With investors and analysts betting on a
rate cut, the next couple of days present a challenging trading climate. It will be interesting to see how people construe a rate cut.
Many thought the original cut was a one-and-done that would take care of any lingering negative effects from the subprime crisis. A further rate cut would acknowledge that the damage may be deeper than originally thought; but it would also provide cheaper money for mergers and acquisitions.
Today I would like to focus on an incredibly cheap Dow component --
. I wrote about
3M earlier this year, and noted that everyone knows this company as the maker of the Post-It.
However, there is way more depth, diversity and success than this office essential. With its vast domestic and international operations, 3M is an attractive investment play in this market. Its global presence and size present considerable opportunity.
The company reported strong earnings, solid revenue growth and raised its profit outlook for the year in its most recent report, yet its shares lost more than 8% on Oct. 19, when management lowered prices on the films they produce for LCD screens. These films had enjoyed a nearly 30% profit margin. While that margin will narrow, the lost profit should be made up for with increased demand.
Management clearly sees things differently than traders. The company raised guidance, boosting both the high and low end of earnings estimates for the fiscal year 2007. When a company raises guidance, I want to be on board, especially when I can buy shares on the cheap. The stock closed at $86.13 Friday, and I will place a limit order to buy 10 contracts of the April 75 calls (MMMDO) for $12.90 or better.
Game of Life
The Boston Red Sox claimed their second World Series Championship in four years last night, sweeping the Colorado Rockies, who came into the Fall Classic having won 21 of their last 22 games, including seven straight in the post-season.
Some will attribute the Rockies demise to their eight-day layoff prior to the World Series. However, the reality is the Red Sox played great baseball, winning their last seven post-season games, after falling behind the Indians three games to one in the ALCS.
The BoSox received outstanding starting pitching, and had Jonathan Papelbon to close the deal. In addition, they received tremendous contributions from rookies Jacoby Ellsbury and Dustin Pedroia, not to mention, incredibly clutch hitting from series MVP Mike Lowell. Red Sox Nation seems to have a team destined to become better in the years to come.
In the NFL, the battle of the titans will take place this weekend in the most anticipated match-up of the season. With convincing victories yesterday, the New England Patriots and Indianapolis Colts both remained unbeaten, boasting undefeated records. Although Peyton Manning has been his usual stellar self, Tom Brady has been nothing short of phenomenal this season.
In seven games, Brady has thrown three or more touchdowns in every game, with a total of thirty TDs thus far. Moreover, he has completed well over 70% of his passes, to a cadre of receivers led by Randy Moss, which has resulted in the Patriots averaging more than 40 points per game. Recall, however, that the Colts are the defending Super Bowl champions, who defeated the Patriots, with a tremendous comeback, in last year's AFC Championship game.
Last year's NFC Super Bowl representative, the Chicago Bears, was beaten by the Detroit Lions yesterday, to fall to 3-5 on the season. If the Packers beat the Broncos tonight, Da Bears will be four back in the loss column.
Given their performance to date, it appears highly unlikely that Chicago will make the playoffs this year. The NFL created some international flavor yesterday, as the New York Giants defeated the win-less Miami Dolphins, in a game played across the pond in London.
On the college gridiron, the Boston College Eagles, borrowing a page from the Red Sox, came back to defeat Virginia Tech on Thursday night, thereby avoiding the recent curse of being ranked No. 2 in the country.
Quarterback Matt Ryan solidified his Heisman trophy candidacy, in Flutie-esque fashion, by leading the Eagles to two touchdowns in the last two minutes of the game. Unquestionably, Boston College has a difficult schedule remaining; however, if they manage to remain unbeaten, they deserve a chance to play for the BCS Championship.
The Players Club recognizes the terrific achievements of these college athletes, as well as the resultant pride it brings to their universities. Furthermore, we appreciate the challenge of balancing academic requirement with athletic excellence.
By guaranteeing recurring cash flow, through our strategic partner, The Players Club endeavors to ensure that our members capitalize on their educations, such that they can apply their knowledge to create and maintain a life characterized by ongoing success and happiness.
Always remember: Life is a journey, enjoy the ride!
At the time of publication, Dykstra had no positions in stocks mentioned.
Nicknamed 'Nails' for his tough style of play, Lenny is a former Major League Baseball player for the 1986 World Champions, New York Mets and the 1993 National League Champions, Philadelphia Phillies. A three time All-Star as a ballplayer, Lenny now serves as president for several privately held businesses in Southern California. He is the founder of The Players Club; it has been his desire to give back to the sport that gave him early successes in life by teaching athletes how to invest and protect their incomes. He currently manages his own portfolio and writes an investment strategy column for TheStreet.com, and is featured regularly on CNBC and other cable news shows. Lenny was selected as OverTime Magazine's 2006-2007 "Entrepreneur of the Year."