A triple portion of bad news caused Wall Street some major indigestion today. Brent crude oil fell to a five-year low at $63.05 on predictions of oversupply through 2015 and a Morgan Stanley downgrade. Exacerbating the bad news on oil was a report showing a slower than expected pace of China’s export growth, along with a 6.7% decline in imports, and further shrinking of Japan’s economy during the third quarter.
Traders are looking for an end to the selling in the oil market, but so far no sign of a bottom has emerged. Healthcare was one of very few sectors to finish in the green today, and was only marginally positive. The Dow Jones Industrial Average dropped 0.59%, while the S&P 500 shrank by 0.72% and the Nasdaq lost 0.84%.
However, bucking the bearishness today were Louisiana-Pacific Corporation (LPX), Best Buy Co Inc (BBY), and Cubist Pharmaceuticals Inc (CBST), all up sharply and looking strong throughout the day. Here’s why those three were able to overcome the negative tone today:
Lousiana-Pacific Corporation (LPX)
LPX stock, which declined on Friday following a downgrade by DA Davidson, roared back today amid news of a $667 million dollar deal for Norbord Inc (NBRXF) to acquire Ainsworth Lumber Co. Ltd. (ANSBF). This news sparked analysts’ hopes for further possible mergers in the lumber industry going forward. Ironically, it was LPX that tried to buy Norbord in September, 2013 for $863 million, but was blocked by U.S. and Canadian regulators, who said the deal would give Lousiana-Pacific a 30% share of the total lumber market. LPX stock was up more than 8% today as a result of the Norbord deal.
Best Buy Co Inc (BBY)
BBY stock was higher by almost 3% today, after announcing it will trade ex-dividend on December 9,2014. Today was the last day for investors to purchase BBY stock and be eligible for the cash dividend payment of 19 cents per share, to be paid on December 31, 2014. The current dividend yield sits at 2.00%, but the pay out is 11.76% higher than it was a year ago. BBY stock has struggled in recent years, but this year it’s up almost 66% since February. InvestorPlace contributor Kenneth Fick recently recommended BBY stock.
Cubist Pharmaceuticals Inc (CBST)
CBST was the de facto winner of all stocks today, blasting up over 35% after Merck & Co., Inc.(MRK) said it would purchase the pharmaceutical company for $8.4 billion, including all of Cubist’s debt. The deal has Merck acquiring CBST stock for $102 per share, and Merck announced it was done to strengthen Merck’s “leadership position the hospital acute care market.”
Cubist’s forte is developing treatments that kill drug-resistant superbugs, which have been on the rise due to America’s frequent overuse of antibiotics. The deal should bring Merck more than $1 billion in annual revenue going forward. CBST stock, which closed above $100 today, was below $60 aper share as recently as this past October.
As of this writing, Ethan Roberts did not hold a position in any of the aforementioned securities.
