Abbott Proves Successful in a Very Tough Market

Ockham Research submits:

While many earnings reports these days are disconcerting to investors as fuel prices weigh on the economy, we think it is important to note those companies that are beating expectations. Beating estimates amidst tough circumstances is a sign of solid management, which is always a positive for investors. Abbott Laboratories (ABT) announced an impressive second quarter earnings increase of 34%, which surprised Wall Street with strong growth for its blockbuster arthritis drug Humira. It produced sales of over $1 billion, up 48 percent from last year.

Also impressive were the double digit gains in HIV treatment Kaletra and cholesterol drug Niaspan. The bulk (56.5%) of Abbott’s sales comes from prescription drugs such as these, and these results led the company to boost its full year guidance from $3.20- $3.25 up to $3.24- $3.28. 

Navigating the Bear Market

Eric Parnell submits:

Investor nerves are running high. It is a question that seems to arise with more frequency during times such as these. “With the market moving lower day after day, should I pull my money out of the market?” While the urge to flee the market is certainly understandable, it is typically not the best move to exit in the midst of a prolonged decline. Even if you have decided that you’ve had enough of the market volatility and need to head to the sidelines, showing some patience before executing such a move is typically rewarded.

Bear markets do not move lower in a straight line. Although it may feel this way when you’re going through it, bear markets instead move lower in a series of steep declines followed by sharp rallies. For example, although the current bear market is now down over –20% from its October 2007 peak, it has been anything but a straight path down to arrive at this point (see chart). Instead, the market has had an up and down ride along the way including five corrections ranging from –5% to –15% and four rallies ranging from +4% to +12%.

Is It Time to Buy or Sell?

Macro Man submits:

Shift F9.

Well, what can you say? Tuesday was a "sell everything" day.....at least until that list included oil....after which it became a "buy everything" day. That is, until there were 45 minutes left in Tuesday's US equity session, at which point it became a "sell everything" day again. Fun for the whole family!

Do "Images of a Shrinking & Damaged Planet" Influence Commodity Prices?

Mark Thoma submits:

Scotia Analyst: Canadian Banks Attractive at Current Prices

FP Trading Desk submits:

There are plenty of views around about when the bottom will come for Canadian bank stocks. But whether we are there or not, Bank of Nova Scotia analyst Kevin Choquette is urging investors to “aggressively” buy the Canadian banks at current prices.

In a report released on Wednesday, Mr. Choquette said:

Mecachrome Cuts Jobs; Stock Down

FP Trading Desk submits:

Shares in Mecachrome International Inc. (MHRMF.PK) were down more than 33% Wednesday after Tuesday's announcement that the Montreal-based maker of aircraft and automotive parts is cutting jobs and reviewing cost cutting options to weather an ongoing business slowdown.

The company's president and CEO, Guillaume Casella, also resigned.

Social Safety Nets, Inflation Fighting & Market Discipline

Mark Thoma submits:

Steve Ballmer Plays Defense

Sam Gustin submits:

If Steve Ballmer can't have Yahoo (YHOO), the last thing he wants is for Yahoo to get AOL.

This could explain why AOL executives are in Seattle today, discussing a possible deal with the software giant, even as Yahoo has ramps up its own talks with AOL.

Wells Fargo: Positive News From a Bank?

Todd Sullivan submits:

Just on Tuesday I said, "It is getting to the point where you have Goldman (GS), JP Morgan (JPM) and Wells Fargo (WFC) as the cream of the crop in financials.." Wishing now I had listened to myself and bought more...

Wells Fargo reported yesterday and:

Data Domain Leaves Competitors Behind

Kris Tuttle submits:

We’ve been following Data Domain (DDUP) for over a year and it has tended to be too expensive to buy.  Our intrinsic value [IV] estimate has been fairly consistent at $24/share but recent inputs suggest the company may be able to do well enough for us to tweak our model higher and see an IV in the upper-$20's.

The recent market turmoil has reduced the price to just over $20, which makes this a strong candidate for boosting overall 2008 returns. The shares could easily finish the year up 20% from here.

MSCI: Stock Off Following Secondary Offering

Zachary Scheidt submits:

MSCI Inc. (MXB) is a recent spinoff from Morgan Stanley (MS).  The company has been under pressure after its last quarterly earnings announcement which left investors wishing for more.  Zachstocks covered the stock last week in the wake of the sell-off.  Although the article raises concerns about a high multiple during a contracting economic environment, perhaps the more important issue with the stock is Morgan Stanley’s large ownership and their future plans.

That concern has been brought to light this week as Morgan Stanley offered 26 million shares to the market at $32.00 per share Tuesday night.  The parent company is reducing its position by 43.36% which is somewhat concerning considering the inside information Morgan Stanley is privy to and the fact that it still has roughly 30 million shares that it could dump on the market in the next few months.  This is actually the second time selling shareholders have brought stock to market as there were 30.9 million shares liquidated on May 2.

Raymond James Analyst: Will Grey Wolf Accept Precision Drilling's Bid?

FP Trading Desk submits:

The decision by Grey Wolf Inc. (GW) investors to reject the company's merger agreement with Basic Energy Services Inc. (BAS) may have re-opened the door to a possible takeover of Grey Wolf by Precision Drilling Trust (PDS), but for Raymond James analyst Andrew Bradford, it's still way too early to call Precision's $10 offer a done deal.

In a note to clients, Mr. Bradford said:

GM Slashes Costs: Implications for Satellite Radio

Tyler Savery submits:

Shorts Sent Scrambling, But Need More Signs of a Bottom

Tate Dwinnell submits:

Holy moly, the long awaited oversold snap back rally has arrived! Time to locate those cash bundles under the spare bedroom mattress and buy, buy, buy!  Eh, well not exactly but after 6 consecutive weeks of market declines, it was good to see the green return in a big way.  While I don't consider myself a bull or a bear, but a momentum trader, I do prefer a market that rises.  It's quite a bit easier to make money in a rising market. 

Getting the market off on the right foot this morning was the report out of Wells Fargo which beat estimates and increased its dividend.  No it wasn't a great quarter and profits decreased 21% from the year ago period, but quite extraordinary news under the circumstances and the market is going to reward companies that come out with any kind of positives.  I would imagine that is the largest single day percentage gain in its history (or darn near).  I think we're really going to start seeing the market separate the wheat from the chaff in the financials, with those responsible financial institutions that largely avoided the sub prime mess seeing exceptional gains over the next few years.  You could put Wells Fargo (WFC) in that category. 

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