This post is part of my series featuring established companies and the smaller, more aggressive or innovative rivals that may eventually succeed them.
Who would have thought that privately held, 2002 upstart Vizio could upset the LCD TV market and knock giant Sony (NYSE: SNE) off of its perch?
The world of televisions is transforming itself to flat-panel, high-definition and big screens. Vizio was founded in 2002 and is taking major market share from Sony and former second fiddle Samsung. Vizio's promise to its customers is simple -- small is big. The company has only 85 employees, mostly in sales and marketing, and outsources the manufacturing to other suppliers. The key to the Vizio story is getting the product through as many retail doors as possible.
The company has signed up a couple of big wigs in the retail sales channel: Wal-Mart (NYSE: WMT) and Costco (NASDAQ: COST), to go along with Sears (NASDAQ: SHLD) and Circuit City (NYSE: CC). Vizio is also available from Dell Computers e-commerce web site (NASDAQ: DELL). Vizio understands it's all about distribution, distribution, distribution.
Vizio has taken the marketing position that television decisions typically are the domain of the male of a household and, as such, has partnered up with the NFL. Football and big screen TVs are synonymous. Vizio has signed All-Pro running back LaDainian Tomlinson of the San Diego Chargers to be its spokesperson. Tomlinson is regarded as both a fine gentleman and perhaps the greatest running back since Barry Sanders. His wholesome image is magical to Vizio's marketing program.
Wal-Mart Stores (NYSE: WMT) is the world's largest retailer, offering a vast array of general merchandise through some 7,350 stores. That total includes nearly 1,000 discount stores, over 2,800 combination discount and grocery stores and about 600 warehouse outlets. More than half of Wal-Mart's facilities are in the United States, but the firm has a widespread and growing international presence. It is the biggest retailer in Canada and Mexico, has a 95% stake in Japan's Seiyu and has developing operations in Europe, South America and Asia. The company employs more than two million associates and serves more than 200 million customers per year. Costco Wholesale (NASDAQ: COST) and Target Corporation (NYSE: TGT) are competitors.
The stock has been a steady Q2 gainer, advancing on word of solid Q1 results, better than expected same-store sales figures, an expanding discount drug program, international development, and favorable analyst commentary.
For the first time Monday I heard John McCain comparing Barack Obama to Jimmy Carter. I had heard this before in other arenas, but not from McCain. I guess that despite these two presidential candidates pledging to the American people to bring change and resist politics as usual, they are both, as usual as one could get.
Obama is being shaped by the pressures of running for office and to believe otherwise is delusional. I suppose one has to have hope but the effects of the campaign are becoming clear. Obama has been painting McCain as an extension of Bush, which is nonsense, and now in a typical tit-for-tat response, McCain is filling the air with Carter references.
Both McCain and Obama are wrong in their assessments of their opponents and they are becoming commoners to resort to the bottom of the barrel campaign techniques used in every campaign for most of our nation's proud history. Obama gave up the high ground too easily and McCain has decided he can sling mud with the best of them.
Where are Americans spending their rebate checks? Apparently Wal-Mart Stores, Inc. (NYSE: WMT) and Costco Wholesale Corporation (NASDAQ: COST). Both reported fantastic sales for May. Wal-Mart explicitly tied their success to the checks. "We're seeing some benefits from the stimulus checks," Wal-Mart Chief Executive Eduardo Castro-Wright said in a company press release. Wal-Mart same store sales were up 3.9% (4.4% if you include gas).
Costco sales were even better, up 5% from last year (7% if you count gas). Costco saw sales of $5.77 billion, up about $600 million. The theory is that people are turning to Wal-Mart and Costco because we're broke and because we're so freaked out by gas prices, we'd rather just drive to one big store. Nice theory, but Target Corporation (NYSE: TGT) is in the same business and saw sales drop 0.7%.
How many of us have spent our rebate checks at Wal-Mart and Costco? About 73% of Costco's stores are in the U.S. (The foreign stores got a big boost from the weak U.S. dollar). So, let's say very roughly 73% of Costco's $600 million sales increase was in the U.S. Or, Costco took in an extra $438 million thanks to the rebate checks. (Yeah, I know, the sales probably would've been up anyway, if only for inflation). At Wal-Mart domestic stores saw a $1.4 billion increase. Assuming we all spent our $600 in one place (just to make the math simpler), that would mean a little over 3 million of us (3,063,333) spent our rebated checks at Wal-Mart and Costco in May.
With oil sliding further, U.S. stock futures were mildly higher as investors also contemplated Verizon's potential bid for Alltel and awaited major retailers results.
On Wednesday, U.S. stocks were mixed on a bag of mixed news. Despite Moody's threatening to downgrade bond insurers, there was positive data from the service sector and oil kept its recent lower prices. The Dow industrials fell 12 points, or 0.10%, the S&P 500 was essentially flat with half a point decline, or 0.03%, and the Nasdaq composite actually ended 22 points, or 0.91%, higher.
Not much economic data is due today, except for the weekly initial jobless claims, but major retailers will report individual sales and comparative sales. Many investors will look to the report to get an indications of the state of the American consumer.
Merrill Lynch upgraded Dell (NASDAQ: DELL) to "buy" from "neutral," according toBriefing.com. The news service also reports that Citigroup began coverage of Valero (NSYE: VLO) with a rating of "buy."
Costco (NASDAQ: COST) was cut to "neutral" at Piper Jaffray, according to24/7 Wall St. The financial website also reports that NASDAQ (NASDAQ: NDAQ) was raised to "overweight" at Lehman Brothers.
Cash-strapped bargain hunters have made it possible for discount retailers Big Lots Inc. (NYSE: BIG) and Costco Wholesale Corp. (NASDAQ: COST) to report healthy profit increases on Thursday.
Big Lots reported that its first-quarter profit rose 20% to $34.5 million, or 42 cents per share, from the same period in the prior year. Quarterly sales grew 2% to $1.15 billion.
Analysts surveyed by Thomson Financial had predicted a first-quarter profit of 36 cents per share on revenue of $1.14 billion.
The Columbus, Ohio-based company said that same-store sales increased 3.4% during the quarter, and also said that results were helped by having about 30 million fewer shares outstanding.
Shares of Big Lots closed up $2.18, or 7.6%, to $30.71. Shares have risen 92.1% since the beginning of the year.
Small Stocks, Big Potential Little companies get less attention from investors, but they can often provide handsome returns. Here are 21 top picks in the group from investing pros. Small Wonders - BusinessWeek
Hot Growth, Against All Odds Here is BusinessWeek's list of fastest-growing small companies. Can they sustain their stratospheric growth? Topping the list is Hansen Natural, LuluLemon Athletica and Graham. Other hot growth companies include J.Crew, Morningstar, Nutrisystem, Quicksilver, Gymboree, Blue Nile, Strayer Education and Under Armour. Hot Growth, Against the Odds - BusinessWeek List: Hot Growth Companies
Stock futures were somewhat lower early Thursday morning, but then started to reverse course, as investors awaited a revision first quarter GDP as well as better indication on oil supplies. Several major retailers and consumer companies are also reporting. For now, futures are mixed, but it seems momentum might push stocks higher.
On Wednesday, U.S. stocks rose after lower drop than estimated in durable goods orders. Yields on 10-year Treasury bonds passed 4% for the first time since January. There were indications that the Federal Reserve might reconsider its rate cut policy. The Dow industrials rose 45 points, or 0.36%, the Nasdaq Composite added 5 points, or 0.22%, and the S&P 500 rose 5 points, or 0.40%.
The economic calendar is busier today with a release at 8:30 a.m. EDT of the revised first quarter reading on gross domestic product, the broadest measure of U.S. economic activity. Economists expect GDP to be revised upward to 0.9% from 0.6%. Also at 8:30, weekly initial jobless claims will be reported for an update on the labor market. At 10:30 a.m., weekly crude inventories numbers will be released and could affect oil trade. So far, oil has dropped somewhat ahead of the report that is expected to show U.S. inventories of crude and petroleum products grew last week.
While the earnings season is beginning to wind down for the current quarter, there are still plenty of results to come. Here's a peek at what analysts surveyed by Thomson Financial are expecting from companies scheduled to report results in the final week of May 2008.
These companies are expected to post earnings growth, compared to the same period in the previous year:
Dell Inc. (NASDAQ: DELL) down 2.9% to 33 cents per share, on $15.66 billion in revenue
TiVo Inc. (NASDAQ: TIVO) is expected to swing to a loss of a penny per share, compared to a penny profit a year ago, and report $55.62 million in revenue. And analysts expect Borders Group Inc. (NYSE: BGP) to narrow its loss 7.8% to 47 cents per share, on $801.11 million in revenue.
MOST NOTEWORTHY: Kohlberg Capital, ClickSoftware and Liberty Property Trust were today's noteworthy initiations:
JMP Securities started shares of Kohlberg Capital (NASDAQ: KCAP) with an Outperform rating and $14 target. The firm believes Kohlberg Capital's alliance with Kohlberg and Company allows Kohlberg Capital to take advantage of considerable expertise. JMP Securities believes Kohlberg Capital has an attractive risk/reward ratio.
Roth Capital initiated ClickSoftware (NASDAQ: CKSW) with a Hold rating and $3.60 target and expects EPS pressure from the depreciating dollar near-term.
Liberty Property Trust (NYSE: LRY) was initiated with a Hold rating at Stifel, citing lack of internal earnings divers and fair valuation.
OTHER INITIATIONS:
Oppenheimer initiated VisionChina Media (NASDAQ: VISN) with a Perform rating and $25 target.
Merrill assumed MGM Mirage (NYSE: MGM) with a Neutral rating.
Goldman Sachs cut the ratings on J.C. Penney (NYSE:JCP) and Nordstrom (NYSE:JWM) from "buy" to "neutral" due to the rising price of oil, according toMarketWatch.
Morgan Stanley began CostCo (NASDAQ:COST) at "equal weight" according toBriefing.com. The news service also reports that JPM downgraded Sandisk (NASDAQ:SNDK) from "market perform" from "underperform".
Douglas A. McIntyre is an editor at 247wallst.com.
In economics, inferior goods are defined as goods that are less in demand as consumers get richer but more in demand as consumers get poorer -- which of course happens when the economy slows down. Inferior goods are often the basic goods and services such as bus rides, potatoes, instant noodles and so on. And with increased demand, the price of such goods, unless regulated, can actually increase in bad times. A recent example of this is the increase in the price of rice (although other forces were at work there as well).
Well, recently we've seen a trend in retail that showcases this clearly -- discount retailers have been performing well relative to most other retailers. When retailers reported same-store sales for the month of April, Wal-Mart Stores Inc. (NYSE: WMT), Target Corp. (NYSE: TGT) and Costco (NASDAQ: COST) outdid their less fortunate counterparts as they have likely taken customers away from other retailers.
The trend that started a few months ago, with car sales (definitely a normal, not an inferior good) in the U.S. softening overall, has continued and even deepened as consumers have less disposable income after inflation and gas money is taken into account. With credit hard to come by, they have turned to cheaper alternatives. To wit, today Wal-Mart -- my "inferior retailer" -- reported that first-quarter profits rose 6.9%. Conversely, Liz Claiborne (NYSE: LIZ) -- the "normal retailer" -- swung to a first-quarter net loss.
To be fair though, it's the top line that matters if I'm looking at consumers' changing habits and there WMT saw a net 10.2% sales increase while LIZ's sales grew by much less during the quarter, 4.9% -- actually, not that bad. Even AnnTaylor Stores Corp. (NYSE: ANN) raised its forecast Monday. Indeed, somehow retail -- excluding auto sales of course -- has managed to hold up quite well recently despite market conditions as today's report indicates. Including autos, though, retail sales declined in April.
This post is part of my series featuring established companies and the smaller, more aggressive or innovative rivals that may eventually succeed them. 
For the first time Monday I heard John McCain comparing Barack Obama to Jimmy Carter. I had heard this before in other arenas, but not from McCain. I guess that despite these two presidential candidates pledging to the American people to bring change and resist politics as usual, they are both, as usual as one could get.
With oil sliding further, U.S. stock futures were mildly higher as investors also contemplated Verizon's potential bid for Alltel and awaited major retailers results.
Big Lots reported that its 
Stock futures were somewhat lower early Thursday morning, but then started to reverse course, as investors awaited a revision first quarter GDP as well as better indication on oil supplies. Several major retailers and consumer companies are also reporting. For now, futures are mixed, but it seems momentum might push stocks higher.
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In economics, 
Comfort Zone Investing: Keep your recovery expectations real
Will Americans have to slim down to fit into their cars?
Starbucks: The next McDonald's
