Again this week, in a list of earnings expectations for some prominent companies in a variety of sectors, we see an apparent optimism. That is, analysts are anticipating more earnings growth than earnings declines.
Analysts surveyed by Thomson Financial expect the following companies to report a rise in earnings when compared to the same period of the previous year.
After hitting a one-year low of $38.01 in August, the stock hit a one-year high of $57.55 in January. NEM opened this morning at $48.35. So far today the stock has hit a low of $47.95 and a high of $49.31. As of 12:30, NEM is trading at $49.28, up $0.96 (2.0%). The chart for NEM looks bullish and steady, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.
For a bullish hedged play on this stock, I would consider a July bull-put credit spread below the $42.50 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. This particular trade will make an 8.7% return in just six weeks as long as NEM is above $42.50 at July expiration. Newmont would have to fall by more than 13% before we would start to lose money.
NEM hasn't been below that level since August and has shown support around $46 recently. This trade could be risky if the price of gold futures drops in the next few months, but even if that happens, this position could be protected by the support the stock might find at its 200 day moving average, which is currently around $47. Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in NEM.
Among companies reporting quarterly earnings on Thursday were Safeway Stores Inc. (NYSE: SWY), the largest food retailer in North America, and Newmont Mining Corp. (NYSE: NEM), one of the world's largest gold producers.
Despite ongoing efforts to upgrade the image of its stores, Safeway, which reported that fourth-quarter earnings in-line with the consensus estimates of analysts surveyed by Thomson Financial, also reported that same-store sales slowed.
The quarterly earnings came to $301.1 million, or 68 cents per share, for the period that ended December 29, down 2% from $307.9 million, or 69 cents per share, in the same quarter of 2006, when tax benefits lifted results. Excluding that gain, earnings per share would have climbed by more than 11%. Fourth-quarter revenue rose 7% to $13.36 billion, which beat the analysts' average estimates.
Despite signs of a slowdown, the fourth quarter capped Safeway's most profitable year since 2001. The company earned $888.4 million, or $1.99 per share, on sales of $42.3 billion, compared to earnings of $870.6 million, or $1.94 per share, on revenue of $40.2 billion in 2006. For 2008, Safeway forecast earnings of $2.25 to $2.35 per share, in-line with analysts' expectations.
Safeway shares fell more than $3 in morning trading, reaching a new 52-week low of $28.80.
Newmont Mining Corp. (NYSE: NEM) stock is rising this morning, helped by positive movement in gold futures, which crept above $815 an ounce for February delivery, its strongest level since Nov 28. If you think that the company won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on NEM.
After hitting a one-year low of $38.01 in August, the stock hit a one-year high of $56.35 in November. NEM opened this morning at $50.72. So far today the stock has hit a low of $50.49 and a high of $51.34. As of 11:05, NEM is trading at $51.17, up $1.14 (2.3%). The chart for NEM looks bullish but deteriorating, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.
For a bullish hedged play on this stock, I would consider a January bull-put credit spread below the $45 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make an 11.1% return in just 6 weeks as long as NEM is above $45 at January expiration. Newmont would have to fall by more than 11% before we would start to lose money. Learn more about this type of trade here.
Where can you find the "Wall Street of the West?" In Colorado, of course -- specifically, Denver's 17th Street financial district.
Colorado's economy has come a long way from its foundation on trapping and mining. Denver's location, equidistant between Los Angeles and Chicago, between Seattle and New Orleans, has helped the Centennial State become the economic center of Rocky Mountain states -- even Denver's time zone and elevation help it keep in touch with the rest of the world. It's no wonder there's a large federal government presence in the state (U.S. Air Force Academy, NORAD, NOAA, Denver Mint, U.S. Geological Survey).
MOST NOTEWORTHY: DPL Inc, IAC/InterActiveCorp, F5 Networks, Community Health and Parametric Technology were today's noteworthy upgrades:
Baird upgraded DPL Inc (NYSE: DPL) to Outperform from Neutral following better-than-expected guidance.
Citigroup upgraded IAC/InterActiveCorp (NASDAQ: IACI) to Buy from Hold as they believe HSN's turnaround, Lending Tree's stabilization and Ask's profitability ramp should drive EBITDA growth acceleration in 2008. The company was also upgraded to Overweight from Equal Weight at Lehman following IAC's better-than-expected Q3 report.
Citigroup upgraded shares of F5 Networks Inc (NASDAQ: FFIV) to Buy from Hold, as they believe now is the time to buy the stock with sentiment at a low-point heading into an attractive 2008 product cycle.
Stifel raised its rating on Community Health Systems Inc (NYSE: CYH) to Buy from Hold based on improved visibility from detailed 2008 guidance.
NEM reported third quarter earnings per share of 72 cents verses consensus estimates of 25 cents. Gold was recently up .95% to $795.30 according to Bloomberg. NEM call option volume of 68,640 contracts compares to put volume of 36,594 contracts. NEM November option implied volatility of 38 was above its 26-week average of 32 according to Track Data, suggesting non-directional price risks.
BAC call option volume of 13,902 contracts compared to put volume of 4,588 contracts. BAC November option implied volatility of 28 was above its 26-week average of 23 according to Track Data, suggesting larger risk.
Volatility Index: VIX down 2.35 to 18.34, suggesting less risk after rate cut.
Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.
Newmont Mining Corp. (NYSE: NEM) stock is soaring to a new 52-week high today after the company's third quarter earnings release. Profit in the quarter doubled to $0.88 per share, obliterating analyst expectations of $0.25 per share profits. Even though gold futures are relatively flat today, prices have been rising recently, lifting the outlook for NEM. If you think that the company won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on NEM.
After hitting a one year low of $48.42 in the summer, the stock has risen quite a bit, settling in above the $45 mark with recent resistance around $48 until today. NEM opened this morning at $47.40. So far today the stock has hit a low of $47.14 and a high of $50.63. As of 10:45, NEM is trading at $50.53, up $4.09 (8.8%). The chart for NEM looks bullish and steady, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.
For a bullish hedged play on this stock, I would consider a December bull-put credit spread below the $42.50 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 5.3% return in just 7 weeks as long as NEM is above $42.50 at December expiration. Newmont would have to fall by more than 15% before we would start to lose money.
Newmont, which is currently the world's second largest gold producer, has had partial ownership of MNG since 2005 when it acquired a 9.9% stake in the company after investing $36.4 million in a Canadian gold field known as the Hope Bay gold belt. Miramar's board has unanimously agreed to Newmont's take over bid and will be recommending that the company's shareholders approve the deal.
Shares of MNG have been soaring today on the announcement. After closing yesterday at $5.15, the stock has sky rocketed today, picking up 22.5% to $6.31, up $1.16. Newmont shares have also been rising today, picking up 2.0% to $45.73, up $0.90.
Full details on the takeover will be made available by the end of this month.
Michael Fowlkes has worked as a stock trader for seven years and spent the last two years working as an analyst for the online investment advisory service Investor's Observer
Newmont Mining Corp. (NYSE: NEM) stock is dropping today as gold futures are falling hard (more than 2%) in this morning's market. Gold is falling as the dollar regains some of the ground it has lost recently. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on NEM.
The stock leapt last month from trading near its year low to a 52-week high of $48.42 on September 24, but quickly retreated to the mid-$40's. This morning, NEM opened at $45.45. So far today the stock has hit a low of $44.70 and a high of $45.48. As of 10:35, NEM is trading at $44.75, down $1.25 (-2.7%). The chart for NEM looks bullish and steady, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.
For a bearish hedged play on this stock, I would consider a November bear-call credit spread above the $50 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 13.6% return in 7 weeks as long as NEM is below $50 at November expiration. Newmont would have to rise by more than 11% before we would start to lose money.
NEM, the world's largest non-hedged gold producer, closed at $45.16. Gold is at $718.80 according to Bloomberg. NEM overall option implied volatility of 34 is above its 26-week average of 29 according to Track Data, suggesting larger price risks.
PetroChina (NYSE: PTR) volatility elevated at 38 as Warren Buffett reduces stake.
PTR, a Peoples Republic of China run petroleum and natural gas company, closed at $145.05. Dow Jones reported that Warren Buffett's Berkshire Hathaway reduced its stake in PTR to 9.72% from 10.16%. WTI Crude oil futures are down 0.03% a $78.21 a barrel according to Bloomberg. PTR overall option implied volatility of 38 is above its 26-week average option implied volatility of 30 according to Track Data, suggesting larger price risk.
Volatility Index S&P 500 Options-VIX at 25.27; 10-day moving average is 24.87.
Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
Ethisphere Magazine, which insists that ethical behavior and profitable businesses are not mutually exclusive, recently released its annual ranking of the world's most ethical companies, and there are a few surprises on the list of those companies that use ethical leadership to drive profits.
To make the list for consideration, companies are first peer-reviewed according to standards in 9 separate criteria sets for 30 different categories of industry. Those criteria, not equally weighted, are legal and regulatory compliance, governance, corporate citizenship, internal ethical systems, transparency, perception and reputation, industry leadership, executive leadership, and innovation. What the companies on the list seem to share is a commitment to corporate social responsibility that far exceeds mere regulatory compliance. Ethical standouts are generally led by senior management that is willing to make ethical decisions on economic, social, and environmental factors despite unfavorable short-term consequences. These companies consider themselves as stakeholders in their own reputations.
Surprises on the list include McDonald's Corp. (NYSE: MCD), though even small changes in corporate behavior can have a enormous result given the size of the company. McDonald's offers minorities special opportunities to own franchises in the company, and is becoming increasingly aware of environmental consequences of its production and packaging policies. Also a surprise on the list is Google Inc. (NASDAQ: GOOG), a company with virtually no consumer privacy protection policies. Surprising because of their absence from the list are Dell Inc. (NASDAQ: DELL), which has a comprehensive computer recycling program, and Newmont Mining Corp. (NYSE: NEM), which sponsors educational programs for children living near its mining operations in developing countries.
Also included on the list are the Kellogg Co. (NYSE: K), which has produced nutritious products in recycled packaging since 1906 and has had a Social Responsibility Committee in place since 1979; and Starbucks Corp. (NASDAQ: SBUX), which is the world's largest seller of Fair Trade Certified Coffee since 2000.
Seagate (NYSE: STX) -- July calls active at Elevated volatility on renewed Speculation. STX designs, manufactures and markets rigid disc drives. STX is up $0.09 cents to $20.94 on renewed LBO chatter. STX has a market cap of $11.2 billion and long-term debt of $1.7 billion. STX reported annual 2006 revenue of $9.2 billion. Brean Murray has a Hold rating on STX. STX call option volume of 17,889 contracts compares to put volume of 2,862 contracts. STX July option implied volatility of 41 is above its 26-week average of 34 according to Track Data, suggesting larger price risks.
Neurochem (NASDAQ: NRMX) option implied volatility suggests Risk into Data. NRMX is recently down $0.13 to $6.68. PIPR lowered its price target to $4.00 from $6.50. NRMX first phase three study of its Alzheimer treatment drug, Alzhemed is expected to be release between now and the end of the quarter. NRMX July option implied volatility is above 215 according to Track Data, indicating large price fluctuations. NRMX puts are more expensive than calls because NRMX is difficult to borrow.
"Get ready for central banks to 'talk down' gold," cautions Eric Roseman in his Commodity Trend Alert who nevertheless remains bullish and offers a trio of favorites.
"Gold prices, in a secular long-term bull market since 2001, continue to impress even the greatest of skeptics," he says. Indeed, he adds, "You've got to be impressed with this price action lately, even as major economy central banks continue to sell their hoard."
The advisor points out that as major central bands sell gold, the emerging market central banks are buying. He explains, "That's the case with Russia, China, and several other countries over the last three years. If I was running a central bank, you can bet your last fiat dollar I'd be selling paper money for gold!"
The advisor forecasts that central banks will start "talking down" bullion very soon. He observes that that is what happened last June as gold prices blasted past $700 an ounce.
He says, "Pretty soon, we'll hear statements like 'inflation is too high, rates have to rise,' or 'wage inflation threatens growth.' Whatever it is, central banks will try to smash the gold price lower once again."
As a result, he expects the metals prices to be "bumpy" on their way to higher levels. Indeed, his forecast calls for a move above $850 by the end of 2008, "if not sooner."
As for specific stocks, he says, "Sometimes, you have to make big bets on great companies that are selling at major discounts to peers in the same industry." And within the metals sector, he feels that describes Goldcorp (NYSE: GG), Newmont Mining (NYSE: NEM) and Silver Wheaton (NYSE: SLW).
He explains, "Now is the time to build on price weakness when the market is giving you these stocks, literally, for almost nothing. Based on assets, cash-flow and growing reserves, these three mining stocks are trading at a major discount to other premium-priced companies in the same industry."
Overall, he concludes, "We've got some monumental gains coming our way for the precious metals. Make sure you own some of the best and largest names in the business at these distressed prices ahead of next historical rally."
For more stock picks from the leading financial newsletter advisors, visit Steven Halpern's free daily website, TheStockAdvisors.com.
"My sources indicate that the world's largest gold company, Barrick Gold Corp. (NYSE: ABX), may make a play for the world's second largest, Newmont Mining Corp. (NYSE: NEM)," suggests Mark Skousen, a 25 year veteran of the advisory industry.
Importantly, takeover speculation is just an added attraction in his assessment. The editor of The Hedge Fund Trader explains, "Even if Barrick doesn't, Newmont still belongs in your hedge portfolio."
For one, he calls Newmont is the bluest of blue chip gold companies, pointing to proven and probable reserves of 95 million ounces, with operations in the U.S., Canada, Australia and Mexico.
Further, he notes, the company does not hedge its gold production either, which allows investors to benefit fully from a rise in the price of gold.
In addition, he says, "Newmont's earnings are superb." He notes that the gold mining company's net income jumped more than three-fold in the fourth quarter of 2006, with profits of $223 million on revenue of $1.46 billion.
Where can you find the "Wall Street of the West?" In Colorado, of course -- specifically, Denver's 17th Street financial district. .gif){kind=logo}
Newmont Mining Corporation
Seagate
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