Markets rarely move at random. InvestorPlace’s leading analysts break down macro trends, sector dynamics, and recurring market patterns to help investors understand what is changing, what matters most, and where opportunities may emerge.
By
Jon Markman, Editor, Trader's Advantage and CounterPoint Options
Investing in stocks is never easy, but picking the right investment strategy after a volatile May seems pretty impossible. But never fear -- if investors do their homework, they will see plenty of investment opportunities in June. Let's do a quick five-minute drill on positives and negatives for the U.S. and global economy, courtesy of our friends at ISI Group in New York.
A Russian-traded company named RUSIA Petroleum, which is majority-owned by TNK-BP, has filed for bankruptcy. TNK-BP is a joint venture between a Russian company and BP plc (NYSE: BP). TNK-BP had earlier filed an early repayment notice on RUSIA Petroleum to collect part of the loans issued to finance development of the Kovykta natural gas condensate field. Because RUSIA Petroleum cannot repay the loans, TNK-BP says it is "obligated to file a bankruptcy procedure with the court."
When Wal-Mart Stores Inc. (NYSE: WMT) identify a new location for one of the chain's supercenters, that often generates some degree of local opposition. Some of that, it turns out, is coming from outside agitators including Safeway Inc. (NYSE: SWY) and Supervalu Inc. (NYSE: SVU).
Walmart (WMT) is the biggest name in shopping, and thanks to its broad global reach it boasts the biggest retail footprints among World Cup competitors – with outlets in eight of the 32 countries competing in the contest. And strangely enough, the big-box store is banking on a correlation between sales in those markets and the performance of the corresponding football clubs. Competitors like retailer Target (TGT) and other grocery store chains are taking notice.
By
Jon Markman, Editor, Trader's Advantage and CounterPoint Options
Talk about the fruit of your labors. Consider a company that provides products to eight out of every ten American households. A company with an exceptional supply chain and industry-leading market share in three of its core products. No, it's not Apple. But close, in a strange way. It's Del Monte Foods (DLM), a company that sells premium brand fruits and vegetables as well as pet food and treats under the brands Kibbles 'n Bits and Milk-bone.
It was a rough market in May, with many stocks taking a plunge along with the broader market. The Dow Jones Industrial Average was down about -10% and the S and P 500 index shed about 11% in May. But not all stocks were battered – and as a group, airline stocks stand out as one of the few sectors that did well in May, with regional carriers like Alaska Air Group (ALK) and JetBlue Airways (JBLU) both posting double-digit gains on the month, and with major carriers U.S. Airways (LCC) and Delta Airlines (DAL) doing even better.
In 2008, refineries in northwest Europe enjoyed a $6.72/b refining margin. Within a year, the margins had fallen to $3.26/b, and are now about $3.55/b. At the 2008 peak, crude oil costs were dropping faster than pump prices, and refining was a big money-maker.
McDonald's Corp. (NYSE: MCD) has effectively conducted dozens of so-called movie tie-ins where the store offers a branded item, like a drinking glass, that links the restaurants with a currently popular movie. These promotions are aimed at children, who then drag their hapless parents into the stores for burgers and fries and tchotchkes. That process just came to a grinding halt today, as McDonald's recalled 12 million drinking glasses tied to the latest Shrek movie from Dreamworks (DWA).
Kellogg Co. (K) has had a difficult go of things in the wake of the recession, lagging rival packaged foods companies in the industries as it struggled to connect with consumers. Things may be getting worse as Kellogg is under fire from the Federal Trade Commission for misleading consumers about the health benefits for Rice Krispies and Frosted Mini-Wheats cereals.
By
Jim Woods, Editor-in-Chief, Successful Investing, Intelligence Report, Bullseye Stock Trader
Initial Public Offerings, or IPOs, were once the Holy Grail of prodigious profit potential for investors lucky enough to get in on the ground floor of the hottest new issues. Then the recession hit, and the IPO market dried up faster than a puddle of water in the Mojave Desert. All that has changed, however, as many high-profile new stock IPO plans are set for the next several months. Among the biggest IPO names are retailer Toys R Us, ratings agency Nielsen, options and commodities exchange CBOE, and perhaps the biggest IPO of all time, the Agriculture Bank of China.
Walgreen Co. (WAG), the nation's largest retail drugstore by store count, is ending its 15-year prohibition on alcohol sales and will begin restocking shelves with beer and wine at about 3,100 locations nationwide. Rivals CVS Caremark (CVS) and Rite Aid Corp. (RAD) already sell booze themselves, so the move by Walgreens will put the retail chain on equal footing with its competitors on the alcohol sales front.
Overall, about two-thirds of US retail stocks are showing some profit gains and about one-third are not. Some of the winners in the May same-store sales sweepstakes are Target Corp. (NYSE: TGT), Costco Wholesale Inc. (NYSE: COST), Gap Inc. (NYSE: GPS), Saks Inc. (NYSE: SKS), and Nordstrom Inc. (NYSE: JWN). The losers among retail stocks in May include Abercrombie and Fitch Co. (NYSE: ANF), J.C. Penney Co. Inc.(NYSE: JCP), Rite Aid Corp. (NYSE: RAD), American Eagle Outfitters (NYSE: AEO), and Hot Topic Inc. (NASDAQ: HOTT).
Will the iPhone from Apple Inc. (NYSE: AAPL) come to Verizon Wireless, the joint venture between Verizon Communications Inc. (NYSE: VZ) and Deutsche Telekom AG (NYSE: DT)? That depends who you ask. A spokesman for Verizon Wireless said yesterday that his company had "no plan to carry the Apple iPhone in the immediate future." That may sound definitive, but is in fact pretty vague. The "immediate future" could be this week and "no plan" can turn into a big plan pretty quickly.
If your investment strategy involves buying stocks with a high dividend yield, you may want to look carefully before you buy and bet on the income. Many dividend stocks with high yields have calculated their income payout based on previous dividends that are annualized out. This means that you're buying based on past dividend investment trends, not on the future. A safer bet is to buy stocks raising their dividends and boosting yields like H.J. Heinz (HNZ), Lowe's (LOW) and McKesson (MCK) have of late – among others.
When you think 3D TV, there possibilities are limitless. That game-winning touchdown pass spiraling out of your flat screen, alien invaders flying ships through the screen ... and yes, even naked chicks strutting their stuff in your living room. It is this latter and controversial content that is fueling the 3D business in Japan right now, where a pair of porn stars are leading the charge in developing three-dimensional entertainment that is compatible with Sony (SNE) and Panasonic (PC) televisions.
Ford Motor Co. (F) offered up a pair of interesting investment headlines today: First, Ford sales rose 22% in May over last year's numbers, topping the forecast of +16% to mark. That makes it the third consecutive month where more than 11 million Ford cars and trucks were sold and sixth straight month of sales gains of Ford in excess of +20%. Secondly, Ford is going to kill its Mercury brand.
Berkshire Hathaway (BRK-A, BRK-B) CEO and investment icon Warren Buffett defended rating agencies in testimony in New York today before the Financial Crisis Inquiries Commission. Legislators and regulators critical of rating agencies like Moody's (MCO) and McGraw-Hill (MHP) division Standard and Poor's wanted an explanation as to why mortgage-backed securities could get high grades but still be so toxic. Buffett's response was simple: "They made the wrong call. I was wrong on it too."
