The RealMoney contributors are in the business of trading and investing all day on the basis of ongoing news flow. Below, we offer the top five ideas that RealMoney contributors posted today and (if applicable) how they played those ideas.
1. Early Look at Earnings
By Timothy Collins
8:58 a.m. EST
had one of the more impressive earnings reports that I've seen this season. Numbers all around are showing improvement. Here's a company that actually grew revenue and profits. The stock is bid up in the $$24.70 area, and I will be happy to take some profits here; however, this is also one stock I'm sliding some shares over to a long-term portfolio.
results seemed in line. Personally, I like what they've done with the Old Navy stores, and think that may be the key shorter term. The stock's reaction thus far is muted.
numbers were strong. They were able to beat on revenue and EPS, as well as guiding higher, which is what I was looking for. The merger with
seems on track. The stock may push the $22.50 upside potential that I have targeted.
is just plain disappointing. The stock is below the $15.00 area premarket.
is out defending the name, and that may help it get back to 15.00.
Positions: Long DBRN, CRMT, GPS
2. Retail Fading
By Robert Marcin
9:34 a.m. EST
Another week of retail earnings reports and it's very obvious that the consumer hit a wall in the past four weeks. Retail sales faded fast in the last two weeks of October and the first half of November. Unemployment, lack of confidence and $3 per gallon gas are the major culprits.
My favorite shorts are in the consumer discretionary sector, like apparel, travel, luxury goods, housing-related, building materials and auto-related. The
SPDR Retail ETF
is an excellent proxy for shorting the retail space.
I do like non-discretionary retail like discounters, staples and pharmacy retail companies. One can create a matched pair in the sector. Consumers will continue to spend where they must, but they will fade what they might only want.
Positions: Short XRT
3. Despite Dell, Earnings Performance Still Good
By Brian Gilmartin
9:50 a.m. EST
We counted 10 companies that reported earnings either last night or this morning from the Bespoke Morning Lineup, and of the 10, seven beat the consensus estimates, and of those seven, three raised guidance for the coming quarter, which (in my opinion) seems pretty representative of what the earnings performance has been like since Oct. 1.
The fact that we have traded back below 1100 on the
is somewhat disconcerting. I've read a number of technicial pieces that talk about various Fibonacci levels that come into play around 1100, but given the easy earnings compares vs. 2008, and Monday's market action, I thought we would have traded cleanly through the October 2009 highs by now.
Despite easy earnings compares and a seasonally-strong market period, (November, December, January), the market is trading heavy. Perhaps it is what is emanating from Washington that is scaring everyone? We track the percentage of earnings revisions that are positive vs. negative from the weekly earnings data, and the percentage of positive revisions continues between 60% and 70% following company's earnings reports.
Finally, Michael Dell is no Brett Favre, that is for sure. After coming out of retirement and resuming the helm at
since Feb '07, Michael Dell has a QB rating of (maybe) a 5. We've been playing DELL as a turnaround story since Michael's return, and it has been a poor bet.
Positions: Long S&P 500 index funds, SPY, DELL
4. ADC Telecom
By Tim Melvin
11:04 a.m. EST
That was a really unpleasant earnings report from
last night. The broadband infrastructure company reported that revenue fell 37%, and it continued to lose money. The company also said that it expected business to be weak in the final quarter as the large telecom providers cut back year-end spending further than they have in the past. If the company posts a loss for the fourth quarter, it will be its sixth losing quarter in a row. It lowered expectations below estimates and predicted a break even to a 10-cents-a-share loss in the quarter.
The company's cash position is just about equal to long-term debt, so the balance sheet is reasonable. Eventually, this company will benefit from broadband buildout, especially in China, where it has a strong presence. For now, business remains slow, and the stock is getting hit hard today -- down 14.6% so far.
5. The Fertilizer Love/Hate Triangle
By Sham Gad
12:47 p.m. EST
It's been nearly a year since the
love saga began.
CF made a bid for Terra, which was followed by Agrium making a bid for CF contingent on CF abandoning its Terra bid. Over that period, Agrium has sweetened it offer for CF a couple of times, the most recent being $45 in cash plus one AGU share, or about $100 a share.
We got a lot of news this week. First, a majority of CF shareholders voiced support for the AGU/CF deal. Then last night at the Terra meeting, TRA voted to elect three CF reps to TRA's board, which certainly helps CF/TRA marriage.
Over the long run, I believe CF is well worth over $100, but I can't help lean toward CF/AGU. CF shareholders would do very well long term in getting a little cash a share of stock, as AGU is an excellent long-term bet. CF shares are down today despite a rise for the other fertilizer plays. And at $82, it's a 20% uspide if AGU prevails. CF has great management, and they are right to say the offer is too low, but with 65% of CF's shareholders thinking otherwise, this saga continues.
This article was written by a staff member of RealMoney.com.