Investors Appear Cautiously Optimistic (CLD, RUE, LSI, MEE, TXI)
Stocks continued their slow but steady rise, with the major market averages all breaking out to new closing highs. We continue to remain cautiously optimistic in the near to medium term, with the fundamentals and technicals both looking good, but at the same time recognizing that the economic recovery could be a bumpy one. Interest rates and jobs will be two areas investors will continue to focus on as we move forward.
All three major stock market averages closed at their highest levels since the late summer, early fall of 2008. The Dow gained 48 points to closed at 10,734, its best finish since October 1st, 2008. The S&P 500 closed at 1,666 and the Nasdaq finished at 2,389, their best finishes since September and August 2008, respectively. Gold also rose by $1.80 to $1,124.00 per ounce, while oil closed up $1.23 to $82.93 per barrel.
On the economic front, the producer price index (PPI) fell -0.6% in February, according to the Commerce Department, while core PPI, which excludes food and energy costs, increased 0.1%. Economists were expecting readings of -0.2% and 0.1%, respectively.
In earnings news, coal producer Cloud Peak Energy (CLD) announced Q4 income from continuing operations of $35.2 million, or 59 cents, up 6% from $33.3 million, or 56 cents, a year ago. Revenue rose 1% to $337 million. Analysts were looking for EPS of 49 cents on sales of $337 million. Looking forward, the company said that 94% of its 2010 estimated production is committed under fixed price contracts at an average price of $12.52 a ton. The stock slipped by -1%.
Shares of rue21 (RUE) rose 3.7% after the youth apparel retailer reported Q4 results that topped analyst estimates. For the three-month period ended January 30th, the company earned $7.7 million, or 32 cents a share, up 67% from $4.6 million, or 20 cents a share, a year earlier. Adjusted EPS came in at 36 cents. Revenue climbed 30% to $155.4 million, as same-store sales jumped 8.6%. The Wall Street consensus was for EPS of 30 cents on sales of $149.7 million. For 2010, the company forecast EPS of between $1.08-$1.13 versus estimates of $1.04.
LSI Corp. (LSI) shares jumped 8.9% after the chipmaker raised its Q1 outlook and announced a $250 million stock buyback program. The company now anticipates reporting adjusted EPS of between 7-11 cents, up from prior guidance of 4-10 cents. Revenue is forecast to come in between $620-$640 million. Analysts were looking for EPS of 7 cents on sales of $607.7 million. Four pro investors counted the stock among their top-15 holdings at the start of Q1, while 178 tickerspy members included the stock in their portfolios.
In M&A news, coal producer Massey Energy (MEE) announced after the bell last night that it would acquire privately held rival Cumberland Resources. Massey will pay $640 million in cash and $320 million in stock for Cumberland, which has 416 million tons of reserves in Virginia and Kentucky, with 216 million tons expected to have metallurgical coal qualities. Massey shares rose 5.8%. Five pro investors counted the stock among their top-15 holdings at the start of Q1, while over 350 tickerspy members included the stock in their portfolios.
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