Overbought Market Dips, But Outlook Still Bullish (MON, FDO, JASO, CKR)

The market dropped on the day, and while worries about Greece or rate increases were some reasons cited, it probably was just some profit-taking, as stocks can’t just consistently go up without going down occasionally. Or, in other words, the market was a little bit overbought in the short term. However, we think the current bull market is still intact and expect solid earnings to help keep it rolling along in the near term.

The Chinese Solar Stocks Index was the top performing tickerspy Index on the day, led by JA Solar Holdings (JASO) with a 10% gain.

Stocks fell on the day, with the Dow off -72 points to 10,898. The S&P fell -7 points to 1,182, while the Nasdaq lost -6 points to 2,431. Oil dropped -96 cents to $85.88 a barrel, while gold jumped $17.20 to $1,152.30 an ounce.

On the economic front, consumer credit was -$11.5 billion in February, according to the Federal Reserve. Economists were only expecting a -$0.7 billion decline.

In earnings news, seed maker Monsanto (MON) saw its Q2 profit fall -19% to $887 million, or $1.60 per share, compared to $1.09 billion, or $1.97 per share, a year earlier. Excluding one-time items, the company earned $1.70 per share. Revenue fell -4% to $3.89 billion. The Wall Street consensus was for EPS of $1.73 on sales of $3.9 billion. The company also said it was unlikely to meet its goal of doubling its 2007 gross profit by 2012, and said 2010 earnings would likely come in at the low end of its $3.10-$3.30 guidance. The stock fell -2.1%. Eighty-nine pro investors counted the stock among their top-15 holdings at the start of Q1, while over 1,100 tickerspy members included the stock in their portfolios.

Shares of Family Dollar (FDO) rose 3.0% after the deep discount retailer reported better-than-expected results and offered upbeat guidance. For fiscal Q2 ended February 27th, the company earned $112.2 million, or 81 cents a share, up 33% from $84.1 million, or 60 cents per share, a year ago. Analysts were looking for EPS of 78 cents. Revenue climbed 4.9% to $2.1 billion, in line with estimates, on a 3.6% increase in same-store sales. For March, meanwhile, the company said comparable-store sales were up 11%. Looking forward, the company guided for EPS of between 71-76 cents for fiscal Q3 and $2.48-2.58 for the full year, above estimates of 70 cents and $2.47, respectively.

Shares of Chinese solar company JA Solar rose 9.7% after the firm boosted its Q1 sales forecast. The company now expects to sell more than 265 megawatts of solar equipment in the quarter ended March 31st, compared to a prior outlook of between 215 and 225 megawatts. Three pro investors counted the stock among their top-15 holdings at the start of Q1, while nearly 1,000 tickerspy members included the stock in their portfolios.

In M&A news, shares of CKE Restaurants (CKR) rose 6.6% after the owner of fast food restaurants Carl’s Jr. and Hardee’s said it has received a superior offer to the one it previously accepted from Thomas H. Lee Partners. The current deal on the table is for $619 million, or $11.05 per share, plus the assumption of $309 million in debt. CKE was given a shopping period of 40 days to look for a better deal that ended yesterday.

Tags: CKR, FDO, JASO, MON