Why Chesapeake Energy Corporation (CHK), Dicks Sporting Goods Inc (DKS) and G&K Services Inc (GK) Are 3 of Today’s Best Stocks

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Although the dollar and Treasuries declined and oil rose, stocks declined Tuesday as traders digested commentary from Federal Reserve members that stoked speculation an interest rate hike could be imminent.

Why Chesapeake Energy Corporation (CHK), Dicks Sporting Goods Inc (DKS) and G&K Services Inc (GK) Are 3 of Today's Best StocksThe S&P 500 dropped 0.55% while the Dow Jones Industrial Average gave up 0.45%. The Nasdaq Composite declined 0.66%.

On a down day for stocks, Chesapeake Energy Corporation (NYSE:CHK), Dicks Sporting Goods Inc (NYSE:DKS) and G&K Services Inc (NYSE:GK) delivered some impressive gains.

Chesapeake Energy Corporation (CHK)

Shares of natural gas giant Chesapeake Energy climbed 7.5% on heavy volume as oil prices rose for a fourth straight day and amid some positive company-specific news. CHK soared on Monday after the company revealed it secured $1 billion loan to repurchase bank notes due between 2017 and 2038.

Oklahoma-based CHK also renegotiated terms of a pipeline contract, which could help the company save $1.9 billion in the future.

On Tuesday, CapitalOne Securities analyst Phillips Johnston upgraded Chesapeake to “equalweight” from “underweight.”

CHK “seems to be pulling out of its death spiral, the incremental outlook has been improving, and we are hard pressed to identify new potential bear concerns that will drive meaningful underperformance going forward, outside of a deteriorating commodity price environment (which we don’t expect),” according to part of the CapitalOne note posted by Barron’s.

Dicks Sporting Goods Inc (DKS)

Sporting goods retailer Dicks Sporting Goods jumped 7% on more than five times the average daily volume after the company reported better-than-expected second-quarter results. For the second quarter, DKS earned 82 cents a share on sales of $1.97 billion. Analysts expected DKS to earn 68 cents a share on sales of $1.89 billion.

Pennsylvania-based Dicks boosted its full-year guidance to $3.05 per share from $2.90. Second-quarter same-store sales increased 2.8%.

DKS plans to open 36 stores this year.

G&K Services Inc (GK)

G&K Services Inc surged 17.7% on about 30 times the usual turnover after the company revealed it will be acquired by rival Cintas Corporation (NASDAQ:CTAS). Shares of Cintas, which like GK, provides corporate and industrial uniforms and related fare, also rose on the news.

Cintas is paying $97.50 a share in cash for G&K, an almost 19% premium to where the latter’s shares closed on Monday. Including debt, the deal values GK at $2.2 billion.

“The transaction is expected to be accretive to Cintas’ earnings per share in its second full year after closing. Additionally, Cintas anticipates realizing annual synergies in the range of $130 million to $140 million. Synergies are projected to be realized in their entirety in the fourth full year after closing,” according to a statement.

The deal is expected to close in the next four to six months.

At the time of this writing, Todd Shriber did not own any of the aforementioned securities.

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Todd Shriber has been an InvestorPlace contributor since 2014.


Article printed from InvestorPlace Media, https://investorplace.com/2016/08/chesapeake-energy-corporation-chk-dicks-sporting-goods-inc-dks-gk-services-inc-gk-3-todays-best-stocks/.

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