Sozzi's Day Ahead: Any Clue What You're Doing?
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Wells Fargo (WFC): The sixth sense I have on this stock stuff has been telling me that the market wants to sell banks into earnings on fear "sell-the-news" events will occur. These tend arise when the market has run higher in advance of the fundamental stories. However, watch the major sector plays and see if they are losing ground into earnings, as the news may be bought when all is said and done. I came out positive on Wells Fargo last week, and would let it ride into earnings.
Assorted Odds and Ends
- Financial comparisons continue to be tough for companies, and Fastenal (FAST) is a prime example. The market is asking you to pay up -- using historical norms and the pre-summer rally -- for earnings of companies that are decelerating, even considering any cost cuts that are padding profit margins. I find it difficult to get excited on this proposition, especially given that there is risk to the decelerating growth projections.
- GNC (GNC): Give it a go-long into earnings, which should come later this month. The story will not disappoint, and I expect a good revision to the full-year earnings outlook, again. The company's online marketing is the best in the nutritional space. Further, this is a U.S.-centric business. It also offers products that, in my opinion, will be the last to be traded off should the fiscal cliff derail consumer confidence. This thesis deserves to be priced in now.
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