which the economy was feeling the after-effects of very tight monetary policy from 1996-2001. Tight money had led to declining commodity prices, declining gold prices, and a very strong dollar. Weak used car prices were reflecting deflationary pressures that were showing up in a lot of asset markets. The second period was dominated by the sudden collapse in confidence and spending that in turn was the fallout from the financial crisis. Prices fell because demand collapsed.

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As we come to grips with China’s leadership, we’re hearing more about Shenzhen-based BYD Company (BYDDF.PK), which stands for Build Your Dreams. It emerged from relative obscurity when Warren Buffett’s Berkshire Hathaway (BRK.A) spent $231 million for a 10% stake in September 2008.

BYD is the world’s largest producer of rechargeable batteries and a major car manufacturer in China, which recently surpassed the US as the world’s largest market for cars. It also makes handsets and parts for mobile phones. Its F3 sedan was the bestselling automobile in China last year.

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Andy Obermueller submits:

Know when to hold ‘em, Kenny Rogers taught us.

Know when to fold ‘em.

Know when to walk away.

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optionMONSTER submits:

By David Russell

Navistar (NAV) gapped lower on a bad earnings report today, and the bears are looking for a steeper push to the downside.
optionMONSTER’s Depth Charge tracking system detected heavy buying of the March 40 puts, which traded 3,263 times against open interest of 2,350 contracts. Most of the institutional-size transactions priced for $0.40 to $0.45.

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Ravi Nagarajan submits:

Berkshire Hathaway’s (BRK.A) investment in BYD (BYDDF.PK) made its first appearance in Warren Buffett’s annual letter (pdf) which provides a table listing common stock investments with a market value of more than $1 billion. As of December 31, 2009, Berkshire held 225 million shares of BYD with a market value of nearly $2 billion. Berkshire’s cost basis is $232 million. While the investment has appreciated significantly, it is unusual for Warren Buffett to purchase shares of what is essentially a technology company in a very unsettled industry environment.

“I am betting on the man.”

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Jim Delaney submits:

Before there were dedicated 24-hour sports networks, ABC would broadcast “Wide World of Sports” every Saturday afternoon. The tagline for that show: “Spanning the globe to bring you the constant variety of sport… the thrill of victory… and the agony of defeat… the human drama of athletic competition… This is ABC’s Wide World of Sports!”, seems as if it could apply to today’s financial markets without too much editing, “Spanning the globe to bring you the constant variety of economic indicators…the thrill of finding an indicator you can believe…the agony of finding out you can’t…the human drama of trying to make sense of all of the cross currents of information…these are today’s financial markets.”

In my effort to “span the globe” in search of information indicating whether this recovery is lasting or temporary, I thought we might look at those things that span the globe. Well, span might be a bit overarching, but at least those things that criss-cross it frequently. These would be the massive container ships carrying raw materials in one direction and finished goods in the other.

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Market Blog submits:

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Ockham Research submits:

Following second quarter results that showed further improvement from a year ago, Thor Industries (THO) stock retreated nearly 8% on Tuesday because it was not as impressive as analysts had hoped. Thor, manufacturer of recreational vehicles and busses, swing to a profit of $11.9 million or 22 cents per share from a loss of $14.9 million or 27 cents a share last year. Profit fell short of consensus estimates of 28 cents per share. Revenue grew a whopping 90% to $430 million, which topped analysts’ estimates by $2 mln. Considering sales were slightly better than inline, it was higher than expected costs that turned out to be the culprit for Thor’s disappointing quarter.

There is little doubt that the first half of the year has been far better in fiscal 2010 than it was in 2009, as EPS of $.65 per share easily topped the loss of $.18 in the prior period. A quarter ago, Thor Industries returned to profitability in both RV’s and bus product lines, but the biggest turnaround has been in RV’s. RV sales in the quarter rose 150% to $335.8 million, which has completed a six month turnaround of $64 million in net income compared to the first half of last year. The company has seen a relatively strong rebound in demand for RV’s (including the brand Airstream), which in combination with generally stable costs has boosted results. However, the stock has already priced in the improved sales trends trading more than 270% higher than a year ago coming into the day.

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John Petersen submits:

Since I’m frequently chastised for holding old fashioned views when it comes to vehicle electrification, I’ll start this article by quoting one of the oldest known versions of a common English proverb, "A byrd in hand – is worth ten flye at large." While this theme is not always clear in my writing, it’s never far from my thoughts. In fact it’s the foundation of my conviction that manufacturers of cheap energy storage products are better investments than developers of cool energy storage products and batteries are great at minimizing waste but miserable at replacing fuel tanks. Just for this week, I’m going to take the debate down a notch and focus on what I see as a bird in the hand in the energy storage sector.

I’ve written about new European standards that will require automakers to reduce CO2 tailpipe emissions to 130 g/km by 2015. I’ve also written about new U.S. CAFE standards that will require automakers to achieve an average fuel economy of 35.5 mpg by 2016. While I’ve never written about the rest of the world, many governments are jumping on the bandwagon and adopting emission standards based on the European model. The following chart from Tenneco (TEN), a global leader in automotive fuel efficiency and emission control systems, provides a summary overview of the current global regulatory landscape.

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Zacks.com submits:

GOL Linhas Aereas Inteligentes S.A. (GOL), the largest low-cost airline in Latin America, has announced its preliminary traffic figures for February 2010.

During the month, total passenger traffic grew 46.9% over the same period last year, fueled by 47.9% growth in the domestic market and 40.3% growth in the international market. The improvement came from economic growth in Brazil and Latin America, and the expansion of GOL’s competitive advantages, especially its cost structure, exemplary service, dynamic fare management and the revitalization of the SMILES program.

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