U.S. markets gained solid traction today, as traders were content after reading the minutes of the Federal Reserve’s October meeting minutes, and feeling better about the situation in France after an successful raid overnight on an apartment complex where alleged terrorists were staying.
In the Fed minutes, Fed Presidents from Richmond and Atlanta, Jeffrey Lacker and Dennis Lockhart said they believe the Fed should raise rates in December. But Lockhart still left a window open by adding that this is contingent upon no market deterioration in economic conditions.
In economic news, U.S. housing starts were down in October by 11%. Building permits rose 4.1% and single-family permits were 2.4% higher, reaching their highest level since December 2007.
The Dow Jones Industrial Average rose 1.4%, while the S&P 500 tacked on 1.6%, and the Nasdaq was 1.8% higher. Sectors were all higher today, and basic materials was up more than 2%.
As usual, stocks with good earnings, analyst upgrades, or M&A speculation showed the most strength. TASER International, Inc. (NASDAQ:TASR), Norfolk Southern Corp. (NYSE:NSC) and Aramark (NYSE:ARMK) all fit that bill as three of today’s best stocks.
TASER International, Inc. (TASR)
TASR shot up like a bullet today, up 9% after a very favorable piece in Barron’s which quoted analyst Glenn Mattson of Ladenburg Thalmann Financial Services (NYSE:LTS) as saying that TASR can gain 30% from current levels (prior to today’s big gain).
Mattson upgraded Taser from “neutral” to “buy,” as he feels that all of the concerns about Taser’s spending and falling earnings expectations have already been priced into the stock. Mattson has a price target on TASR stock of $24 — still 30% above current levels.
TASR has been quite the unloved stock since peaking in June above $35 per share. Two weeks ago, TASR stock tumbled 12% in a day after missing estimates on EPS that fell 89% from a year ago. The stock continued its decline, reaching a low yesterday of $16.74 before rebounding today.
Norfolk Southern Corp. (NSC)
All aboard! That’s what investors were shouting this morning, after Canadian Pacific Railway Limited (USA) (NYSE:CP) made an offer to merge with Norfok Southern in a deal worth at least $28 billion.
However, NSC is thus far turning its nose up at the offer of $46.72 cash and 0.348 shares, as it represents less than 10% premium of the NSC stock price at the closing bell yesterday afternoon.
So far there has not been a formal deal made, just offers to talk, according to spokesman Martin Cej of Canadian Pacific.
A year ago, CP tried unsuccessfully to strike a deal with CSX Corporation (CSX) to form a transcontinental railroad, but the two companies failed to reach agreement on a host of issues. As recently as June, however, there was speculation that CP might still try again.
NSC finished 6% higher on the day, blasting back over the 200-day moving average, while CP gained more than 5%.
Aramark (ARMK)
ARMK stock took a 10% leap higher today after the food service and uniform provider posted fourth-quarter adjusted earnings of 44 cents per share — 4 cents better than the Zacks Consensus Estimate.
Revenue of $3.55 billion was a bit shy of the street’s view of $3.58 billion. This was largely overlooked by the Street, as ARMK announced it is also raising the company’s dividend by 10% to 9.5 cents per share.
As of this writing, Ethan Roberts does not hold a position in any of the aforementioned securities.
