Cash Rich Tech Shares Attractive In Pullback

Stocks had a strong day on reports that European Central Bank President Jean-Claude Trichet plans to meet with EU officials to formulate a plan to bail out Greece. Of course, Greece isn’t he only EU nation facing debt issues, and we’re not yet convinced that the dip we’re in the middle of is over. We’re not expecting a huge sell-off but for the major market averages to at least reach official correction territory (down -10%). And as we’ve said previously, if the market continues to feel pressure, we favor starting to accumulate cash rich, large cap tech into the downturn.

The Bill Collector Stocks Index was the top performing tickerspy Index on the day, led by Encore Capital Group (ECPG) with a 17% gain.

Stocks climbed on the day, with the Dow up 150 points to 10,059. The S&P moved up 14 points 1,071, while the Nasdaq rose 25 points to 2,151. Oil jumped $2.06 to $73.95 a barrel, while gold rose $5.80 to $1,072.00 an ounce.

On the economic front, the Commerce Department reported that wholesale inventories fell -0.8% in December. Economists were expecting an increase of 1.0%.

In earnings news, Coca-Cola (KO) announced a Q4 profit of $1.54 billion, or 66 cents per share, up 55% from $995 million, or 43 cents a share, a year ago. Revenue rose 5% to $7.51 billion. Analysts were looking for EPS of 66 cents on sales of $7.21 billion. The stock rose 2.6%. Over 250 Pro investors counted the stock among their top-15 holdings at the start of Q4, while over 1,400 tickerspy members included the stock in their portfolios.

Shares of Electronic Arts (ERTS) sunk -8.8% after the video game maker offered a weak outlook. For fiscal Q3, the company lost -$82 million, or -20 cents per share, compared to a year-earlier loss of -$641 million, or -$2.00 per share. Adjusted EPS fell to 33 cents from 56 cents. That was 2 cents above analyst estimates after the company had warned it would miss prior forecasts. Revenue tumbled -25% to $1.24 billion. For fiscal Q4, the company guided for adjusted EPS of between 2-6 cents on revenue of $800-$850 million, well below Wall Street estimates for EPS 13 cents on sales of $851 million. Twently-one Pro investors counted the stock among their top-15 holdings at the start of Q4, while 192 tickerspy members included the stock in their portfolios.

Coventry Health Care (CVH) shares climbed 3.5% after the health insurer’s Q4 results topped the Wall Street consensus. For the quarter, the company recorded net income of $109.1 million, or 74 cents per share, up 24% from $88.2 million, or 60 cents per share, a year ago. Analysts were looking for EPS of 56 cents. Revenue rose 15% to $3.43 billion. For 2010, the company predicted a profit of between $2.10-$2.25 per share, versus estimates of $2.23.

Voice recognition technology company Nuance Communications (NUAN) posted a fiscal Q1 adjusted profit of 29 cents, two cents ahead of the consensus. As reported, the company lost -$4.3 million, or -2 cents per share, compared to a loss of -$26.3 million, or -11 cents per share, a year ago. Adjusted revenue climbed 16% to $284.6 million, well ahead of the $269.0 million Wall Street was expecting. For fiscal Q2, the company forecast EPS of 25-28 cents versus estimates of 27 cents. The stock fell -0.5%.

Tags: CVH, ECPG, ERTS, KO, NUAN