Joseph Lazzaro
New York - http://
Despite stock's sluggishness, Hess remains a buy
So far, institutional investors (IIs) have not noticed that Hess Corp.'s (NYSE: HES) upstream operations (exploration and production) should benefit from high oil prices in the $80 per barrel range. But the argument here is that eventually they will, preferably starting in early 2010, which is why I'm reiterating my Buy rating for the company, first recommended on April 22, 2009 at a price of $50.41. Right now, IIs are fixated on the lower margins of downstream operations, which Hess and other refiners are coping with, as a result of recession-induced sluggish U.S. gasoline sales. The First Call FY2009/FY2010 EPS estimates for HES are $1.63 to $3.66.
Continue reading Despite stock's sluggishness, Hess remains a buy
Fed signals low rates will continue 'for an extended period'
Is a Fed rate tightening up ahead any time soon? Despite concern that low, real, short-term interest rates are hurting the dollar. Don't count on it.First, the U.S. Federal Reserve wants to encourage banks to lend -- for auto purchases, and especially for business loans -- and nothing prompts banks to lend, even in tighter capital times, like low-interest-rate or zero-interest-rate money.
Continue reading Fed signals low rates will continue 'for an extended period'
Du Pont: Hold shares
I'm placing a Hold on shares E.I. du Pont De Memours (NYSE: DD), also known as Du Pont, first recommended on April 22, 2009 at a price of $27.48. If you bought DD in April, you're up about 20%Look for DD's coatings and color technologies business to begin to recover in 2010, on the U.S./global recoveries. However, DD's pharmaceuticals unit will face a tougher 2010, due to patent expirations. The First Call FY2009/FY2010 EPS estimates for DD are $2.01 to $2.22.
Continue reading Du Pont: Hold shares
Comcast's stock continues to meander
It's a difficult call, but I'm Reiterating my Buy rating for Comcast Corp. (NASDAQ: CMCSA), first recommended on April 22, 2009 at a price of $14.05, Comcast posted a decent rebound in subscriber growth in Q3, but concerns about intensifying competition in cable television, broadband, and advanced video services persist. In particular broadband competition from telephone/telecom companies, who are offering cheaper DSL services represent the biggest threat. Moreover, as these telecom companies build-out fiber-based video and broadband services, they'll begin to chip away at Comcast's (and other cable companies') conventional cable television services.
Continue reading Comcast's stock continues to meander
Buffett's railroad move: A win for BNI shareholders
Warren Buffett's (NYSE: BRK.A) decision to buy the 77.4% shares of Burlington Northern Santa Fe (NYSE: BNI) that he did not already own, for $100 each in cash and stock, is like an early holiday present for BNI shareholders.And first recommended on April 30, 2009 at a price of $67.81, that means BNI shareholders will earn a cool 47% for their April-bought shares. Not bad for a six-month investment. I would say BNI probably was worth 10-15% more, but BNI shareholders will take the immediate pay-off, just the same.
Buffett's move also reflects his stance toward U.S. railroads, a sector I like, too.
Continue reading Buffett's railroad move: A win for BNI shareholders
A little federal income tax hike would go a long way
The U.S. dollar continues to weaken, which has led to commodity price increases, including a higher-than-fundamentals-dictate oil price of about $80 per barrel, and U.S. Treasury Department professionals are working long-and-hard to continue to refinance and rollover U.S. debt to finance the U.S. government's operations -- all because the budget deficit is high. What could take pressure off all of the above? Well, in addition to letting the 2001 Bush income tax cut expire in 2011 as expected, Congress could pass a modest tax increase above the expiration amounts -- for example, increasing the top two income tax brackets by 2-4 percentage points.
Continue reading A little federal income tax hike would go a long way
Chevron: Riding out the U.S. gasoline market's doldrums
Now that there's credible evidence that the U.S. economy is recovering, U.S. gasoline demand may stabilize, helping refiners like Chevron Corp. (NYSE: CVX), hence I'm Reiterating my Buy rating for the company, first recommended on February 15, 2009 at a price of $66.18. Look for Chevron's oil/natural gas production to increase more than 5% in FY2009, and then at about a 4-4.5% annual rate 2010-2012.
Continue reading Chevron: Riding out the U.S. gasoline market's doldrums
Marathon Oil: Snail's pace progress
Marathon Oil Corp. (NYSE: MRO) continues to inch along, 'totally un-spectacularly,' with performance weighed-down by the recession's impact on refined products.I am Reiterating my Buy rating for the company, first recommended on April 20, 2009 at a price of $28.55, but the call recommends only establishing a 25% position, in total.
Continue reading Marathon Oil: Snail's pace progress
Fuel Systems Solutions: Buy on a pull-back
Alternative fuel system company Fuel Systems Solutions Inc. (NASDAQ: FSYS) continues to progress. The company Thursday reported Q3 EPS of 77 cents versus the 43 cents First Call EPS estimate and the stock was up $8.82 to $42.63 at mid-day. I'm reiterating my Buy rating for the company, first recommended on August 17, 2009 at a price of $30.42, but wait for a pull-back following Thursday's surge. If bought FSYS in August, you're up about 40%.Fuel Systems' Q3 revenue increased 10% to $116.2 million, with the company reporting a record 47,000 systems installations, up from 37,000 and 30,000 in Q2 and Q1, respectively. Demand for alternative fuel vehicles was strong, especially in Italy, which offset weakness in its industrial business, and a negative foreign exchange impact, the company noted.
Continue reading Fuel Systems Solutions: Buy on a pull-back
3M is in an uptrend
I'm reiterating my Buy rating for 3M Co. (NYSE: MMM), first recommended on April 20, 2009 at a price of $51.97. If you bought 3M in April, you're up an impressive 46%. Way back in the spring, I argued, among other factors, that a strong case for buying 3M shares could be made based on the company's large free cash flow and net returns on capital, and reasonable P/E (then about 11), before everyone else jumped on the bandwagon.
Well, with a current P/E of about18, 3M is no where near as cheap, but I still like the shares here, around $75.
Continue reading 3M is in an uptrend
Under the radar: Saudi oil exports to U.S. fall to 22-year low
Under the radar: Some trends are obvious enough and visible to all investors. Others are more-subtle, but are just as potent, and these often slip 'under the radar.'Case in point: Saudi Arabia's oil exports to the United States have fallen to a 22-year low, at 745,000 barrels per day (bpd) in August, the latest month for which data is available, from 1.14 million bpd in July, according to data compiled by the U.S. Energy Information Agency. August's 745,000 bpd total is the lowest since December 1987. On a year-over-year basis (August 2008-August 2009), those exports are down about 50%.
Continue reading Under the radar: Saudi oil exports to U.S. fall to 22-year low
AutoZone: Hold shares
AutoZone Inc.'s stock (NYSE: AZO) remains a bit of an enigma, hence for now, I'm placing a Hold on the company's shares, first recommended on March 39, 2009 at a price of $163.40. Auto parts chain AutoZone's forecast revenue growth for FY2010 of 4-6% is sufficient following a 4.5% gain in FY2009, including a 5.4% increase in same store sales in Q4. The headwinds are real: high U.S. gasoline prices that might delay purchases, but they are offset by long-term trends: more drivers maintaining older, used cars because they aren't able to purchase a new one.
Continue reading AutoZone: Hold shares
Sunoco: Modest progress amid tepid gasoline sales
I'm Reiterating my Buy rating for Sunoco, Inc. (NYSE: SUN), first recommended on April 20, 2009 at a price of $26.58, but there are qualifiers, so close attention is warranted. If you bought SUN in April, you're up about 19%. Sunoco has been hurt by the high oil price/low gasoline demand condition pervasive in the giant U.S. market that's squeezed margins. Further, Sunoco's primarily sweet crude oil refining operation prevents it from capitalizing on larger-margin sour crude refining. However, the sweet focus has enabled SUN to produce larger amounts of higher-grade products.
Continue reading Sunoco: Modest progress amid tepid gasoline sales
Alcoa: Upside potential, but with high risk
Look for Alcoa Inc. (NYSE: AA) to benefit from the the U.S./global economic recoveries, which is I'm Reiterating my Buy rating for the company, first recommended on August 17, 2009 at a price of $12.41. Alcoa's revenue in FY2010 should increase 13-15%, assuming likely stabilization in the U.S. housing and auto sectors. Aluminum companies also should benefit from modestly higher aluminum prices next year.
Continue reading Alcoa: Upside potential, but with high risk
Like its parts, Precision Castparts is soaring
With Precision Castparts Corp. (NYSE: PCP), as air travel goes, so go the profits, which is why I'm Reiterating my Buy rating for the company, first recommended on April 20, 2009, at a price of $61.92. If you bought PCP in April, you're up an impressive 50%.
Precision is a major maker of jet engine components, and PCP will benefit as engine orders ramp-up in FY2010. By most measures, an industrial bottom is occurring in the U.S. and global economies in Q3/Q4. Hence, rising demand coupled with the need to re-stock inventories of parts bodes well for Precision. The key revenue drivers: 1) emerging market economies that are modernizing their airline fleets and increasing fleet sizes and 2) Boeing's (NYSE: BA) new 787 Dreamliner, which should undergo its first test flight by the end of 2009.
Continue reading Like its parts, Precision Castparts is soaring
Senator Sanders proposes legislation to break up large banks
Closing Bell: Unemployment must not be relevant (GE, ACOM, FNM, ZIOP, MOT, NVDA)
Employee productivity up close to 10%
