Bulls Dive Back Into Stocks (NTAP, PETM, DRYS, SPLS, GM, UEC)
Investors dove back into the market today after several down or drifting sessions. The return of General Motors (GM) as a public company after last year’s government led bailout and forced bankruptcy helped put investors back into a buying mood. Concerns also eased over the Irish debt crisis, with the U.K. joining the European Union in saying it was also willing to provide support. There will likely be some more lurching moves to the downside but overall we’re still looking for a solid Santa Claus rally to close out 2010 as corporate earnings reports, for the most part, have been pretty good.
Stocks posted solid gains today with the Dow adding 173 points to close at 11,181. The Nasdaq closed at 2,514, up 38 points, while the S&P 500 added 18 points to close at 1,197. Gold rose by $16.10 to $1,353.00 per ounce, while oil was also up $1.41 per barrel to $81.85.
On the economic front, the Labor Department announced that unemployment claims rose by 2,000 to a seasonally adjusted 439,000 last week. Economists were expecting a rise to 440,000. Meanwhile, the unemployment rate held steady at 9.6%. Elsewhere, the Conference Board declared that its index of leading economic indicators increased 0.5% last month, following an identical reading in September.
In earnings news, shares of NetApp (NTAP) jumped 8% despite the company issuing weaker-than-expected guidance for its third quarter. For the period ended October 29th, net income was $164.6 million, or 42 cents a share, up from $95.7 million, or 27 cents a share, last year. Adjusted EPS was 52 cents, which topped estimates by three cents. Revenue grew to $1.21 billion from $910 million, while gross margin fell to 66.3% from 66.7%. For Q3, NetApp said it expects adjusted EPS of 48-50 cents on revenue of $1.24-$1.29 billion. The Street was looking for Q3 adjusted EPS of 51 cents on revenue of $1.26 billion. A total of 39 Pro investors counted the stock in their top-15 U.S.-listed equity holdings at the start of Q3, while 287 tickerspy members held the stock in their portfolios.
PetSmart (PETM) raised its full-year outlook and also reported that its Q3 profit soared 23%. For the quarter, the pet products retailer earned $45.6 million, or 38 cents per share, matching expectations. Year-earlier net income was $38.1 million, or 31 cents per share. Revenue climbed 7% to $1.4 billion. The company raised its FY10 EPS target to $1.96-$2.00 from $1.91-$1.99. Analysts are expecting FY10 EPS of $1.98. For Q4, PetSmart expects EPS of 71-75 cents, bracketing the 73-cent consensus. The stock edged down -3.7%.
Shares of DryShips (DRYS) rose 7.7% after the drybulk shipper and driller’s quarterly results easily beat expectations. For the third quarter, the company earned $49.3 million, or 18 cents a share, up from $31.4 million, or 11 cents a share, a year ago. Adjusted EPS was 38 cents, which soared past the 25-cent consensus. Revenue edged up about 1% to $225.5 million, coming in above the Street’s estimates of $216.9 million. Looking forward, CEO George Economou said, “We believe we will again outperform the spot market next year.” A total of 5 Pro investors counted the stock in their top-15 U.S.-listed equity holdings at the start of Q3, while 2,336 tickerspy members held the stock in their portfolios.
Staples (SPLS) saw its shares move up 2% after the company said its Q3 net income grew 7%, partly due to lower costs. For the quarter, the office-supply seller posted a profit of $288.7 million, or 40 cents a share, up 7% from $269.4 million, or 37 cents a share, last year. Adjusted EPS came in at 41 cents, a penny higher than estimates. Revenue inched up to $6.54 billion from $6.52 billion, while same-store sales slipped -1%. Looking ahead, the company forecast Q4 EPS of 39-41 cents, straddling the 40-cent consensus, and full-year EPS of $1.27-$1.29. Wall Street is looking for full-year EPS of $1.28.
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