Love for Momentum Names Returns (MA, GMCR, NETL, YUM, TZOO)
It was a bit of a topsy-turvy day for stocks, but in the end the markets closed higher. This week has shown a return to momentum names, as after flocking from these stocks earlier this earnings season, investors have suddenly decided to bid up high-beta, high-multiple stocks on good reports. Meanwhile, investors have suddenly been able to forgive things like rising Chinese labor and input costs, which a week or two ago would have had them running for the exits. This Jekyll and Hyde market keeps us cautious in the near term.
The Coffee Stocks Index was the top performing tickerspy Index on the day, led by Green Mountain Coffee Roaster (GMCR) with a 15% gain. The Dotcom Travel Stocks Index was the day’s worst performing tickerspy Index, with Travelzoo Inc (TZOO) down -17%.
Stocks rose on the day, with Dow up 20 points to 12,062. The S&P added 3 points to close at 1,307, while the Nasdaq advanced 4 points to 2,754. Oil slipped -32 cents to $90.54 a barrel, while gold rose $20.90 to $1,353.00 an ounce.
In economic news, the Labor Department said initial jobless claims fell to 415,000 last week, down -9% from the previous week’s number of 457,000. Economists were expecting a reading of 425,000 new claims. The four-week moving average inched higher by 1,000 to 430,500. January nonfarm payroll data will be released Friday before the open of U.S. markets. Elsewhere, the Institute for Supply Management’s services index surged to 59.4% in January from 57.1% in December. Analysts were expecting a reading of 57.3% in January. Readings above 50 are considered positive.
In earnings news, shares of MasterCard (MA) rose 2.5% after the company said its fourth-quarter profit surged 41% to $415 million, or $3.16 per share, from $294 million, or $2.24 per share, a year earlier. Revenue jumped 11% to $1.44 billion. Analysts were expecting a profit of $3.03 a share on revenue of $1.43 billion.
Shares of Green Mountain Coffee Roasters surged 14.6% after the maker of Keurig coffee brewers and K-Cup coffee packs reported fiscal first-quarter earnings of $2.2 million, or 2 cents per share, compared with $10.1 million, or 8 cents per share, a year earlier. Excluding one-time items, the company earned 18 cents a share. Revenue came in at $575.0 million. Analysts were expecting a profit of 16 cents a share on sales of $545.5 million. Vermont-based Green Mountain forecasted earnings of 38-42 cents per share in the fiscal second quarter. It kept its 2011 adjusted EPS forecast at $1.19-$1.29. Fifteen pros held Green Mountain Coffee Roasters in their portfolios at the end of the third quarter, and more than 420 tickerspy members own the stock in their portfolios.
NetLogic (NETL) shares popped 9.3% after the semiconductor firm posted a narrower fourth-quarter loss. California-based NetLogic said it lost -$9.4 million, or -14 cents a share, in the fourth quarter, compared with –$37.2 million, or 71 cents a share, a year earlier. Excluding items, the company reported a profit of 45 cents a share compared with a profit of 30 cents a share in the fourth quarter of 2009. Sales rose 44.5% to $100.4 million. Analysts were looking for EPS 36 cents on sales of $100.1 million.
Shares of Yum Brands (YUM), the owner of the KFC, Pizza Hut, and Taco Bell restaurant chains, rose 3.1% after the Kentucky-based company said its fourth-quarter profit rose 27% to $274 million, or 56 cents a share, from $216 million, or 45 cents a share, a year earlier. Revenue rose to $3.56 billion from $3.37 billion. Analysts were expecting a profit of 60 cents a share on revenue of $3.51 billion. Earnings from Yum’s U.S. business, an area where the company has recently struggled, rose 15%. Looking forward, the company that it expects mid-teen China wage inflation in 2011 and for food costs to rise 5% in China and 4% in the U.S. 40 pros held Yum Brands in their portfolios at the end of the third quarter, and almost 700 tickerspy members own the stock in their portfolios.
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