Morgan Stanley analysts upgraded Time Warner Inc (TWX
The analysts upgraded TWX from “Equal-Weight” to “Overweight” and see shares reaching $72. This price target suggests a 14% upside to the stock’s Wednesday closing price of $63.34.
Time Warner shares were up 66 cents, or 1.03%, during morning trading on Thursday. The stock is up 34.06% year-to-date.
Joy Global (NYSE: JOY ) has seen its share price tank by approximately 15% this year. Even though the company's third-quarter results beat consensus estimates on earnings, investors continue to remain negative on its prospects. The reason behind this negativity is the decline in earnings, revenue, and order backlog that the company has witnessed.
Joy Global is a manufacturer and supplier of equipment for open cast and underground mining activities. It manufactures belt conveyors, drills, shuttle cars, flexible conveyor trains, long-wall shearers, crushers, and similar equipment. It also manufactures spare parts for its equipment for aftermarket sales.
One of the major problems that Joy faces in its end markets is oversupply. Last year, global consumption of coal grew 2% to 7.84 billion tons while production grew 3% to 7.88 billion tons, resulting in a surplus that led to a decline in price. Due to the lower prices, mines started putting off capital expenditures, and that hurt Joy.
Coal consumption growth in China is estimated to have slowed down to 4% year on year in 2012, down from 10% in 2011. An economic slowdown in the country has affected demand, and this has been one of headwinds for Joy because it has substantial exposure to China. Caterpillar (NYSE: CAT ) , one Joy's competitors, is also facing trouble in China of late.
Caterpillar had to cut its full-year forecast in July on the back of weak mining equipment demand. However, Caterpillar did manage to find a silver lining in the results when management stated that sales in China, excluding acquisitions, grew 20% year over year. Management also believes that "China has bottomed" and that given the cyclical nature of the mining industry, it should pick up again in the long run.
The tailwinds
The global mining equipment market is expected to reach $117 billion by 2018 at a CAGR of 8.5% from 2012 to 2018. Surface mining equipment holds the largest share of this market at nearly 37%, followed by underground mining equipment. The Asia-Pacific region is projected to be the fastest-growing area in the coming years, fueled by increasing mining production and related machinery sales in India, China, and Indonesia.
Coal's share of the global energy mix continues to rise. By 2017, coal will come close to surpassing oil as the world's top energy source according to the International Energy Agency. In fact, the world will burn around 1.2 billion more tonnes of coal per year by 2017 compared to today, equivalent to the current coal consumption of Russia and the U.S. combined. China and India will lead the growth in coal consumption over the next five years.
source: EIA
In addition, domestic consumption of coal in the U.S. is also expected to rise due to an increase in natural gas prices. The reduction of the U.S. stockpile to the five-year average is encouraging as we can expect to see an increase in coal mining activity. Coal production is expected to grow further in 2014, by an estimated 3%, as inventories stabilize and coal consumption increases.
Ninety percent of coal in the U.S. is used to produce electricity. The entire coal sector enjoyed an upgrade by Moody's, which believes that electricity demand could rise and pull prices higher. This has been a driver behind Arch Coal (NYSE: ACI ) and Alpha Natural Resources as well. The increase in domestic mining activity augurs well for Joy and other mining equipment suppliers; once the activity in the mining industry picks up, one can expect an increase in capital expenditure.
As an example, Arch Coal recently reduced its capital expenditure forecast by $20 million for fiscal 2013. The company's capex forecast for 2013 is now between $280 million and $310 million after the reduction. However, Arch Coal management believes that the current weakness in the coal market isn't sustainable.
Arch Coal stated that global crude steel production is expected to increase 35% between 2012 and 2020. The expansion of steel capacity will lead to higher demand for metallurgical coal since steel production from iron ore needs coke, which is made from metallurgical-grade coking coal. Thus, an increase in metallurgical coal demand will also lead to more coal mining, which bodes well for the likes of Joy Global.
Is a recovery in sight?
In the open-cast mining sector involving iron ore, there are conflicting analysts' opinions regarding growth projections. Oversupply is the main reason behind the decline of ore prices. Australia, the largest iron ore exporter, forecasts exports to rise 14% in the ongoing fiscal year. Weakness in pricing is in the cards next year due to slower than expected economic growth in China, however.
The economic recovery in major commodity markets will take time. As a result, growth in commodity demand will be slow. The cut in capital expenditure by the mining industry in general is another indicator that the recovery will be slow.
Signs of a slow recovery are very much visible in the guidance of Joy Global as well. The results display strong operational efficiencies and weak market conditions, but the company likely won't see light at the end of tunnel until late 2014.
Conclusion
It's not game over for Joy. The company has a good track record of revenue growth and has a low debt-to-equity ratio. It still has the aftermarket segment which can generate more business as the need for replacement parts will go up due to aging equipment. It has also announced a share repurchase to the tune of $1 billion over the next three years.
If the recovery in the mining industry -- driven by higher steel production and an uptick in China -- indeed happens as expected, then Joy Global should witness better times. And under eight times its earnings, the stock is dirt cheap when compared to others, such as Caterpillar (which trades at 14 times earnings.) That's why value investors should definitely take a look at Joy Global.
Skeptical About Future Growth?
Many global regions are still stuck in neutral, and their resurgence could result in windfall profits for select companies. A recent Motley Fool report, "3 Strong Buys for a Global Economic Recovery," outlines three companies that could take off when the global economy gains steam. Click here to read the full report!
As interest rates rise and investors withdraw billions from bond funds, Goldman Sachs Asset Management is asking them to take a closer look at fund managers’ performance and asset allocations before heading for the exits.
Investors with portfolios of laddered individual bonds face the same duration risk as those with bond funds, and the only difference is that investors in bond funds can check the NAV daily whereas those in laddered portfolios only see their returns posted periodically on statements, said Jonathan Beinner, co-head of GSAM Global Fixed Income and Liquidity Management, at a press briefing in New York on Thursday.
“A lot of investors are exposed to interest rate risk and are just not aware of it,” said Beinner, who also serves as co-portfolio manager for Goldman Sachs Strategic Income Fund (Class A: GSZAX). “The duration is there whether you choose to acknowledge it or not. In the same way that a bond fund doesn’t mature, a laddered bond portfolio doesn’t mature.”
Goldcorp Inc. engages in the acquisition, exploration, development, and operation of precious metal properties in Canada, the United States, Mexico, and Central and South America. It produces and sells gold, silver, copper, lead, and zinc. The company was founded in 1954 and is headquartered in Vancouver, Canada.
Advisors' Opinion:The Market Vectors Gold Miners ETF (GDX) has gained 2.6% to $29.85 today at 10:35 a.m., while Barrick Gold (ABX) has climbed 3.2% to $20.30, Goldcorp (GG) has gained 3% to $30.80 and Newmont Mining (NEM) has risen 1.9% to $32.71. The SPDR Gold Shares ETF (GLD) has ticked up 0.2% today.
Golden Star Resources Ltd., a gold mining and exploration company, through its subsidiaries, engages in the acquisition, exploration, development, and production of gold properties. It owns and operates the Bogoso/Prestea gold mining and processing operation that covers approximately 40 kilometers of strike along the southwest-trending Ashanti gold district in western Ghana; and the Wassa open-pit gold mine located to the east of Bogoso/Prestea in southwest Ghana. The company also has an 81% interest in the Prestea underground gold mine located in Ghana. In addition, it holds interests in various gold exploration projects in Ghana, Sierra Leone, Burkina Faso, Niger, and Cote d?Ivoire, as well as holds and manages exploration properties in Brazil in South America. The company was founded in 1984 and is based in Littleton, Colorado.
IAMGOLD Corporation, together with its subsidiaries, engages in the exploration, development, and production of mineral resource properties worldwide. It primarily explores for gold, silver, zinc, copper, niobium, diamonds, and other metals. The company holds interests in eight operating gold mines, a niobium producer, a diamond royalty, and exploration and development projects located in Africa and the Americas. Its advanced exploration and development projects include the Westwood project in Canada; and the Quimsacocha project, which consists of 3 mining concessions covering an aggregate area of approximately 8,030 hectares in Ecuador. The company was formerly known as IAMGOLD International African Mining Gold Corporation and changed its name to IAMGOLD Corporation in June 1997. IAMGOLD Corporation was founded in 1990 and is based in Toronto, Canada.
Advisors' Opinion:IAMGOLD (IAG) is one of my favorite gold stocks principally because it is a relatively high cost producer with long lived mines. That paradox arises since high cost producers have the most volatility when gold prices change. If they are operating close to break even, a relatively small rise in gold prices makes them quite profitable. Conversely, when prices fall they bleed all over the floor.
CME Group Inc. operates the CME, CBOT, NYMEX, and COMEX regulatory exchanges worldwide. The company provides a range of products available across various asset classes, including futures and options on interest rates, equity indexes, energy, agricultural commodities, metals, foreign exchange, weather, and real estate. It offers various products that provide a means of hedging, speculation, and asset allocation relating to the risks associated with interest rate sensitive instruments, equity ownership, changes in the value of foreign currency, credit risk, and changes in the prices of commodities. CME Group owns and operates clearing house, CME Clearing, which provides clearing and settlement services for exchange-traded contracts and counter derivatives transactions; and also engages in real estate operations. Its primary trade execution facilities consist of its CME Globex electronic trading platform and open outcry trading floors, as well as privately negotiated transact ions that are cleared and settled through its clearing house. In addition, the company offers market data services comprising live quotes, delayed quotes, market reports, and historical data services, as well as involves in index services business. CME Group?s customer base includes professional traders, financial institutions, institutional and individual investors, corporations, manufacturers, producers, and governments. It has strategic partnerships with BM&FBOVESPA S.A., Bursa Malaysia Derivatives, Singapore Exchange Limited, Green Exchange, Dubai Mercantile Exchange, Johannesburg Stock Exchange, and Bolsa Mexicana de Valores, S.A.B. de C.V., as well as joint venture agreement with Dow Jones & Company. The company was formerly known as Chicago Mercantile Exchange Holdings Inc. and changed its name to CME Group Inc. in July 2007. CME Group was founded in 1898 and is headquartered in Chicago, Illinois.
Advisors' Opinion:Shares of Nasdaq OMX Group have gained 0.4% to $30.58 today, while CME Group (CME) has fallen 1.1% to $71.89, IntercontinentalExchange (ICE) has dropped 0.2% to $185.16, and NYSE Euronext (NYX) has ticked down 0.1% to $42.66.
CME Group (NASDAQ: CME ) made a market for its own debt, selling $750 million of 5.3% 30-year paper. The money will be used to redeem $750 million of 5.75% paper maturing next February. The refi will save CME a little more than $3 million per year in debt service.
Options traders and commodity junkies should recognize CME Group (CME) as the Chicago Mercantile Exchange, a financial entity that operates a host of futures exchanges as well as providing its own exchange-traded products and derivatives.
Claude Resources Inc. engages in the acquisition, exploration, and development of precious metal properties, as well as production and marketing of minerals in Canada. It primarily explores for gold in northern Saskatchewan and northwestern Ontario. The company holds interests in the Seabee gold mine located at Laonil Lake, northern Saskatchewan; and the Madsen property that consists of 6 contiguous claim blocks totaling approximately 10,000 acres, located in the Red Lake Mining District of northwestern Ontario. It also holds interest in the Amisk Gold project, which covers an area of 13,800 hectares in the province of Saskatchewan. The company was founded in 1980 and is based in Saskatoon, Canada.
Northgate Minerals Corporation, together with its subsidiaries, engages in exploring, developing, processing, and mining gold and copper deposits in Canada and Australia. Its principal producing assets include 100% interests in the Fosterville and Stawell Gold mines in Victoria, Australia; and the Kemess South mine located in north-central British Columbia, Canada. The company was formerly known as Northgate Exploration Limited and changed its name to Northgate Minerals Corporation in May 2004. Northgate Minerals Corporation was founded in 1919 and is headquartered in Toronto, Canada.
New Gold Inc. engages in the acquisition, exploration, extraction, processing, and reclamation of mineral properties. The company primarily explore for gold, silver, and copper deposits. Its operating properties include the Mesquite gold mine in the United States; the Cerro San Pedro gold-silver mine in Mexico; and the Peak gold-copper mine in Australia. The company also has development projects, including the New Afton gold, silver, and copper project in Canada; and a 30% interest in the El Morro copper-gold project in Chile. The company was formerly known as DRC Resources Corporation and changed its name to New Gold Inc. in June 2005. New Gold Inc. was founded in 1980 and is headquartered in Vancouver, Canada.
Advisors' Opinion:Even bad news has failed to dent the rise in gold stocks today. NewGold (NGD), for instance, has gained 1.8% to $7.49 despite the fact that the wall of one of its mines collapsed. The Wall Street Journal has the details:
One group of stocks not feeling the optimism today: Gold miners. With fewer concerns that a U.S. attack on Syria will be disruptive and more evidence that tapering will begin this month, the price of the precious metal has dropped 1.6% to $1,388.90 an ounce–and gold stocks are falling with it. New Gold (NGD), for one, has dropped 3% to $6.55, while Barrick Gold (ABX) has fallen 1.3% to $19.25.
Bridges favorite stocks include Goldcorp, Newmont, Eldorado Gold (EGO) and New Gold (NGD).
Note, however, that these recommendations are all qualified in one way or another. Investors should keep that in mind before going all in on the gold miners.
Agnico-Eagle Mines Limited, through its subsidiaries, engages in the exploration, development, and production of mineral properties in Canada, Finland, and Mexico. The company primarily explores for gold, as well as silver, copper, zinc, and lead. Its flagship property includes the LaRonde mine located in the southern portion of the Abitibi volcanic belt, Canada. The company was founded in 1953 and is based in Toronto, Canada.
Advisors' Opinion:In august, the Association of Equipment Manufacturers (AEM) published the mid-year review for the agricultural sector. Their findings point to a slowdown for the industry, highlighting a 9.5% decline on exports through the first half of 2013. Also, late soybean planting in the USA is expected to compound the industry�� slowdown. So, what are the prospects for AGCO (AGCO), CNH Global (CNH), and Deere & Co. (DE) under such conditions?
BALTIMORE (Stockpickr) -- The tail end of earnings season is in full swing this week, as another set of firms gear up to report their numbers to investors. When it comes to the opportunity for big stock moves, there's nothing quite like earnings season.
Earnings are a big deal; they're one of just four fundamental updates that investors get access to each year. So it's not surprising that earnings calls can inject some serious volatility into the broad market.
That's exactly what we're seeing this month: strong overall earnings numbers are sent the S&P 500 breaking out to new all-time highs above 1,700 last week, an important move from a technical standpoint. With a new high-water mark in equities, it's worth taking a look at five Rocket Stock names worth trading this week.
Cymer, Inc., together with its subsidiaries, engages in the development, manufacture, and marketing of light sources for the manufacturers of photolithography tools in the semiconductor equipment industry. It offers installed base products in support of chipmaker customers used in their advanced wafer patterning production processes. The company also supplies deep ultraviolet light sources to lithography tool manufacturer customers, who integrate the light source into their wafer steppers and scanners, which they then provide to chipmakers. Its products include 193 nanometers (nm) ArF immersion light sources, 193 nm ArF dry light sources, and 248 nm KrF light sources. In addition, the company invests in the development of extreme ultraviolet sources for chip manufacturing. Further, it develops, integrates, markets, and supports silicon crystallization tools used in the manufacture of various types of displays, including high-resolution low temperature poly-silicon liquid c rystal displays and organic light emitting diode displays; and installed base products for use in photolithography systems used in the manufacture of semiconductors. Additionally, the company offers spare and replacement parts for light sources. Cymer, Inc. markets its products in the United States, Europe, Japan, Taiwan, South Korea, Singapore, and China. The company was founded in 1986 and is headquartered in San Diego, California.
Codere, S.A. engages in the management of gaming machines, bingo halls, horse racing tracks, casinos, and off-track betting facilities in Argentina, Brazil, Colombia, Italy, Mexico, Spain, Panama, and Uruguay. As of December 31, 2008, the company managed 54,818 slot machines and electronic bingo terminals, 137 bingo halls with 30,803 seats, 106 off-track betting facilities, 3 horse racing tracks, and 6 casinos. It also operated 15,963 AWP machines in approximately 10,886 bars and restaurants in Spain. Codere, S.A. was founded in 1980 and is headquartered in Alcobendas, Spain.
Advisors' Opinion:The brokerage view CODE as the market leader in the embedded NOR flash memory solutions segment. Spansion has a diversified customer base of over 4,000 global customers, good design win momentum, a focused new management team, a flexible Fab Lite manufacturing strategy and recent strong revenue and earnings growth.
Since emerging from chapter 11 in May 2010, the company has executed well with four quarters of embedded flash revenue growth, regained market share of 2-3 points every quarter, achieved strong design win momentum, and generated strong cash flow from operations.
Gilead Sciences, Inc., a biopharmaceutical company, engages in the discovery, development, and commercialization of therapeutics for the treatment of life threatening diseases worldwide. Its products include Atripla, Truvada, Viread, Emtriva for the treatment of human immunodeficiency virus infection in adults; Hepsera, an oral formulation for the treatment of chronic hepatitis B; AmBisome, a amphotericin B liposome injection to treat invasive fungal infections; Letairis, an endothelin receptor antagonist for the treatment of pulmonary arterial hypertension; Ranexa for the treatment of chronic angina; Vistide, an antiviral medication for the treatment of cytomegalovirus retinitis in patients with AIDS; and Cayston, an inhaled antibiotic used as a treatment to enhance respiratory systems. The company?s products also comprise Tamiflu, an oral antiviral for the treatment and prevention of influenza A and B; Macugen, an intravitreal injection for the treatment of neovascular a ge-related macular degeneration; and Lexiscan/Rapiscan, an injection used as a pharmacologic stress agent in radionuclide myocardial perfusion imaging. Its products under the Phase III clinical trials consist of Cobicistat, a pharmacoenhancer that is under evaluation as a boosting agent for HIV medicines; Elvitegravir, an oral integrase inhibitor being evaluated as part of combination therapy for HIV; Integrase Single-Tablet, a ?Quad? regimen of elvitegravir, cobicistat, tenofovir disoproxil fumarate, and emtricitabine for the treatment of HIV/AIDS in treatment-naive patients; and Aztreonam for inhalation solution for the treatment of cystic fibrosis patients with Pseudomonas aeruginosa. The company?s Phase II clinical trials products comprise Cicletanine, Ranolazine, and Aztreonam, as well as GS 9190, GS 9256, and GS 9451. Its Phase I clinical trial products include GS 7340, GS 5885, GS 6620, GS 9620, and GS 6624. The company was founded in 1987 and is headquartered in Fost er City, California.
Advisors' Opinion:Gilead Sciences, Inc. (Nasdaq:GILD) reported that the Antiviral Drugs Advisory Committee of the U.S. Food and Drug Administration (FDA) has voted to support approval of once-daily oral Truvada庐 (emtricitabine and tenofovir disoproxil fumarate) to reduce the risk of HIV-1 infection among uninfected adults, an HIV prevention strategy called pre-exposure prophylaxis or PrEP.
Gilead Sciences is one of the top picks for some investors. While it may not be one of the best green stocks to invest in, the ROE and profit margin make it one to buy.
Trimble Navigation Limited provides positioning, wireless, and software technology solutions. The company?s Engineering and Construction segment offers site positioning systems, construction asset management services, software, and wireless and Internet-based site communications infrastructure solutions that improve productivity, accuracy, safety, and environmental impact in the entire construction process; and productivity solutions for the building construction sectors, as well as designs and markets handheld data collectors, productivity survey and mapping equipment, and data collection software for field use. Its Field Solutions segment provides guidance and positioning systems, automated application systems, and information management solutions to improve crop performance, profitability, and environmental quality; and handheld data collectors that gather information in the field. The company?s Mobile Solutions segment offers vehicle solutions, such as GPS receivers, business logic, sensor interfaces, and wireless modems; mobile worker solutions to automate service technician work in the field; and scheduling and dispatch solution, an enterprise software program to optimize scheduling and routing of field service technicians. Its Advanced Devices segment supplies global navigation satellite system modules (GNSS), licensing and complementary technologies, and GNSS-integrated sub-system solutions; supplies global positioning system receivers and embedded modules for aircraft navigation and timing applications; provides GPS-enabled cell phones for outdoor recreational activities; precision products that combine GNSS with inertial sensors; and ultra high frequency radio frequency identification reader modules, radio frequency identification readers, and design services. The company markets its products through dealers, distributors, and authorized representatives worldwide. Trimble Navigation Limited was founded in 1978 and is headquartered in Sunnyvale, California.
Cepheid, a molecular diagnostics company, engages in developing, manufacturing, and marketing integrated systems for testing in the clinical market, as well as for application in legacy biothreat, industrial, and partner markets. Its systems enable molecular testing for organisms and genetic-based diseases by automation. The company offers GeneXpert system that integrates sample preparation in addition to DNA amplification and detection; and SmartCycler system, which integrates DNA amplification and detection to allow rapid analysis of a sample. The GeneXpert system is designed for reference laboratories, hospital central laboratories, and satellite testing locations, such as emergency departments and intensive care units within hospitals and doctors? offices. Cepheid also provides GeneXpert Infinity System for high volume testing. The company offers tests for the GeneXpert and the SmartCycler systems in the areas of healthcare associated infections, critical infectious d isease, genetics, women?s health, and oncology. These tests include U.S. Food and Drug Administration (FDA) cleared products, CE marked products, analyte specific reagents, and research use only tests in the clinical market. In the industrial market, it sells its SmartCycler system along with general use polymerase chain reaction reagents and reaction tubes. Cepheid sells its products its direct sales force and through third-party distributors worldwide. It has collaboration agreements with Novartis, Foundation for Innovative New Diagnostics, Life Technologies Corporation, and Northrop Grumman Corporation. The company was founded in 1996 and is headquartered in Sunnyvale, California.
The new Apple Inc. (NASDAQ: AAPL) iPhone or iPhones will be released early next month, according to hundreds of press accounts. The range of price points among the models will be substantial, which could make it hard, for the first time, for consumers to pick a phone and be happy with the choice.
In the past, a new edition of the iPhone usually was priced between $200 and $400, when married with a two-year 4G wireless subscription from AT&T Inc. (NYSE: T), Verizon Communications Inc. (NYSE: VZ) or Sprint Corp. (NYSE: S). Older versions of the phone dropped sharply in price and often fell as low as zero. People who had unusual technical skills and did not want to be tethered to one carrier could get an unlocked iPhone for as much as $849.
Presumably, the new high-end iPhone (probably called the iPhone 5S) will be priced according to the pattern of all new iPhone releases. The new 64 GB iPhone will retail for $399. This smartphone will get a better processor than past models had, a better camera and probably fingerprint-based security. Less potent versions of the iPhone 5S will be priced as low as $199. In the wake of the release of the new iPhone, prices on earlier versions will drop immediately.
However, Apple will release a new “cheap” iPhone next month as well. Based on most accounts, the smartphone will be tacky plastic. Dubbed the “iPhone C,” the product may be aimed at emerging markets and may be underpowered by the standards of recent models. No one much outside of Apple knows if it will be sold in the United States as well. No matter what the target markets are, the price point will have to be low. The threat a cheap phone will cannibalize expensive iPhones is relatively high, but Apple has to take some of the bottom end of the market to keep increasing global unit sales. For the sake of an argument about Apple’s future, the iPhone C will retail for $99.
As usual, carriers will offer the most ancient iPhone versions for free to trap value shoppers into two-year commitments. There will be an unlocked edition of the newest iPhone as well. Perhaps the rumored iPhone 5S gold-covered edition, unlocked, will only be available for more than $1,000.
All that leaves consumers with a choice — a free iPhone, refurbished iPhones, one new model for $99, one for $199, one for $399, one for $849, and perhaps one that is even more expensive because it is made with real gold. All of that from a company that used to release one product at a time, and each time with price points locked down so tight that neither consumers nor carriers could change them.
[ Enlarge Image ]
[ Enlarge Image ]
[ Enlarge Image ]It's another bad day for teen retail. Late last night, clothing retailer Aeropostale (ARO) reported a bigger-than-expected fiscal second-quarter loss, a 15% drop in same-store sales and unveiled disappointing third-quarter financial forecasts. So it's little wonder investors are dropping the stock like last year's fashion.
But there's more to worry about — namely the cash burn.
Aeropostale’s cash balance fell 40% to $100 million as mounting operating losses burned cash. Cowen & Co. analyst John Kernan predicts the company may need to issue debt or draw on a revolving credit facility to fund working capital late in fiscal 2014 unless sales and margin trends improve. But rising interest rates could make it even more difficult for Aeropostale to return to profitability. Kernan writes:
…We are slashing our estimates for ARO following disappointing Q2 and weak Q3 guidance. Without a top-line turnaround & improved sell through ARO may not return to profitability before 2015 & may need to tap some type of credit facility. We are lowering our PT to $9 (from $13) and see mounting risks.
At $8.77, Aeropostale’s share price dropped $2.22 or 20.17% in afternoon market action, having earlier falled to $8.59.
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Ameristar Casinos (NASDAQ: ASCA ) and Pinnacle Entertainment (NYSE: PNK ) fell as much as 11% today after the government brought into question the merger of the two companies.
So what: The U.S. Federal Trade Commission filed a complaint over the merger, saying it would lead to higher prices -- or lower payouts -- to gamblers in Missouri and Louisiana. The FTC thinks that Pinnacle would have incentive to change table game rules, the hold rate, and rake rates post-merger because it has the scale to not fear competition. �
Now what: It's difficult to say how this complaint will play out, but one possibility would be the sale of some casinos to a third party and a continuation of the merger. No matter what happens, I think the combined company faces a lot of challenges, because gaming has deteriorating returns around the country. More and more states are allowing slots and table games, which reduces return for existing casinos, and the trend doesn't seem to be slowing down any time soon.
Interested in more info on Pinnacle Entertainment? Add it to your watchlist by clicking here.
Wynn Resorts, Limited, together with its subsidiaries, engages in the development, ownership, and operation of destination casino resorts. The company owns and operates Wynn Las Vegas casino resort in Las Vegas, which includes approximately 22 food and beverage outlets comprising 5 dining restaurants; 2 nightclubs; 1 spa and salon; 1 Ferrari and Maserati automobile dealership; wedding chapels; an 18-hole golf course; meeting space; and foot retail promenade featuring boutiques. Wynn Las Vegas casino resort also features approximately 147 table games, 1 baccarat salon, private VIP gaming rooms, 1 poker room, 1,842 slot machines, and 1 race and sports book. It also owns and operates an Encore at Wynn Las Vegas resort, a destination casino resort located adjacent to Wynn Las Vegas that features a 2,034 all-suite hotel, as well as a casino with 95 table games, 1 sky casino, 1 baccarat salon, private VIP gaming rooms, and 778 slot machines. In addition, the company operates Wyn n Macau casino resort located in the Macau Special Administrative Region of the People?s Republic of China. Wynn Macau casino resort features approximately 595 hotel rooms and suites, 410 table games, 935 slot machines, 1 poker room, 1 sky casino, 6 restaurants, 1 spa and salon, lounges, meeting facilities, and retail space featuring boutiques. Further, it operates Encore at Wynn Macau resort located adjacent to Wynn Macau. Encore at Wynn Macau resort features approximately 410 luxury suites and 4 villas, as well as casino gaming space, including a sky casino consisting of 60 table games and 80 slot machines, 2 restaurants, 1 luxury spa, and retail space. The company was founded in 2002 and is based in Las Vegas, Nevada.
Advisors' Opinion:One gambling player that's starting to move within range of triggering a near-term breakout trade is Wynn Resorts (WYNN), a developer, owner and operator of destination casino resorts. This stock has been trending hot so far in 2013, with shares up 24%.
If you look at the chart for Wynn Resorts, you'll notice that this stock has been uptrending strong for the last two months, with shares moving higher from its low of $120.96 to its intraday high of $140.82 a share. During that uptrend, shares of WYNN have been consistently making higher lows and higher highs, which is bullish technical price action. Shares of WYNN have been consolidating for the last few weeks, moving between just below $137 to just above $140 a share. A high-volume move above the upper-end of its recent sideways trading chart pattern could trigger a big breakout trade for shares of WYNN.
Traders should now look for long-biased trades in WYNN if it manages to break out above some near-term overhead resistance at $140.82 to its 52-week high at $144.99 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action of 1.30 million shares. If that breakout triggers soon, then WYNN will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $160 to $165 a share, or even $170 a share.
Traders can look to buy WYNN off any weakness to anticipate that breakout and simply use a stop that sits right below its 50-day moving average of $132.51 a share. One can also buy WYNN off strength once it takes out those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.
Wynn Resorts'(WYNN) run up of more than 55% this year has caused Wall Street to question its valuation.
Currently, eight analysts have a buy rating on Wynn, 16 say hold, two rate it underperform rating and one says to sell the stock.
"With little on the growth horizon in the intermediate term, new competition from Cotai coming in 2011 and 2012 ... and the unclear timing of a true recovery in Las Vegas, we see few catalysts not yet priced-in to pull valuation higher than current levels," Bain wrote in a note following its third-quarter earnings report.
During the quarter, Wynn lost $33.5 million, or 27 cents a share, compared with a profit of $34.2 million, or 28 cents, in the year-ago period. The loss was attributed to charges related to servicing its debt. On an adjusted basis, Wynn actually earned 39 cents, matching Wall Street's outlook.
Total Revenue grew to $1 billion from $773.1 million, better than the $990.8 million analysts predicted.
In Macau, Wynn reported a 50% surge in revenue to $671.4 million, while EBITDA was $198 million, up 54.5% from $128.2 million in the third quarter of 2009. Earlier in the year the company opened its $600 million Wynn Encore Macau, which added 414 rooms to the market.
Looking ahead, Wynn expects to break ground on its Cotai development in early 2011. The $2 billion to $3 billion project is slated to open in 2015, and management said it would provide additional details following its fourth-quarter earnings report.
In Las Vegas, CEO Steve Wynn says the Strip is on the road to recovery. "I believe we have seen the bottom in Las Vegas," he said during the company's third-quarter conference call. "I don't know how fast it is going to get better but it isn't going to get any worse."
Las Vegas revenue inched up 3.1% to $334.5 million during the three-month period, and EBITDA grew 9.3% to $76.5 million.
Wynn also issued a cash dividend of $8 a share payable on Dec. 7 to sharehold! ers of record on Nov. 23.
Penn National Gaming, Inc. and its subsidiaries own and manage gaming and pari-mutuel properties in the United States. It operates approximately 27,000 gaming machines; 500 table games; and 2,000 hotel rooms in 23 facilities in 16 jurisdictions, including Colorado, Florida, Illinois, Indiana, Iowa, Louisiana, Maine, Maryland, Mississippi, Missouri, New Jersey, New Mexico, Ohio, Pennsylvania, West Virginia, and Ontario. The company was formerly known as PNRC Corp. and changed its name to Penn National Gaming, Inc. in 1994. Penn National Gaming, Inc. was founded in 1982 and is based in Wyomissing, Pennsylvania.
Advisors' Opinion:Penn National Gaming(PENN) squeaked past its guidance through improved cost controls, and investors praised its efforts.
But expectations were low, and its upbeat outlook shouldn't be viewed as a message that regional markets are recovering. "Going forward, we project soft regional gaming revenue results over the next three to six months, as we do not expect to see a significant increase in consumer spending patterns given the uncertain economic environment," J.P. Morgan analyst Joseph Greff wrote in a note.
Penn National raised its full-year earnings guidance to $1.18 from $1.13 a share, and up its revenue outlook by $26 million to $2.44 billion from $2.41 billion.
During the second quarter, the company earned $9.2 million, or 9 cents a share, compared with $28.5 million, or 27 cents, in the year-ago period. Excluding items, Penn actually earned 29 cents a share, a penny higher than estimates.
Revenue rose 3% to $598.3 million, higher than the $597.1 million Wall Street projected. The upside was driven by both better revenues and margins and was generally broad-based across many properties, especially larger venues in Charlestown, Lawrenceburg and Grantville, Pa.
Penn National rolled out table games in West Virginia and Pennsylvania during the quarter, which should be a growth catalyst moving forward. The company also plans to open a slot facility in Maryland on Sept. 30 and expects its Toldeo, Ohio, location to open in the first-half of 2012. Its Columbus project is slated to open in the second-half of 2012.
The company repurchased 409,000 shares during the quarter. "[This] sends a message to investors on the value of its equity, but perhaps indicating the lack of near-term acquisition opportunities," J.P. Morgan analyst Joseph Greff wrote in a note.
Las Vegas Railway Express Inc. focuses to re-establish a conventional passenger train service between the Las Vegas and Los Angeles metropolitan areas. It plans to establish a ?Vegas-style? passenger train service. The company is based in Las Vegas, Nevada.
Boyd Gaming Corporation, together with its subsidiaries, operates as a multi-jurisdictional gaming company in the United States. As of December 31, 2011, the company owned and operated 1,042,787 square feet of casino space, containing approximately 25,973 slot machines, 655 table games, and 11,418 hotel rooms. It also owned and operated 16 gaming entertainment properties located in Nevada, Illinois, Louisiana, Mississippi, Indiana, and New Jersey. In addition, the company owns and operates a pari-mutuel jai-alai facility located in Dania Beach, Florida, as well as a travel agency in Hawaii. Further, it holds a 50% controlling interest in the limited liability company that operates Borgata Hotel Casino and Spa in Atlantic City, New Jersey. Boyd Gaming Corporation was founded in 1988 and is headquartered in Las Vegas, Nevada.
Advisors' Opinion:Boyd Gaming(BYD) posted a bigger-than-expected drop in its second-quarter earnings, citing weak performance in Las Vegas, the Midwest and the South.
During the quarter, the casino operator earned $3.4 million, or 4 cents a share, a 73% plunge from $12.8 million, or 15 cents, in the year-ago period. Adjusted earnings came in at 5 cents a share, significantly lower than the 10 cents Wall Street predicted for Boyd.
Boyd's revenue fell 6% to $578.4 million, also short of the consensus of $588 million.
"The lingering effects of the recession have left consumers unusually sensitive to shifts in the economy, and they now react more quickly to economic data and other developments, such as fluctuations in the stock market," said CEO Keith Smith, in a statement. "Although conditions remain uncertain, we believe long-term stabilizing trends are still in place, and that year-over-year growth is achievable by the end of 2010."
In the Las Vegas locals market, the rate of decline in earnings before interest, taxes, depreciation and amortization rose to 16.2% from 10.8%, J.P. Morgan analyst Joseph Greff wrote in a note. Boyd previously reported a 9.9% decline for its Borgata property in Atlantic City. Revenue came in at $186.9 million, a 2.4% decrease from the year-ago period.
"We think second-quarter results are less important than the coming operating results in the second-half of 2010, when the Atlantic City market faces increased regional competitive pressures from tables in Pennsylvania and West Virginia and the first Philadelphia casino opens this summer," J.P. Morgan analyst Joseph Greff wrote in a note.
Greff reaffirmed his underweight rating on Boyd, given increasing competition in Atlantic City, a weak recovery in the Las Vegas locals market and stagnant regional gaming trends.
While there is no doubt the Atlantic City gaming market remains one of the most depressed, Borgata continues to dominate the market and gain share. Atlant! ic City saw gaming revenues plunge 11.1% in June to $286.8 million. Boyd co-owns Borgata with MGM Resorts, which is currently in the process of divesting its 50% stake.
