Market Preview: Big Gain Hangover

NEW YORK ( TheStreet) -- The big game is following a big gain for stocks, and sorry Patriot fans, but one outcome bodes better than the other.

According to data from S&P Capital IQ, when New England wins the Super Bowl, the S&P 500 has on average lost 2.1% for the year. Conversely, when the Pats fail in their quest for the Lombardi trophy, the index has risen 5% on average.

The Giants have won the Super Bowl three times, and the average performance in the wake of their wins is a negative 0.5%, but this includes the wreckage wrought by the financial crisis in 2008 when the S&P 500 dropped 37%.

In the other two years that the Giants won, 1987 and 1991, the market was up 5.1% and 30.5%, respectively. When the Giants lost to Baltimore Ravens in 2001, the market finished the year down 11.9%.

This is all small sample-size stuff, of course, and S&P Capital IQ, which makes clear the analysis is intended to be lighthearted and not the basis for any investment decisions, provides plenty of data points that fans from either side can hang their hat on. For example, years when the home team wins -- this year that's the Pats -- the S&P 500 has risen an average of 17%.

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Rooting for the G-Men? When the NFC wins, the market has risen an average of 15% vs. a 7% gain in years when the AFC comes out on top. There are also some positives to be gleaned for neutral observers as the five previous Super Bowl rematches have yielded 19% returns on average. Both teams have also previously won Super Bowls, another good sign, as the S&P 500 has jumped an average of 13% in years when a former champion returns and wins.

Meantime, the Dow Jones Industrial Average was finally able to book its second triple-digit swing of the year on Friday, as the January jobs report came in much better than expected. Or did it?

Research firm TrimTabs took issue with the Bureau of Labor Statistics in the wake of the data, which said nonfarm payrolls swelled by 243,000 and the unemployment rate decreased to 8.3%. TrimTabs concentrates on income tax collection data for its job estimates, and its calculations put total job growth at 83,000 for the December-January period, much lower than the 446,000 reported by the federal government.

Charles Biderman, TrimTabs' CEO, wonders whether the decidedly positive turn in the employment data just as an election year begins isn't politically motivated, calling the numbers from the BLS "suspiciously high."

"Actual jobs outstanding, not seasonally adjusted, are down 2.9 million over the past two months," Biderman says. "It is only after seasonal adjustments -- made at the sole discretion of the Bureau of Labor Statistics economists -- that 2.9 million fewer jobs gets translated into 446,000 new seasonally adjusted jobs."

He continued: "No one I know has any idea how the BLS does its seasonal adjustments. The BLS revises historic data every month for several months until actual payroll data is used to benchmark the BLS data almost a year in arrears. In other words, the BLS currently has accurate data for March 2011 and before."

Either way, be on the lookout for a potential big gain hangover on Monday.

So far this year, the Dow is up 5.3%, its best start to a year since 1997. The S&P 500 is up 6.9% in 2012, its fastest jump out of the gate since 1987 (although that didn't turn out so well). The Nasdaq Composite has surged an incredible 11.5%, pushing the index to heights unseen in more than a decade.

FactSet Research offered up some analysis on Friday of why stocks seem to be getting a pass on a ho-hum earnings season (excluding Apple ( AAPL)), saying that the buy side is slowing getting more optimistic about 2012 as a whole.

"Looking at bottoms-up EPS estimates for the index, analysts are calling for a drop in earnings in Q1 2012 relative to Q4 2011," the firm said in commentary on Friday. "But after Q1 2012, earnings are projected to continue to increase for the remainder of 2012. It is also interesting to note that while the bottoms-up EPS estimates for Q1 2012 through Q3 2012 have recorded declines since December 31, the bottoms-up EPS estimate for Q4 2012 has remained unchanged during this time frame."

FactSet said that 272 S&P 500 companies have reported quarterly results so far, and 65% have come in above the mean estimate. That percentage is a bit skewed, however, because roughly 20% of companies warned ahead of their reports, lowering the bar in many cases. On a valuation basis, FactSet estimates the current 12-month price-to-earnings ratio for the S&P 500 at 12.4, which is below the 10-year average of 14.6.

Switching gears, it's always interesting to look at which stocks don't participate in a broad rally like the one seen on Friday. Research In Motion ( RIMM) was one whose presence was notably absent as the stock dipped nearly 2% following a downgrade by Jefferies.

Another stock showing weakness was Best Buy ( BBY), which lost 1.8% to $23.86 after Bank of America Merrill Lynch cut its price target on the shares to $19, arguing that Apple's ascendance is a problem for the company.

"We view Apple's record-breaking results last week as a very negative indicator for BBY," said the firm, which has an underperform rating on the stock. "Increased sales of Apple products by BBY would be negative for margins. More importantly, with Apple's own retail sales up 61% in the quarter, we believe traffic at BBY stores was hurt, with more people choosing to shop in AAPL stores."

B of A Merrill Lynch also found warning signs in news from RadioShack ( RSH) and Amazon.com ( AMZN), saying Best Buy could be affected by weak Sprint ( S) activations the way RadioShack was and that poor sales of game consoles through Amazon bode poorly as well as the firm estimates as much as 13% of Best Buy's revenue comes from gaming.

Best Buy shares are down 32% in the past year, and if Apple's dominance is a bad thing for the company, more pain likely lies ahead for shareholders.

Check out TheStreet's quote page for Best Buy for year-to-date share performance, analyst ratings, earnings estimates and much more.

Moving on to Monday's scheduled news, Coinstar ( CSTR) is reporting its fiscal fourth-quarter results after the closing bell and the average estimate of analysts polled by Thomson Reuters is for a profit of 64 cents a share in the December-ended period on revenue of $498.1 million.

The stock is up 23% in the past year, but based on Friday's regular-session close at $49.65, it has pulled back 18% since hitting a 52-week high of $60.71 on July 13. The new year's been good to the shares, though, as Coinstar is up 10.4% so far in 2012, moving solidly above both its 50-day and 200-day moving averages of $46.36 and $46.09, respectively.

Benchmark previewed the quarter last week, and the firm thinks Coinstar, which operates the Redbox DVD rental kiosk business, should beat the consensus view, getting some help from the strategic missteps of rival Netflix ( NFLX).

"We believe the upside potential could come from stronger than modeled revenues, benefiting from continued weakness of Netflix share of physical DVD and at Blockbuster as shown by the NPD survey," wrote Benchmark, which is expecting earnings of 67 cents a share from Coinstar on revenue of $501 million.

The firm has a buy rating and a $70 price target on the stock, and it believes DVD rentals at Redbox have remained strong despite Coinstar's decision to raise the price of a one-day rental to $1.20 from $1 to account for costs related to the Durbin amendment. In the future, Benchmark expects Coinstar to be able to lessen impact of the amendment by at least 50%, which could provide upside in 2012 and beyond.

On the other hand, Dougherty & Co., which has a neutral rating on Coinstar with a $55 price target, is below consensus, forecasting earnings of 59 cents a share on revenue of $494 million for the quarter. Expect the firm to be active on the conference call because it's got lots of questions on a "variety" of issues.

"For starters, an update on the search for a new President of Redbox, especially given the recent disclosure that #2 Gregg Kaplan was taking a leave of absence until April?," Dougherty wrote in research issued Friday. "Also, given the expiration of the company's sourcing agreement with Warner Brothers, will the sourcing of discs at retail be a net positive given that the company can now get Warner titles on street date? What is the status of the company's negotiations with processors to lower debit card transaction fees or alternatively change its software to bundle transactions as another method of reducing costs?"

The firm's not done there either, as it also wants to know how Coinstar's digital strategy is shaping up.

"From our vantage point, unless the company is willing to invest capital to procure content we are skeptical that any form of digital partnership, such as the rumored deal with Verizon ( VZ), can create a meaningful return for CSTR shareholders," Dougherty said.

As for first-quarter expectations, Dougherty is modeling earnings of 64 cents a share on revenue of $514.5 million, much lower than the current consensus view for a profit of 86 cents a share on revenue of $514.5 million.

"The DVD release schedule for the March quarter looks to be down about 17% in box office receipts, with March looking like a particularly tough comp, which may limit Q1 guidance," the firm said. "Coinstar remains a cheap stock ... However, we are concerned by the continuing volatility at Redbox, which is likely to cause the company to miss estimates and/or guide below expectations every couple of quarters, as well as the inevitable slowing in demand for physical DVD."

Check out TheStreet's quote page for Coinstar for year-to-date share performance, analyst ratings, earnings estimates and much more.

Earnings season will of course continue to grind on come Monday with Earthlink Networks ( ELNK), Hasbro ( HAS), HCA ( HCA), Humana ( HUM), Lazard ( LAZ), Libbey ( LBY), Mercury General ( MCY), Nielsen Holdings ( NLSN), Sohu.com ( SOHU), Sysco ( SYY), and USG Corp. ( USG) among the early reporters.

The late roster includes Advent Software ( ADVS), Amylin Pharmaceuticals ( AMLN), Anadarko Petroleum ( APC), Bankrate ( RATE), Becton, Dickinson & Co. ( BDI), Cascade Bancorp ( CACB), Coinstar ( CACB), Dun & Bradstreet ( DNB), Leggett & Platt ( LEG), Lincare Holdings ( LNCR), NCR Corp. ( NCR), Pioneer Natural Resources ( PXD), PMC-Sierra ( PMCS), Regal-Beloit ( RBC), Standard Pacific ( SPF), Sunrise Senior Living ( SRZ), UnumProvident ( UNM), Veeco Instruments ( VECO), Wabash National ( WNC), and Yum! Brands ( YUM).

The economic calendar is light with just consumer credit for December due at 3 p.m. ET, so the euphoria from the jobs report will have to continue to carry the load on the data front.

-- Written by Michael Baron in New York.

>To contact the writer of this article, click here: Michael Baron.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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