CarMax Shares Soar on Profitable Quarter

Shares of CarMax ( KMX) were up nearly 10% in early trading, after the used-car retailer reported fourth-quarter profit rose 72% to $37.5 million, or 17 cents per share, for the three months ended Feb. 28, compared with $21.8 million, or 10 cents per share a year ago.

The profit part of the report was good, but revenue did fall 28% to $1.47 billion from $2.04 billion a year ago, as same-store sales tumbled 26% during the quarter. The company said used-vehicle sales dropped 26.8%, while new-vehicle sales fell 41.6%.

Looking ahead, management decided to pull back from offering any guidance, blaming unprecedented declines in traffic and sales and volatility in the credit market.

Shares of KMX are more than 50% off all-time highs of $28, hit in January 2007. The stock has technical support in the $7-$9 price area. If the shares can stabilize, we see overhead resistance in the $16.50-$18 price area. We do not currently rate this non-dividend paying stock, but we do follow the company closely.

Pfizer Stops Breast Cancer Trial for Sutent Drug

Pfizer ( PFE) shares were down slightly in early trading after the pharmaceutical company halted a late-stage study of the cancer drug Sutent, which treats a form of advanced breast cancer.

The drug has been approved to treat advanced forms of gastrointestinal and kidney cancers, and was the company's bestselling cancer drug, with $847 million in sales in 2008.

The company will continue Sutent trials for advanced breast cancer treatment in three late-stage and two mid-stage trials.

We had removed the shares of PFE from our "Recommended" list on Nov.12, when the stock was trading at $16.77. The company has a dividend yield of 4.57%, based on last night's closing stock price of $13.99. The stock has technical support in the $7-$11 price range. If the shares can firm up, we see overhead resistance in the $15-16 price area. We would remain on the sidelines for now.

Dow Chemical Shares Rise After Company Announces Sale of Morton Salt

Shares of Dow Chemical ( DOW) were up nearly 6% in early trading after the company announced that Rohm & Haas ( ROH), a wholly owned subsidiary of Dow Chemical ( DOW), has entered into a definitive agreement to sell the stock of Morton International, the salt business of Rohm & Haas, to K+S Aktiengesellschaft.

The transaction values Morton International at $1.675 billion. Management said the sale puts it ahead of schedule on its deleveraging plan post the close of the Rohm & Haas acquisition.

Dow will have quite a task to shed the nearly $20 billion in debt it will have following the completion of the transactions announced in the last 48 hours. We removed shares of Dow from our "Recommended" list on Sept.29, when the stock was trading at $33.97. The company has a 6.81% dividend yield, based on last night's closing stock price of $8.81. The stock recently broke to new all-time technical lows. If the stock can firm up, we see the $11-$15 level as the next levels of overhead resistance.

Costco Getting Out of Home Store Business

Shares of Costco ( COST) were up slightly in early trading after the warehouse club retailer announced plans to close on July 3 its two Costco Home stores, located in Kirkland, Wash., and Tempe, Ariz.

Management said the current economic slowdown and resulting weakness in the home furnishings business in particular led it to conclude that the single-format Costco Home concept did not fit into its long-term expansion plans.

The company recently announced a second-quarter profit of $239.7 million, or 55 cents per share, compared with $327.9 million, or 74 cents per share, in the year-ago period.

We had removed shares of COST from our "Recommended" list on Sept.22, when the stock traded at $66.09. The company has a dividend yield of 1.38% based on last night's closing stock price of $46.35. The stock has key support in the $43-$44 price area. There is the potential for the stock to gap down to the low $30s if those levels fail to hold again. If the shares can turn around, we see overhead resistance around the $51-$55 price levels. We would remain on the sidelines.

Be sure to visit our complete recommended list of the Best Dividend Stocks as well as a detailed explanation of our ratings system.

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At the time of publication, the author had no positions in stocks mentioned, although positions may change at any time.

Tom Reese and Paul Rubillo are senior editors of Dividend.com. Visit Dividend.com for more dividend stock ratings, picks, news, and analysis for long-term and income-seeking investors.

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