China in Focus Over the Weekend (PLL, NSM, GMCR, CYH, THC)

Stocks closed out the week on a solid note. The economic data was once again encouraging, and economists have started to boost their GDP forecasts for next year on a brighter economic outlook. Investors will turn their attention to China this weekend, though, as many pundits believe the country could raise rates yet again over the weekend after the country reported both strong import and export data. With the stock market strong of late, we wouldn’t mind a small pullback that opens up some better buying opportunities.

The Hospital Stocks Index was the top performing tickerspy Index on the day, led by Tenet Healthcare (THC) with a 55% gain.

Stocks climbed on the day, with the Dow up 40 points to 11,410. The S&P advanced 7 points to 1,240, while the Nasdaq rose 21 points to 2,638. Oil fell -58 cents to $87.79 a barrel, while gold dropped -$7.90 to $1,384.90 an ounce.

On the economic front, consumer sentiment in early December rose more than expected, according to the Thomson Reuters/University of Michigan’s index, coming in at 74.2, up from 71.6 in November and better than the 72.5 reading expected by economists. Meanwhile, its index of current economic conditions increased to 85.7, topping November’s 82.1 reading and estimates of 83.1. Elsewhere, the Commerce Department said that the U.S. trade deficit shrank -13% in October to $38.7 billion, less than the $44.5 billion consensus.

In earnings news, shares of Pall (PLL) moved up 4.1% after the water filtration company posted better-than-expected fiscal Q1 results. For the period ended October 31st, Pall earned $71.4 million, or 61 cents per share, up 6.6% from $67 million, or 56 cents per share, a year ago. Adjusted EPS was 62 cents, which easily topped the 50-cent consensus. Revenue rose to $605.5 million from $546.9 million. Analysts were expecting revenue of only $589.4 million. Looking forward, the company projects FY11 EPS of $2.48-$2.63, up from an earlier view of $2.35-$2.55 and above analyst estimates of $2.46. Sixteen Pros held the stock in their top-15 U.S.-listed equity positions at the end of Q3, and 55 tickerspy members hold the stock in their portfolios.

National Semiconductor (NSM) saw its shares drop -7.8% after the chipmaker announced a Q3 revenue outlook that came in below expectations. For Q2, net income was $83.5 million, or 34 cents per share, up 78% from $47 million, or 20 cents per share, last year. Analysts were looking for EPS of 32 cents. Sales jumped 13% to $390.4 million. The company expects revenue to be in the range of $344-$359 million during Q3, below estimates of $382.3 million, due to lower demand than usual from handset manufacturers. Four Pros held the stock in their top-15 U.S.-listed equity positions at the end of Q3, and 114 tickerspy members hold the stock in their portfolios.

Shares of Green Mountain Coffee Roasters (GMCR) sank -9.7% after the company’s fiscal Q1 forecast disappointed investors. For fiscal Q4, Green Mountain posted a profit of $27 million, or 20 cents a share. A year earlier, net income was $14.1 million, or 12 cents a share. Revenue soared 73% to $373.1 million. Adjusted EPS was 22 cents, 2 cents better than the consensus Looking forward, the coffee company guided for adjusted EPS of 14-18 cents in Q1, missing the 20-cent consensus. For FY11, it projected EPS of $1.19-$1.29, down from its prior view of $1.24-$1.29 and only slightly above the $1.18 consensus.

In M&A news, Community Health Systems (CYH) has offered to buy hospital operator Tenet Healthcare for $3.3 billion, or $7.3 billion including the assumption of debt. Based on Tenet’s closing price yesterday, the $6 per share bid represents a premium of 40%. Tenet’s management has rejected the bid, however, pushing shares of the stock 55.0% higher, above $6. Shares of Community Health rose 13.4%.

Tags: CYH, GMCR, NSM, PLL, THC