Why stocks are in for a rough ride this week
Stocks in for a rough ride this week

Longtime market bull Jeremy Siegel says investors could realize the market is behind the curve on interest rates.

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By joining forces, the companies could take out Google.

By TheStreet Staff Feb 23, 2011 2:05PM

By Eric Jackson, TheStreet

 

Apple (AAPL) has a $315 billion market capitalization, with $60 billion in cash on its balance sheet. Analysts speculate it will use the money to start paying a dividend, do stock buybacks or make an acquisition.

 

There is one company -- Facebook -- that should be on the top of Apple's shopping list, and Apple should be willing to spend up to $100 billion to get it.

 

Last October, Steve Jobs made an unexpected appearance during the quarterly analysts' call and was asked his intentions for the cash pile.

 

He responded: "We strongly believe that one or more very strategic opportunities may come along that we're in a unique position to take advantage of because of our strong cash position." In other words, it will use the money only for acquisitions.

 

A look at what's ahead now that the uptrend has been shaken by international political turmoil.

By Anthony Mirhaydari Feb 23, 2011 1:35PM

Investors were rudely reminded Tuesday that stocks don't just go up; they can go down, too. And when they do fall, sell-offs tend to be hard and fast. In just days, market corrections wipe out weeks of upward progress.

 

That's exactly what's happening now that concerns over bubbling inflationary pressures, the end of policy stimulus and the Fed's $600 billion QE2 money-printing operation, and political turmoil in Libya and elsewhere have finally broken the back of the post-September uptrend, resulting in the worst one-day losses since last August. The weakness continues today.

 

Everywhere you look, critical support was lost, trend lines were broken, and recent patterns reversed. So what's next?

 

When natural gas prices recover, Range may be ready to run.

By Motley Fool Pick of the Day Feb 23, 2011 1:10PM

While some commodity prices have skyrocketed lately, natural gas has remained relatively flat. But Fool analyst Jordan DiPietro believes that won't last, and has a company that might benefit from a more gaseous economy.

 

Rex Moore, Motley Fool Top Stocks Editor

 

Cash-rich oil conglomerates like ExxonMobil (XOM) and Chevron (CVX) have been forming joint ventures and acquiring smaller gas companies in anticipation of a nascent recovery in natural gas. Even BP (BP), attempting the first in what will most likely be a number of moves in its recovery from the gulf spill last year, has gotten in the game -- it recently announced a $7.2 billion move into difficult natural gas blocks in India.

 

Both ExxonMobil and BP recently released independent reports that confirm the same feeling: Natural gas is going to surge; it's not "if," but "when." While oil demand is expected to rise by 0.6% annually, natural gas is supposed to surge by 2.1% each year for the next 20 years. Want to get in on the rally? I've got one company worth your while.

 

Gold's cheaper cousin is trading at 30-year highs and is already up 11% this year. But it's still far from its record.

By TheStreet Staff Feb 23, 2011 12:17PM

Image: Silver (© Corbis)By Alix Steel, TheStreet

 

Gold was the hot metal in 2010, but silver has emerged as the early favorite to be this year's precious-metal winner.

 

As gold prices struggle to hit and hold new highs, silver prices are on a tear. The white metal is trading at 30-year highs, and prices are already up 11% this year.

 

The metal settled at a high of $32.86 an ounce Tuesday after hitting an intraday 30-year high of $34.33, but these levels are still a far cry from their $50 record.

 

Silver hit an all-time high of $50 an ounce in 1980 after the famous (or infamous) Hunt brothers bought the metal aggressively for 7 years; at one time they owned more than 200 million ounces of silver.

 

As the supply gets squeezed, these companies stand to benefit.

By TheStreet Staff Feb 23, 2011 11:45AM

Oil pump © Seth Joel/PhotographerBy Gregg Greenberg, TheStreet

 

Unrest in the Middle East is causing volatility in the price of oil, but fund managers say the main engine pushing energy shares higher remains the global economic recovery and a supply squeeze.

 

TheStreet searched for three powerful energy stocks with Stephen Davis, a senior associate portfolio manager for the Alpine Mutual Funds, and Mark Schultz, the fund manager of the MTB Mid-Cap Growth Fund (AMCRX).

 

1. Apache Corp. (APA)

Apache is an oil and gas exploration and production company operating all the way from the U.S. to Australia. The company's international locations help diversify geologic and geographic risk and expose it to larger reserve targets, which fuel production and reserve growth. Apache also has exploration interests in Tierra del Fuego, Chile.

 

Hewlett-Packard is faltering hard, losing market share to Apple and EMC.

By Jim Cramer Feb 23, 2011 9:58AM

jim cramerthestreetThere are lots of takeaways from Hewlett-Packard's (HPQ)earnings report -- besides what a loser company it seems to have become.

 

Here are the three biggest:

 

1. The enterprise is still strong, which means that EMC (EMC) is seeing great strength, although it will most certainly be knocked down by the "sweeping generalization" types. This is cloud/virtualization; the group got hit Tuesday and most likely will be today -- a good place to buy.

 

2. The personal computer is weak. We don't know whether that's because of the Apple (AAPL) competition and the iPad freezing the market, but it seems like a decent bet. The decline is too big to explain it away by saying weak consumer demand, especially given how strong both smart-phone and iPad sales are. This is looking more and more like Apple has a completely destructive technology.

 

3. The low-end router biz of HPQ is eating Cisco's (CSCO) lunch but isn't doing so well for HPQ's margins. Hewlett is making too many low-end deals on routers that are taking away core Cisco business.

 

TRW Automotive Holdings had such a great quarter that analysts' earnings growth estimates for 2011 now seem too low.

By Jim J. Jubak Feb 22, 2011 7:38PM
Jim JubakI’ll take it -- the fourth-quarter earnings report, that is.

And I’m going to add TRW Automotive Holdings (TRW) to Jubak’s Picks when the market opens Wednesday. The stock fell by 3.2% Tuesday to $57.65.

In the fourth quarter, TRW Automotive saw a 32% increase in earnings per share from the fourth quarter of 2009, the company reported Feb. 16. Excluding one-time items, earnings grew by 46%. Either way, earnings of $1.56 or $1.72 a share easily beat the consensus Wall Street estimate of $1.24.

Sales in the quarter climbed by 9.7% to $3.71 billion. The company reduced its net debt by $815 million to $768 million. (Net debt is debt -- $1.846 billion at the end of 2010 -- minus cash and cash equivalents -- $1.078 billion.)
 

United and Delta lead the decline as violence in Libya sends oil prices up.

By TheStreet Staff Feb 22, 2011 3:17PM

thestreetImage: Airline (© Christie & Cole/Corbis)By Ted Reed, TheStreet

 

Airline shares were falling Tuesday as oil prices surged on unrest in Libya.

 

By midafternoon, airline shares were all trading down, led by United (UAL), which was down about 8.5% to $24.63, and Delta (DAL), trading at $10.76, down 74 cents or about 6.5%. The Amex Airline Index was down 4.3%. Unhedged US Airways (LLC) was trading at $9.24, down 48 cents or about 5%. 

 

Airlines have been seeking to raise fares, but it can be challenging to keep up when fuel price increases occur suddenly. During the past year, jet fuel prices have risen about 50% to around $2.80 per gallon.

 

In a report issued late Tuesday, Soleil Securities analyst James Higgins wrote about media reports that Delta could acquire Virgin Atlantic in order to enhance its access to London's Heathrow Airport. "Our rating on DAL remains buy, although it is difficult for us to see how any airline stock can move higher in the uncertain near-term environment for fuel prices the social unrest in the Middle East is creating," Higgins said.

 

The retailer just posted its seventh straight decline in US same-store sales, and its stock is falling.

By TheStreet Staff Feb 22, 2011 3:00PM

Image: Retail sales (© Image Source/Corbis/Corbis)By Jeanine Poggi, TheStreet

 

Wal-Mart's (WMT) U.S. sales fell for the seventh consecutive quarter, leaving Wall Street wondering just when the company's sales will finally rebound.

 

The stock is taking a hit as a result, with shares falling 3.9% to $53.24 in afternoon trading.

 

During the fourth quarter, the discount giant posted a 27% jump in earnings to $6.06 million, or $1.70 a share, as cost cutting and overseas momentum offset weak domestic sales. Excluding one-time items, Wal-Mart actually earned $1.34 a share, better than the $1.31 a share Wall Street predicted.


But Wal-Mart's total revenue grew only 2.4% to $116.3 billion, short of analysts' estimates of $117.52 billion. Overall, same-store sales fell 1.1%. Namesake discount stores reported a 1.8% decline in comparable sales, significantly worse that the 0.8% drop analysts predicted.

 

The book retailer struggles even after rival Borders falls into bankruptcy, suspending its cash dividend.

By Kim Peterson Feb 22, 2011 2:42PM
Credit: ((C) Gene J. Puskar/AP)

Caption: Barnes and Noble storeYou might think the implosion of Borders bookstores would be great for rival Barnes & Noble (BKS). But no, Barnes & Noble is struggling as well and said today it will suspend dividends to shareholders.

Previously, the annual dividend was $1 a share. Barnes & Noble also said it will stop giving forecasts for the rest of the fiscal year. The stock plunged 15% on the news and at midday was down more than 12% to $16.30.

The company's cash situation is precarious. Barnes & Noble lost $14.5 million in the nine months through January, Bloomberg reported, and will get about $60 million a year from the suspended dividend. "There's still an uphill battle from the physical side of the business," a Morningstar analyst told Bloomberg.

The problem for Barnes & Noble, of course, is that there isn't just the physical side of the business. The company has been trying to wage war against Amazon.com (AMZN) and its popular Kindle reader, and that takes money and resources. 

If you focus on recent same-store sales numbers, you may be missing the point.

By Motley Fool Pick of the Day Feb 22, 2011 2:07PM

Same-store sales are battering the wind beneath Buffalo Wild Wings. But are the critics full of hot air? Fool contributor Nick Nejad offers up a history lesson.

 

Rex Moore, Motley Fool Top Stocks Editor

 

Buffalo Wild Wings (BWLD) reported earnings results last week to conclude its 2010. Sales for the year grew 13.1% on the back of a 12.3% increase in store count, operating margin improved by a full percent, and earnings for the year ended up 25%. Yet the company's same-store sales results have been a major overhang on the share price.

 

For the year, Buffalo Wild Wings saw an increase of only 0.6% in company restaurants open for more than a year. Rival Chipotle Mexican Grill (CMG) saw a 9.4% jump in its comps. Improvements such as that have led Chipotle's stock to gain 156% over the last year, compared to Buffalo Wild's 33% gain.

 

A Foolish opportunity?
Pessimists argue that Buffalo Wild Wings may be reaching a plateau. It's bad enough to imagine that same-store sales growth may no longer continue, or worse yet, that the company's expansion opportunities have begun to dwindle.

 

Calm down about the delay rumors. A less-than-credible Taiwanese brokerage suggests production problems, and Apple shares fall.

By Kim Peterson Feb 22, 2011 1:50PM
Credit: (© Justin Sullivan/Getty Images)

Caption: Apple iPadToday's iPad 2 drama is beyond ridiculous. Analysts are arguing over the launch date of the next version of the iPad, and shares of Apple (AAPL) are falling as investors worry that the device will be delayed.

But here's the thing: Apple hasn't announced any launch date for the iPad 2. Heck, Apple hasn't even announced an iPad 2 yet. The media and analysts have created an imaginary launch date, and now people are freaking out because that date may be missed. Give it a rest already.

Apple shares dropped nearly 3% Tuesday after two analysts in Taiwan said the iPad 2 may be delayed till June from April because of production bottlenecks at Hon Hai Precision Industry, one of Apple's manufacturing partners in Taipei. The analysts said the delay came after Apple made design changes before the Lunar New Year, Bloomberg reported. The analysts, Vincent Chen and Alison Chen, work for Yuanta Securities. 

A sharp rise in cotton prices has been a boon for a fund that tracks them, but it remains a wildly volatile investment.

By TheStreet Staff Feb 22, 2011 12:19PM

Image: Investing (© Don Carstens/Jupiterimages)By Don Dion, TheStreet

 

Here are five exchange-traded funds to keep your eyes on this week.

 

1. iPath Dow Jones UBS Cotton Total Return Subindex ETN (BAL)

 

Cotton has been a standout in the recent commodities rally, and last week it surpassed $2 a pound for the first time.

 

The relentless multi-month ascension has been a boon for the iPath Dow Jones UBS Cotton Total Return Subindex ETN, which, prior to Friday's sell-off, was trading in previously unexplored territory.

 

BAL's performance has been breathtaking, but I urge conservative investors to look elsewhere for agriculture exposure. As we saw with Friday's heavy dip, BAL remains a wildly volatile product. If cotton prices follow up Friday's tumble with additional losses, investors holding BAL will be in for a rocky ride.

 

The violence in Libya is weighing down stocks, but it will not ultimately harm the earnings of many companies.

By Jim Cramer Feb 22, 2011 10:04AM

jim cramerthestreetI never like these weird days off, when we are gone and they aren't. But I particularly don't like them now, when the books are all one and the same -- so, basically, we have to get Monday's hammering plus Tuesday's hammering.

 

There are two ways to approach this kind of baked-in sell-off. You can decide that it is just the beginning of a larger downward slide, or you can make a bet that things will get better and pick your opportunities.

 

My instinct during this period is to err on the side that it is baked in and that selling now would mean locking in losses from Middle East unrest that, most likely, will not harm the numbers of most of the companies I want to buy. It will hurt the consumers of oil, but I don't want those anyway.

 

So I take the "beginning of the end" off the table.

 

The No. 2 pizza chain hopes some new items will help it take a bite out of Pizza Hut's market share.

By Kim Peterson Feb 21, 2011 2:01PM
Credit: (© Douglas C. Pizac/AP)
Caption: Domino's franchiseDomino's (DPZ) continues its ongoing menu overhaul this week, adding boneless chicken and revamped chicken wings in hopes of increasing the size of customer orders.

The company's focus is still pizza, of course. But now customers can get boneless chicken with any of these dipping sauces: hot, BBQ, ranch, blue cheese and sweet mango habanero. Chicken wings are also available in hot, sweet mango habanero and BBQ flavors.

The offerings come as Domino's cruises to a 52-week high. The stock zoomed as high as $17.61 last week but dropped to $17.14 Friday (markets are closed Monday). The stock has soared 31% in the past six months.

What makes Domino's so hot? Net income growth has been sluggish, writes TheStreet, but the company makes up for that with revenue growth, reasonable debt levels, good cash flow and a largely solid financial position. 

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