The past few trading days flew by and Friday was no exception, with headline after headline of breaking business updates, so let’s take a quiet moment and run down the latest news.
“Best Buy” May Be A Misnomer
Shares of Best Buy (NYSE:BBY) retreated nearly 15% after the big box electronics retail gave more time to founder Richard Schulze to consider his bid to buy out the company. Now that Schulze has until February to make his decision, he has time to see how Best Buy fares during the holiday shopping season. Earlier in the week, shares soared 20% as Wall Street had been eager to see a deal get worked out, but even Friday’s consolidation didn’t wipe out all of these gains. If you ask me, I don’t see any value in getting caught up in the frenzy—BBY is an F-rated stock due to its abysmal fundamentals and buying pressure so I’m staying away from it.
General Electric Puts its Cash To Work
General Electric (NYSE:GE) announced that it is hiking its next dividend by 12% to 19 cents per share. The stock will go ex-dividend on December 20, so shareholders of record on Christmas Eve will be paid on January 25, 2013. GE is a dividend heavy weight in the Diversified Machinery industry—with a 3.1% annual dividend yield, it has the third highest dividend out of 336 companies. On top of this, the GE board boosted its ongoing stock buyback program by $10 billion. I currently have GE down at a B-rating, but I would watch this stock’s Fundamental Grade closely if you decide to buy.
Wal-Mart Reveals Its Sweet Tooth
Ever since Hostess Brands Inc. announced plans to liquidate its assets and fire nearly 20,000 workers, widespread fears have surfaced about the fate of the Twinkie and Wonder Bread. But today snack fans rejoiced to hear that two dozen big bidders have already expressed interest in the 82-year-old company’s brands, including Wal-Mart (NYSE:WMT) and Kroger (NYSE:KR). Rumor has it that bidding for these assets could go as high as $1 billion. Both WMT and KR are rated as B-rated buys in my Portfolio Grader tool.
Friday’s Economic Headlines
Consumer Price Index
In November, consumer prices declined by 0.3%. This was a larger drop than the consensus estimate, which called for the CPI to fall 0.2%. As with the PPI report, falling gasoline prices kept the CPI down. Meanwhile, the core measure rose 0.1% on higher housing costs and auto prices.
The rise in core CPI matched economists’ expectations. Since November 2011, consumer prices have risen just 1.8%. This, along with the PPI report, supports the idea that deflationary forces are now weighing on the U.S. economy. The fact that the Fed’s bond buying programs haven’t spurred inflation yet opens the door for continued stimulus measures from the Fed.
The Federal Reserve announced that industrial production rose by 1.1% in November—the most in two years. This was also over double the 0.5% growth in output forecast by economists. In November, output at factories, mines and utilities rebounded in earnest after Superstorm Sandy.
Manufacturing, which accounts for three-quarters of production, also surged 1.1%. It appears that U.S. manufacturing still has some bright spots even in the face of business pessimism associated with the Fiscal Cliff.
I’ll be in touch this week with the latest market headlines as well as an update on the latest third-quarter GDP estimate.