Friday, September 3, 2010

Stocks and Sectors

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Archive for the ‘Transport’ Category

DryShips: Come Aboard, Just Make Sure You Have Your Sea Legs

Posted by admin On September - 3 - 2010

Daniel Long submits:

When the rumor mill gets going about a potential buyout target, investors can generally become interested for one of two main reasons. The first is when the potential target has a strong foothold on technology, staff or demographics that the potential suitor perceives as essential to its future earnings growth or even survival. When this is the case, shares for the firm being bought will often have high multiples due to big R&D and other costs relative to current earnings. The buyer in this case will likely be overlooking the value concerns just to get their hands on what they so desperately need, and a bidding war can easily ensue. Because of this, however, the stock tends to rise quickly, well before any buyout is announced, and can often trade higher than what is ultimately paid.

The other less exotic scenario occurs when a company has great long term fundamentals, but has been beaten down by short term forces. The buyer of these types of companies is generally looking for a solid investment to add to their balance sheet, something that will generate income right away. When this happens, the stock will likely see less action leading up to a deal, and a premium is often paid. This is because traders believe that the potential suitors will be more likely to low-ball any offers, and will have plenty of time to wait. The financial condition of the prey in this case is often the determining factor as to what price is paid. As different as the results can be for investors of these two scenarios when the sitting ducks are eventually acquired, a further divergence in results can occur if the companies are in fact not bought out. When something that was in dire need suddenly is not, chances are it will be left on the curb. Investors holding a value play, on the other hand, may benefit from the strong fundamentals that kept them from being overtaken in the first place.

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Light Vehicle Sales Are, Unfortunately, Light

Posted by admin On September - 3 - 2010

Sold At The Top submits:

While the latest sales results from automakers generally came in weaker than last year when sales boomed as a result of the government’s sham "cash-for-clunkers" policy, looking at the Department of Commerce light vehicle sales series you can see that for the better part of the last decade auto sales have been terrible, stuck in a perpetual declining trend since the late 90s with the current level of sales last seen way back in early 1983.

With the tightening consumer credit conditions, structurally high unemployment and a decade long disappointing sales trend, recent auto sales results offer an interesting data-point but essentially paints a picture of bleak economic weakness.

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August Auto Sales Bake in Late Summer Heat

Posted by admin On September - 3 - 2010

Wall Street Strategies submits:

By David Silver

Going into August’s auto sales results, we knew there would be a decline from last year as August 2009 was benefited from the cash for clunkers program. With that in mind, it wasn’t as bad as some articles were predicting. One of the headlines include "the worst month for auto sales in 28 years." First thing is it was a stat for the month of August, not any month of the year. That fine print took many by surprise. If you remember back to May, June, and July of last year, the industry seasonally adjusted annual rate of sales (SAAR) was below 10.0 million units, the lowest was 9.2 million. The figure for August 2010 didn’t really approach that Armageddon level, but it was one of the worst August’s (adjusting for population growth) since World War II. I honestly had hoped we had passed the post WWII comparisons, but apparently not. There were 997,468 sales which equates to approximately an industry SAAR of 11.7 million units.

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Maybe the 787 Isn’t Boeing’s Biggest Problem

Posted by admin On September - 3 - 2010

YCHARTS.com submits:

Boeing (BA) delayed the delivery of its first 787 Dreamliner yet again last week (Aug. 27), to first-quarter 2011, meaning the ambitious effort to build a fuel-efficient new wide body plane is more than two years behind schedule. The plane was by now supposed to be boosting Boeing sales, but instead revenue was down 9% year over year.

BA Stock Chart

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tom konrad Tom Konrad (AltEnergyStocks) submits:

I’ve been researching and writing this series about investments that will benefit from peak oil for half a year. If you’ve read the 20+ articles in the series so far, you’ve learned about several stocks that should be well positioned to benefit from rising oil prices, and you should also have a good idea about which sectors are best to avoid.

On the other hand, if you are just coming across my writing now, you’re about to learn about a single investment that should not only benefit from peak oil, but it will give you diversification at a fairly moderate cost.

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Rail Traffic at Its Highest Level Since 2008

Posted by admin On September - 2 - 2010

Mark J. Perry submits:

WASHINGTON , D.C. – Sept. 2, 2010 – "The Association of American Railroads (AAR) today reported weekly rail traffic continues to set records with U.S. railroads posting their highest numbers for 2010 in both rail carloads and intermodal volume for the week ending Aug. 28. U.S. railroads originated 302,358 carloads for the week, up 5.8 percent compared with the same week in 2009 and intermodal traffic totaled 237,194 trailers and containers, up 17.1 percent from the same week in 2009 (see charts above). Compared with the same week in 2009, container volume, a subset of intermodal, increased 18.1 percent and trailer volume rose 11.4 percent." Other highlights include:

1. This is the 33rd consecutive week in 2010 that intermodal volume is above the same week in 2009, with 24 of those weeks being double-digit percentage gains.

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August Auto Sales Worst in 27 Years

Posted by admin On September - 2 - 2010

Tim Iacono submits:

Yesterday, automakers in the U.S. reported the worst sales since 1983 and not even the ongoing troubles at Toyota (TM) seem to have been able to cushion the fall, the graphic below from this story at CNN/Money offering a reminder of how much the “Cash for Clunkers” program boosted sales last year.

Industry sales also fell 5% from July levels. August sales typically outpace July, as deals become available on older models ahead of the fall introduction of new model year cars. August sales would equate to an annual sales pace of about 11.5 million vehicles.

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Why It’s Getting Harder to Be a Clueless Consumer

Posted by admin On September - 2 - 2010

Rick Newman submits:

The nanny state has been getting a few things right.

American consumers hate being told what to do, and to prove it, we routinely make choices that are irrational and counterproductive. We make impulse purchases we can’t afford. We build bigger houses than we need, chaining ourselves to an onerous mortgage for years. We drive rugged, four-wheel-drive vehicles even though we never leave the pavement. We buy Snuggies.

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Warren Buffett Didn’t Buy All of the Railroads

Posted by admin On September - 2 - 2010

YCHARTS.com submits:

The fabulous opportunity represented by the first-quarter 2009 bottom for these two railroad stocks is long gone, of course, and even Warren Buffett didn’t buy at the very bottom. His Berkshire Hathaway (BRK.A) waited until November of 2009 to cut its deal to acquire the 77.4% of Burlington Northern Santa Fe (BNI) it didn’t already own, for $26.4 billion in cash and stock.

UNP, CSX Chart (click to enlarge)

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The world`s third largest commercial plane maker Bombardier (BDRAF.PK) [TSX: BBD.A, TSX: BBD.B] saw a 27% decline in its second quarter fiscal 2011 profits, as it reported net income of C$148 million, compared with C$202 million for the same period last year, largely due to poor performance of its aerospace segment.

The company`s other financial results suffered as well, as consolidated revenues dropped to C$4.1 billion for the quarter versus C$4.9 billion last year, while EBITDA fell by 24% to C$331 million. Diluted earnings per share were also C$0.08, compared to C$0.11 a year earlier.


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