Time to Start Thinking About Earnings (ACE, CELL, F, POT, IPI, CAAS)

Stocks had a mixed day on the second trading day of the year, never really able to gain any traction after yesterday’s nice rally. The news remains fairly light, but earnings will soon begin trickling in and investors will anxiously be awaiting 2010 guidance. We expect more upbeat outlooks from managements, but we still anticipate a cautious tone being struck.

The Chinese Auto Parts Stocks Index was the top performing tickerspy Index on the day, led by China Automotive Systems (CAAS) with a 14% gain.

Stocks ended the day mixed, with the Dow down -12 points to 10,572. The S&P added 4 points to 1,137, while the Nasdaq ended fractionally higher at 2,309. Oil rose 26 cents to $81.77 a barrel, while gold inched up 20 cents to $1,118.50 an ounce.

On the economic front, the National Association of Realtors announced that pending home sales fell -16% month over month in November. Economists were only expecting a -2% drop. Elsewhere, the Commerce Department reported that factory orders rose 1.1% in November, better than the 0.5% rise economists were expecting.

In earnings news, property and casualty insurer Ace Ltd (ACE) issued 2010 guidance below Wall Street estimates. As a result, the stock dropped -2.3%. For the year, the company forecast EPS of between $6.25-$6.75. The guidance includes $390 million in pretax catastrophe losses. Analysts were looking for EPS of $7.64.

Shares of Brightpoint (CELL) fell -11.3% after the cellphone distributor warned its Q4 earnings would be below analyst estimates. The company now sees adjusted EPS of between 13-18 cents versus estimates of 19 cents.

Automaker Ford (F) announced that it saw a 33% increase in U.S. sales in December. On an adjusted basis, sales rose 23.3% for the month, much better than the 8.3% jump analysts were expecting. In total, the company sold 184,655 vehicles in December, up from 139,067 a year ago. The company also said it gained market share for the full year for the first time since 1995. Ford share jumped 6.6%. GM, meanwhile, said its U.S. December sales fell -10%. Twenty-six Pro investors counted Ford among their top-15 holdings at the start of Q4, while over 2200 tickerspy members included the stock in their portfolios.

Shares of potash fertilizer makers jumped after Credit Suisse upgraded the stocks. The firm cited news that Belarusian Potash Co. agreed to provide potash to China at $350 per ton as the primary reason for the improved view. China typically sets the floor on prices with its contracts given that it’s the largest buyer of the fertilizer. However, no contract price was ever agreed upon in 2009. Shares of Potash Corp. of Saskatchewan (POT), which were take to “buy” from “hold,” rose 5.5%, while Intrepid Potash (IPI), which was lifted to “neutral” from “underperform,” climbed 3.7%. Sixty-one Pro investors counted Potash Corp. among their top-15 holdings at the start of Q4, while over 2100 tickerspy members included the stock in their portfolios.

Tags: ACE, CAAS, CELL, F, IPI, POT