TheStreet.com's Jim Cramer says we should watch them and Apache and Exxon -- these stocks will set the tone.
You can always gauge rotations when some company that really misses, as Colgate (NYSE: CL) (Cramer's Take) did with its gross margins the other day, can still take off after a momentary hit. You can also gauge rotations by how many times an Apache (NYSE: APA) (Cramer's Take) or an Exxon (NYSE: XOM) (Cramer's Take) will get hit on the same margins miss.
Make no mistake about it, the Exxon quarter was ugly, and the Apache quarter, after all the hoopla, was barely a beat. But both of those companies are making a ton of money and will one day work their way back -- APA before XOM, because XOM has underinvested in oil and overinvested in its stock.
But Colgate was just out-and-out pantsed by raw costs. They had good revenue growth but simply got more killed by food and oil ingredients than even Tyson (NYSE: TSN) (Cramer's Take), which was ground zero for ethanol madness.
Yet it snapped right back yesterday as if it didn't miss at all.
Stock futures got a boost this morning from a possible $22 billion deal as Buffett's Berkshire and Mars consider buying Wrigley. Also in on investors' mind is this week's Federal Reserve meeting and rate decision as well as oil nearing $120 a barrel again.
U.S. stocks finished mixed on Friday, with the Dow industrials rising 42 points, or 0.33%, and the S&P 500 up 9 points, or 0.65%. The Nasdaq composite, however, found itself in the red following a cautious outlook from Microsoft the day before, and finished the day down almost 6 points, or 0.25%.
Without much economic news today, investors will focus on the Federal Reserve Open Market Committee two-day meeting starting Tuesday. On Wednesday, Fed chairman Bernanke will announce the policy decided and most economist expect a quarter point rate cut, but also for the Fed to halt the cuts after that as inflationary pressures have been rising.
Also, attention will be on oil prices, which once again hit an all-time high of $119.93 a barrel Monday. A refinery strike closed a pipeline system that delivers a third of Britain's North Sea oil to refineries in the U.K. as well as supply outages in Nigeria have caused oil to climb again despite the strengthening dollar.
Another big new item this morning, and one that helped boost sentiment is that of Mars and Warren Buffett's Berkshire Hathaway (NYSE: BRK.A) nearing a deal to buy chewing gum giant Wm. Wrigley Jr. (NYSE: WWY) for more than $22 billion, according to The Wall Street Journal and The New York Times. Wrigley, which has a market capitalization value of roughly $13.6 billion, is seeing its shares climbing over 23% in premarket trading.
PDUFA date for Genentech, Inc. (NYSE: DNA) and Roche Holding Ltd. (OTC: RHHBY)'s supplemental Biologics License Application for Herceptin for label expansion to include AC followed by docetaxel in treatment of adjuvant HER2+ breast cancer.
PDUFA date for Shire plc (NASDAQ: SHPGY) and New River Pharma's supplemental New Drug Application for Vyvanse (NRP-104) treatment of Attention Deficit Hyperactivity Disordre, or ADHD, in adult patients 18-55 years old; the drug is already approved for pediatric ADHD ages 6-12.
Verizon Communications Inc. (NYSE: VZ) to report Q earnings; conference call at 8:30am.
Tyson Foods, Inc. (NYSE: TSN) to report Q2 earnings; conference call at 9:00am.
Tuesday, April 29
Two-day FOMC meeting beginning at 8:30am.
PDUFA date for Merck & Co., Inc. (NYSE: MRK)'s New Drug Application for Cordaptive (MK-0524A) adjunctive therapy to diet for treating elevated LDL Cholesterol, low HDL Cholesterol and elevated triglycerides levels.
PDUFA date for Sucampo Pharmaceuticals, Inc. (NASDAQ: SCMP)'s supplemental New Drug Application for dose of 8mg treatment of Irritable Bowel Syndrome with Constipation; already approved for Chronic Idiopathic Constipation at 24ug dosage.
BP plc (NYSE: BP) to report Q1 earnings; conference call at 10:15am.
United States Steel Company (NYSE: X) to report Q1 earnings; conference call at 2:00pm.
MOST NOTEWORTHY: Goldman Sachs, Alexza Pharma and SAP AG were today's noteworthy upgrades:
Wachovia upgraded Goldman Sachs (NYSE: GS) to Outperform from Market Perform, as they believe Goldman has a superior capital position relative to competitors and will likely benefit more than any firm from Bear Stearns' (NYSE: BSC) collapse. They have a $180-$185 target range for the stock.
Following Alexza Pharma's (NASDAQ: ALXA) Q4 report, JMP Securities said they have reduced concerns regarding Loxapine timelines and risks. The firm raised Alexza to Outperform from Market Perform.
SAP AG (NYSE: SAP) was upgraded to Outperform from Market Perform at Bernstein on valuation and a positive view on fundamentals.
OTHER UPGRADES:
Tyson Foods (NYSE: TSN) was raised to Overweight from Equal Weight at Stephens.
Citigroup upgraded Teekay Shipping (NYSE: TK) and General Maritime (GMR) to Buy from Hold.
RiskMetrics (NYSE: RMG) was upgraded to Buy from Neutral at Banc of America.
MOST NOTEWORTHY: Fluor, Forward Air and McDermott were today's noteworthy upgrades:
Citigroup upgraded shares of Fluor (NYSE: FLR) to Buy from Hold to reflect the company's strong performance and backlog in Q4 and raised their target to $190.50 from $158.
Baird upgraded Forward Air (NASDAQ: FWRD) to Outperform from Neutral citing near-term growth initiatives that are gaining traction.
Citigroup also upgraded shares of McDermott (NYSE: MDR) to Buy from Hold to reflect the company's strong Q4 performance and rising commodity prices.
MOST NOTEWORTHY: Syntroleum, Pervasive Software and Ardea Biosciences were today's noteworthy initiations:
Merrriman believes Syntroleum (NASDAQ: SYNM) possesses the technological platforms with its Biofining process and the cost structures with its Tyson Foods (NYSE: TSN) relationship needed to commercialize clean synthetic fuels. The firm started shares with a Buy rating.
Pervasive Software (NASDAQ: PVSW) was assumed with a Buy rating and $7 target at B. Riley, as they find shares attractive in this market given the company's solid balance sheet with a sizeable cash balance and positive operating cash flow. They believe the stock is undervalued at current levels.
Ardea Biosciences (NASDAQ: RDEA) was assumed with an Outperform rating at Cowen. The firm believes Ardea has a promising clinical pipeline for HIV, gout, and cancer.
Verizon reported fourth-quarter earnings that were in line with expectations of analysts surveyed by Thomson Financial. The company earned $1.07 billion, or 37 cents per share, in the period ending in December, compared to $1.03 billion, or 35 cents per share, in the same period a year earlier. Excluding charges for severance costs related to layoffs and a loss on the sale of Verizon's operations in the Dominican Republic, the latest earnings were 62 cents per share.
Revenue for the fourth quarter was $23.8 billion, up 5.5% from $22.6 billion a year ago. The average analyst forecast had been $23.96 billion. For all of 2007, Verizon earned $5.5 billion, or $1.90 a share, on $93.5 billion in revenue, compared to a profit of $6.2 billion, or $2.12 a share, on $88.2 billion in revenue the year before.
Shares were up almost 1% on Monday, to close at $38.11. Shares were at 52-week low of $35.40 last week.
Proxy Governance Inc. has recommended that shareholders withhold their support for the board of directors at Tyson Foods, Inc. (NYSE: TSN), in light of excessive executive compensation in the face of operational underperformance.
Tyson has underperformed its peer group over the past few years, and Proxy argues that the company's management has not done enough to respond to industry challenges including increased feed costs and export restrictions on beef.
In 2007, Tyson stock declined in value while Richard Bond was paid $24.6 million. Tyson says that "it's apparent they haven't done all their homework." But I think that a CEO getting paid $24.6 million while presiding over the destruction of shareholder value is indicative of a compensation committee that hasn't done its homework: Proxy estimated that Tyson chief executives have been paid 82% more than CEOs at other companies in the peer group.
Executive pay is, as a whole, so out of touch with reality that any company that is overpaying so egregiously that it gets the attention of a proxy advisory firm really doesn't have a leg to stand on. Hopefully Tyson shareholder will send a message to the board.
Tyson Foods (NYSE: TSN) will be grumbling a bit this week after spending the summer revising labels for its poultry products. Previously, the USDA said the chicken giant could label its chicken products "raised without antibiotics." Now the U.S. Department of Agriculture says that decision was in error.
So, instead of enlightening Tyson customers with a more natural marketing message for its fresh chicken products, the campaign introduced this summer will now be canceled and the labels will be pulled off those products.
According to the USDA, a food additive called ionophores is indeed fed to Tyson's chickens before they are processed. The USDA has classified ionophores as antibiotics before and said it would not change its policy, much to the chagrin of Tyson marketing executives.
However, Tyson executives say that ionophores are not antibiotics and that the FDA does not consider them to be antibiotics either. Who will win out here? If it's the USDA, then Tyson just wasted quite a bit of marketing money to tell customers something that wasn't true. Well, according to the USDA at least.
MOST NOTEWORTHY: Tyson Foods, Unilever, Brooks Automation, Akzo Nobel and Yahoo! were today's noteworthy upgrades:
Deutsche Bank upgraded shares of Tyson Foods (NYSE: TSN) to Buy from Hold on valuation and the potential for protein complex improvement.
Goldman upgraded shares of Unilever (NYSE: UN) to Neutral from Sell to reflect the company's diversified product range and growing exposure to developing and emerging markets.
Bear Stearns raised its rating on Brooks Automation (NASDAQ: BRKS) to Outperform from Peer Perform. The firm cited the company's compelling valuation and growth drivers.
Akzo Nobel (OTC: AKZOY) was upgraded to Buy from Hold at SNS Securities, as they see absolute total return greater than 20%.
CIBC upgraded Yahoo! (NASDAQ: YHOO) to Sector Outperformer from Sector Performer on valuation following the recent pullback and their analysis of Yahoo's non-operating assets. They believe Yahoo's stake in Alibaba Group is now worth about $4/share and raised their target to $31 from $28.
OTHER UPGRADES:
First Analysis upgraded Spss Inc (NASDAQ: SPSS) to Overweight from Equal Weight.
UBS upgraded Yamana Gold (NYSE: AUY) to Buy from Neutral.
Tyson Foods (NYSE: TSN) to report Q4 earnings. They are holding a conference call at 9am and a business update later at 10:45am.
Tuesday, November 13
Wal-Mart Stores (NYSE: WMT) to report Q3 earnings; pre-recorded conference call at 7am.
Home Depot (NYSE: HD) to report Q3 earnings; conference call at 9am.
Fed Reserve Governor Randall Kroszner is the Keynote Speaker at Standard & Poor's Banking Conference in New York at 1pm.
Wednesday, November 14
Fed Reserve Chairman Ben Bernanke is the Keynote Speaker at Cato Institute Annual Monetary Conference at 9:10am.
Macy's (NYSE: M) to report Q3 earnings; conference call at 10:30am.
Thursday, November 15
Charles Schwab (NASDAQ: SCHW) to hold business update conference call at 10:30am.
Nevada District Court: Bayer (NYSE: BAY) vs. Watson Pharmaceuticals (NYSE: WPI) on Patent Infringement Lawsuit over the generic birth control drug YAZ.
MOST NOTEWORTHY: Total SA, HLTH Corp, Aflac First Solar and Town Sports were today's noteworthy upgrades:
Citigroup upgraded Total SA (NYSE: TOT) to Buy from Hold following the company's Q3 results. JP Morgan upgraded shares to Overweight from Neutral, as they believe the company's Q3 results underlined the strength of exploration and production growth prospects versus peers.
Friedman Billings raised its rating on HLTH Corporation (NASDAQ: HLTH) to Outperform from Market Perform following the company's proposal to merge into WebMD Health Corp (NASDAQ: WBMD) for a combination of cash and stock.
The firm also added shares of Aflac (NYSE: AFL) to its Top Picks List, as they believe Aflac is the only high quality, defensive growth story in the Life Insurance sector.
CIBC upgraded shares of First Solar (NASDAQ: FSLR) to Sector Outperformer from Sector Performer following the Q3 upside and set a $230 target on the stock.
Banc of America upgraded shares of Town Sports (NASDAQ: CLUB) to Neutral from Sell on valuation as they believe the downside risk is now priced into the stock.
OTHER UPGRADES:
Credit Suisse upgraded Nortel Networks (NYSE: NT) to Neutral from Underperform.
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.
MOST NOTEWORTHY: Countrywide Financial (CFC), Toll Brothers (TOL), United Parcel Service (UPS) and OSI Pharma (OSIP) were today's noteworthy upgrades:
Both Friedman Billings and Wachovia upgraded Countrywide Financial (NYSE: CFC) to Market Perform from Underperform following the $2 billion investment by the Bank of America (BAC).
JMP Securities upgraded Toll Brothers (NYSE: TOL) to Market Perform from Underperform and believes the worst news on housing is reflected and that fears over a disappearing jumbo loan market are overblown.
Matrix upgraded United Parcel Service (NYSE: UPS) to Buy from Hold to reflect strong demand from overseas shipping.
Wachovia raised OSI Pharma (NASDAQ: OSIP) to Market Perform from Underperform on valuation...
OTHER UPGRADES:
UBS raised Joy Global (NASDAQ: JOYG) to Buy from Neutral.
China Netcom (NYSE: CN) was raised to Neutral from Sell at UBS.
Roth Capital upgraded IMAX Corp (NASDAQ: IMAX) to Buy from Hold.
WedBush raised InfoSpace (NASDAQ: INSP) to Buy from Hold.
Tyson Foods Inc. (NYSE:TSN) shares are up after the chicken, beef, and pork processor reported better-than-expected second-quarter results. The company posted $0.31 EPS, well above the $0.25 First Call estimate and well above a loss posted in Q2 2006. Revenues rose almost $600 million to $6.96 billion, also above the $6.74 billion estimate.
To top it off, the company also raised annual EPS guidance from $0.65 to $0.90 to $0.82 to $0.92. It appears the cost cutting and containment measures are working. The company has closed some processing plants, installed spending caps, and you haven't even heard press on major labor violations in a long time. The company's operating income improved in all operations including its prepared foods unit.
The company is also in the midst of a 'quasi-healthier' launch with its "Raised Without Antibiotics and Any'tizers(tm)" and is also in a renewable fuels venture based on leftover animal fat products that would otherwise end up in landfills.
The other good news here is that it has all the distribution channels in place, and it still has major brand recognition. The reason this is important is that the company noted a higher feedcost being offset by it raising its own sales prices.
Tyson has greatly improved its position from its woes a few years ago. Shares are up 50% from yearly lows and closer to recent highs. At $21.60, that's much closer to the $24.32 high over the last 52-weeks. This one sounds good enough, I think I'm having some chicken for lunch.
Jon Ogg is a partner at 24/7 Wall St.; he does not own securities in the companies he covers.
TheStreet.com's Jim Cramer says we should watch them and Apache and Exxon -- these stocks will set the tone.
Stock futures got a boost this morning from a possible $22 billion deal as Buffett's Berkshire and Mars consider buying Wrigley. Also in on investors' mind is this week's Federal Reserve meeting and rate decision as well as oil nearing $120 a barrel again. 
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With its recent acquisition of GoldKist, 
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