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The week in preview: Earnings expectations for techs, Canadian banks

Results for the tech stocks in last week's preview were a mixed bag, some beats, some misses, some in line. By and large, expectations for tech companies reporting results this week remain high, though. Here's what analysts surveyed by Thomson Financial are anticipating in the way of earnings, as compared to the same period of the previous year.

Continue reading The week in preview: Earnings expectations for techs, Canadian banks

Analyst downgrades: Thornburg Mortgage, Whirlpool, Jackson Hewitt

MOST NOTEWORTHY: Thornburg Mortgage, Whirlpool and Jackson Hewitt were today's noteworthy downgrades:
  • Jefferies downgraded shares of Thornburg Mortgage (NYSE: TMA) to Hold from Buy to reflect the ongoing dislocation of the mortgage markets and lowered their target to $3.75 from $14. While they believe Thornburg will probably survive its current liquidity crisis, they think the company's capital structure will be impaired further.
  • JP Morgan downgraded Whirlpool (NYSE: WHR) to Underweight from Neutral, citing valuation, higher steel prices, the difficult macro environment and competition.
  • Stephens cut Jackson Hewitt (NYSE: JTX) to Equal Weight from Overweight to reflect the company's recent results and concerns over the issues that have impacted the basic business.
OTHER DOWNGRADES:
  • Merrill lowered Bank of Montreal (NYSE: BMO) to Sell from Neutral.
  • Lehman downgraded PDL BioPharma (NASDAQ: PDLI) to Equal Weight from Overweight.
  • Friedman Billings downgraded Tessera (NASDAQ: TSRA) to Market Perform from Outperform.

Will the SIV bailout arrive in time?

I've been talking about the Super SIV bailout plan since the plans for the fund first became public October 14. Today The Wall Street Journal is questioning whether the Super SIV bailout fund can be funded in time [subscription required] to help struggling SIVs who need to find investors for $100 billion in debt coming due in the next six to nine months. The Journal reports some of the biggest SIV operators already are selling their assets, including Citigroup (NYSE: C), the Super SIV champion and the operator of the largest chunk of SIVs, and Rabobank of the Netherlands. Moody's Investor services continues to downgrade the types of assets held by the SIVs, especially assets based on subprime mortgages in the U.S.

Why should you care? You may be holding a money market fund or mutual fund that holds debt from these SIVs in trouble. If the bailout doesn't arrive in time, SIVs will have to restructure their debt, wind down, or in the worst-case scenario become unable to pay their debt investors. When the Journal first started talking about this mess, it reported SIVs held $400 billion in assets globally. Today, because of the write-downs and sale of assets, the Journal is estimating the total value of SIV assets at $350 billion.

Continue reading Will the SIV bailout arrive in time?

Pilgrim's Pride Corp. (PPC): Chicken is good for you

With its recent acquisition of GoldKist, Pilgrim's Pride Corporation (NYSE: PPC) is now the largest chicken company in the United States. This acquisition was part of a larger consolidation of the chicken industry, a development that has given large companies like PPC and its rival Tyson Foods, Inc. (NYSE: TSN) a great deal of pricing power, especially with the industry-wide production cuts that have limited supply and helped sustain higher prices.

This pricing power has been especially important with the rising price of corn, which has increased feed costs to a substantial degree. Fortunately for PPC, it's been able to offset these costs with higher prices, and its most recent quarterly report announced net income of $62 million, compared with a $20 million loss in the same quarter of 2006. For the nine months of fiscal year 2007, PPC's revenues are up nearly 65%.

It's no surprise, then, that PPC's stock price has benefited, and it is now trading near its 52-week high. It's not clear whether its margins will be sustainable, given the potential for corn prices to keep rising and the cyclical nature of poultry prices. But a recent report from Bank of Montreal's food analyst argued that corn prices have been self-correcting (they were down 25% over the summer), and it also pointed to the rise of Blue Ear disease in China, which could mean a rise in demand for protein-rich food like chicken; meanwhile the consolidation and production cuts should stabilize price volatility for the foreseeable future. At the right price, this one could well be a nice meal for your portfolio.

Type of Stock: The largest chicken company in America, with a newfound return to profitability.

Price Target: The Bank of Montreal report predicted a 12-month price target of $47. With the stock near $40, that
would be a nice gain of more than 10%. But this stock tends to go up and down a bit, and you might be able to make your purchase closer to $35.

Hilary Kramer is a financial editor and money coach for AOL and an authority on investing. Visit her at www.hilarykramer.com.

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Last updated: May 28, 2012: 07:26 AM

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