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Be wary of dire market forecasts

The most likely scenario is that the markets will begin to rise from here -- and that bounce is just beginning to take hold.

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After a rough 2010, Precision Castparts has a good future riding on the launch of Boeing's 787 Dreamliner.

By Jim J. Jubak May 17, 2011 6:06PM
Jim JubakOnly one question: Does Precision Castparts (PCP) have enough upside potential to make its shares worth buying? Or holding -- since I own them in my Jubak’s Picks portfolio?

The company’s business has clearly turned the corner after a tough calendar 2010. In 2011, Precision Castparts should profit from the recovery in aerospace, and in particular the launch of Boeing’s 787 Dreamliner.

If this were a typical cyclical stock, I know how I’d go about accounting for that recovery and valuing the shares. But Precision Castparts isn’t your typical cyclical, and that makes putting a target price on the shares quite a bit tougher.

Let me explain why.

With the typical cyclical, revenue and earnings plunge when the economy or the company’s industry goes into a downturn.
 

The recent spate of high-profile security breaches has focused attention on tech stocks such as Symantec, Fortinet and Websense.

By TheStreet Staff May 17, 2011 3:28PM

the streetBy James Rogers, TheStreet

 

The recent data breaches at Sony (SNE), Epsilon and EMC's (EMC) RSA security division provide ample evidence -- if any was needed -- that hackers are on a tear.

 

"For hackers, the RSA breach was akin to attacking Fort Knox," Laura DiDio, principal analyst at ITIC, told TheStreet. "The hackers are now more organized and the attacks themselves are becoming more sophisticated and more pernicious."

 

Corporate America's pain, however, could be a gain for investors, as recent events focus attention squarely on security firms capable of locking down data and networks. Cue Symantec (SYMC), Fortinet (FTNT) and Websense (WBSN), which tout their wares as a way for businesses to avoid embarassing data breaches.

 

Sales crews working overnight shifts. Black curtains in store windows. Early-morning staff meetings. Is Apple cooking up a new product?

By Kim Peterson May 17, 2011 3:21PM
Apple (AAPL) celebrates 10 years of retail Thursday, and rumors are swirling that the company has something big planned for its stores.

The technology site Boy Genius Report says it has heard that about 10 to 15 employees are signed up to work overnight shifts at each Apple store Saturday night. During those shifts, the employees must lock their cellphones away and will have to sign a nondisclosure agreement about their activities.

Apple will put up black curtains in its store windows during that time, the site reports, and install specialized hardware inside the store that night. Employees are getting special training, and all stores will have mandatory meetings Sunday.

Sounds intriguing. What could Apple be planning? 

The home improvement chains both report a surprise drop in first-quarter sales, but one stock is the clear winner.

By TheStreet Staff May 17, 2011 3:04PM

By Jeanine Poggi, TheStreet

 

In a head-to-head battle, Home Depot (HD) continues to reign supreme against Lowe's (LOW), according to analysts.

 

Here's a look at how the first-quarter earnings of the two companies stacked up:

 

Home Depot earned 50 cents a share on revenue of $16.82 billion, beating Wall Street profit estimates of 49 cents a share, but missing analysts' revenue projections of $17.06 billion. Lowe's posted earnings per share of 34 cents on revenue of $12.19 billion, falling short of forecasts of 36 cents on revenue of $12.54 billion.

 

Home Depot reported same-store sales decline of 0.6% versus Lowe's 3.3% decrease.

 

Is there finally enough evidence to go after Goldman Sachs?

By Motley Fool Pick of the Day May 17, 2011 12:45PM

By Matt Koppenheffer

 

In a piece earlier this year titled "Why Isn't Wall Street in Jail?" Rolling Stone fire-breather Matt Taibbi began with a quote from a former Senate investigator:

 

"Everything's [bleeped] up, and nobody goes to jail," he said. "That's your whole story right there. Hell, you don't even have to write the rest of it. Just write that." [Censoring via The Motley Fool.]

 

The teddy-bear regulators
Many Americans resent the profound dearth of Wall Streeters sent to jail after the horrific financial crisis. It seems to be a particularly sore spot for Taibbi, particularly when it comes to Goldman Sachs (GS), the company he infamously tagged the "great vampire squid."

 

As selling pressure intensifies, important technical milestones are lost, clearing the way for additional broad market losses.

By Anthony Mirhaydari May 17, 2011 12:43PM

With Monday's sell-off, the bulls couldn't hold their line of defense, seen most clearly at the Russell 2000's 50-day moving average and the 1,340 level on the S&P 500. The bears are on full attack.

 

A similar downside breakout was seen back in March during the fallout from the Japanese earthquake and meltdown at the Fukushima Daiichi nuclear plant. That decline proved to be short-lived and was followed by a quick and decisive rebound.

 

But things are different this time. We've seen a huge shift out of cyclical sectors into defensives. Sentiment indicators have risen to levels not seen since the end of the last bull market. And we've seen a huge deceleration in the economic growth trend. All suggest this new downturn will last longer than March's speed bump.  Here's why.

 

The lawsuit says that after 3 days of training, the company dismissed an employee who asked to use a step stool.

By Kim Peterson May 17, 2011 12:38PM
You're a Starbucks (SBUX) barista who can't reach all the tools needed to do the job. Should Starbucks allow you a step stool?

That's at the heart of a lawsuit filed against Starbucks on behalf of Elsa Sallard, a dwarf hired to work as a barista in El Paso, Tex.

In the lawsuit, Sallard claims she was only allowed to train for three days before she was fired. She wasn't tall enough to do the job, and she asked to use a stool or a small stepladder. The same day, the lawsuit says, she was fired for posing a potential danger to customers and employees. 

The company relied on overseas business for its first-quarter profit. With video.

By Kim Peterson May 17, 2011 12:05PM
Wal-Mart's (WMT) U.S. sales slump is one of the worst in its history. Nothing the company tries here seems to work.

The retail giant reported a solid first quarter Tuesday, beating analysts' expectations with a 3.8% gain in profit. But the store relied on strong overseas business to overcome a sales drop in the U.S. that has stretched for eight straight quarters.

Meanwhile, other retailers in the U.S., including dollar stores and Target (TGT), are eating away at Wal-Mart's market share here. Wal-Mart executives said American shoppers are running out of money faster than before.

Post continues after this video of one investor discussing Wal-Mart's flaws: 

Commodities appear headed for volatility, so investors should be careful with resource-related funds.

By TheStreet Staff May 17, 2011 11:22AM

By Don Dion, TheStreet

 

At the start of this week, Joy Global (JOYG) stole the headlines with news that the coal mining equipment firm was planning to purchase LeTourneau Technologies from Rowan Companies (RDC) for $1.1 billion.

 

There are a number of ETFs that will be likely affected as more is learned about this deal.

 

The most direct way to gain access to the Joy Global deal is through the Market Vectors Coal ETF (KOL), which is designed to track some of the world's largest and most liquid coal-related companies. Currently, shares of JOYG represent 8% of its portfolio, making it the third largest position.

 

Other major KOL holdings include Bucyrus International (BUCY), Consol Energy (CNX) and Peabody Energy (BTU).

 

The PC giant says weak sales and slow spending will cut profits.

By TheStreet Staff May 17, 2011 11:18AM

By Scott Moritz, TheStreet

 

Hewlett-Packard (HPQ) slashed its outlook for the quarter and the year on soft consumer spending and weak PC demand.

 

Shares of HP were down 5% in pre-market trading Tuesday after the No. 1 computer maker was forced to release its earnings a day early due to a leaked memo from CEO Leo Apotheker that warned his management team of "another tough quarter."

 

The disappointing forecast comes just a week after switching and computer networking rival Cisco (CSCO) cut its outlook for the third straight time on deteriorating sales across several segments of the business.

 

The sector's outperformance has been surprising, but the current market correction brings risk.

By MoneyShow.com May 17, 2011 10:38AM
By Tom Aspray, MoneyShow.com

One of the surprising areas of market strength since the March 2011 lows has been the retail sector. In past years, this has not been a typically strong seasonal period for the group, but the Dow Jones Retailers index is up over 10% in just two months.

Many of the big retailers have reported strong earnings in the past week, including Macy’s Inc. (M), Kohl’s Corp. (KSS), and Dillards, Inc. (DDS), but strong earnings have not boosted all the stocks in this group.

The sharp increase in gas prices has kept many investors away from these stocks, as it was expected to have a serious impact on consumer confidence and limit shopping trips to the mall. Now that crude oil prices have softened, the better-than-expected earnings have been met with some good buying.

Of course, the key question now is whether the current market correction will set up a favorable entry point on the long side, or whether now is the time to get out of these stocks.
 

The billionaire investor made few moves and posted just a small gain in the first quarter.

By TheStreet Staff May 17, 2011 10:33AM

By Frank Byrt, TheStreet

 

Warren Buffett'sBerkshire Hathaway (BRK.B) made only two trades in the first quarter: initiating a small stake in MasterCard (MA) and trimming its big stake in ConocoPhillips (COP).

 

It's the second quarter in a row of little activity for the investment company run by the man dubbed the Oracle of Omaha for the trading prowess that helped him build an estimated net worth of $50 billion over half a century. In the first quarter, former hedge fund manager Todd Combs started working at Berkshire, managing part of the portfolio, as the 80-year-old billionaire selects a succession team.

 

Berkshire Hathaway's 26-stock investment portfolio was valued at $53.6 billion as of March 31, up $1 billion, or 2%, from the end of 2010, according to a Securities and Exchange Commission report that the hedge fund filed late Monday. Buffett isn't required to publish foreign holdings. The benchmark S&P 500 Index ($INX) rose 5.4% in the first quarter.

 

Evercore may be smaller than big investment banks, but it's well-positioned to get a piece of the buyout biz in 2011.

By InvestorPlace May 17, 2011 9:34AM
By Hilary Kramer, InvestorPlace.com

investorplace logoAfter the 2008 financial crisis, merger-and-acquisition activity plunged. But recently, things have perked up. Just look at Microsoft (MSFT) last week, which paid a hefty $8.5 billion for Skype, or the recent plan from AT&T (T) to acquire T-Mobile from Deutsche Telekom for $39 billion. (Microsoft owns and publishes MSN Money.)

No doubt, the deal making has boosted the fortunes of investment banks. But your best bet to cash in on the M&A boom isn’t one of the big players. It's a smaller buyout shop that is doing big business despite its size.

That stock is Evercore Partners (EVR).  

One is a cheap stock that has simply run out of buyers, while the other is undisciplined and lacks a growth catalyst.

By Jim Cramer May 17, 2011 8:55AM

jim cramerthe streetWhen I check out Twitter, it's almost always the same stocks that have people hot and bothered: Apple (AAPL) and Google (GOOG). People just keep wanting to know what I think of them.

 

I'll begin with Apple because we own it for Action Alerts Plus. It's a cheap stock that just happens to be out of buyers. It seems that everyone who wants it already owns it, and the angst factor is causing selling.

 

I think the stock is cheap even if you don't back out the cash, and I also think that if Steve Jobs were healthy, the price would be higher. I just get the sense that so many people have one foot out the door that it can't rally.

 

Abbott is about as balanced as it gets in the pharmaceutical sector, and an increase in sales and profit is likely this year.

By Jim J. Jubak May 16, 2011 5:14PM
Jim JubakYou can certainly find stocks with a higher dividend yield than the 3.4% that Abbott Laboratories (ABT) paid when I added it to my dividend income portfolio on May 6. (It closed that day at $52.52.)

But I think you’ll be hard pressed to find a stock paying that much that has the same potential for very safe and steady growth. (See my recent post for my latest update of that portfolio.)

Abbott is among the most balanced of the big U.S. drug companies. Pharmaceuticals accounted for just 56% of sales
in 2010, with the rest coming from nutritional products (16%), diagnostic products (11%), and a vascular business (9%) that makes stents and catheters.

The drug business itself is diversified across existing and potential blockbusters, such as Humira and Kaletra, potential new drugs from the four new molecular entities in late stage development and the 20 that the company projects will be in Phase 2 or Phase 3 clinical trials by the end of 2011, and recent acquisitions that have expanded the company’s market share in emerging economies such as India. (57% of Abbott Laboratories’ sales now come from overseas.)
 

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[BRIEFING.COM] The stock market ended the holiday-shortened week on a mixed note as the Dow Jones Industrial Average shed 0.1%, while the S&P 500 added 0.1% with seven sectors posting gains.

Equity indices faced an uphill climb from the opening bell after disappointing quarterly results from Google (GOOG 536.10, -20.44) and IBM (IBM 190.04, -6.36) weighed on the early sentiment. Google reported earnings $0.15 below the Capital IQ consensus estimate on revenue of $15.42 ... More


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