Buffett Comments Send Stocks Rebounding (KCP, OSTK, OSG, NHP, TREX, LDK, VTR)
While technology shares lagged, stocks overall had a solid day, bolstered by comments from Warren Buffett, a strong Chicago PMI number, and a nice jump in personal income, which was bolstered by a cut in the payroll tax. Overall, the Recommended List ended February up 4.7% year to date. While in positive territory, that just trails the 5.5% gain in the S&P. However, since 2008 when the market was rocked by the Great Recession, the Recommended List has still outperformed the S&P by over 40%. Overall, we still remain cautious in the near term.
The Lumber and Wood Production Stocks Index was the top performing tickerspy Index on the day, led by Trex Company (TREX) with a 12% gain. The Chinese Solar Stocks Index was the day’s worst performing tickerspy Index, with LDK Solar Company (LDK) down -7%.
Stocks rose of the day, led by a 96-point, or 0.8%, gain in the Dow to 12,226. The S&P jumped 7 points to 1,327, while the Nasdaq edged up 1 point to 2,782. Oil fell -91 cents to $96.97 a barrel, while gold inched up 60 cents to $1,409.90 an ounce.
In economic news, the Commerce Department said personal incomes rose 1% on a seasonally adjusted basis in January, good for the biggest increase in 18 months. Consumer spending rose 0.2%. Economists were expecting personal incomes to rise 0.9% and consumer spending to increase by 0.4%. Elsewhere, the Chicago Purchasing Managers Index surged to 71.2 in February from 68.8 in January, easily beating the reading of 67.7 expected by economists. Any reading above 50 is considered bullish. The National Association of Realtors said pending home sales slid -2.8% in January to 88.9 from 91.5 in December.
In earnings news, shares of Kenneth Cole (KCP) dropped -7.0% after the apparel and fragrance maker posted poor Q4 results and said CEO Jill Granoff is departing. Chairman and Chief Creative Officer Kenneth Cole will be the interim CEO. The company reported a narrower fourth-quarter loss of -$2.7 million, or -15 cents per share, compared with -$52 million, or- $2.88 per share, a year earlier. Revenue rose 10% to $107.9 million, as same-store sales surged 14.1%. Analysts, however, were looking for a profit of 31 cents per share on sales of $120.7 million.
Shares of Overstock.com (OSTK) surged 9.2% after the online discount retailer said its fourth-quarter earnings jumped to $14.8 million, or 63 cents per share, from $12.7 million, or 55 cents per share, a year earlier. Sales climbed 8% to $348.9 million. The consensus was for EPS of 43 cents on revenue of $364.1 million. Three pros held Overstock in their portfolios at the end of 2010, and almost 60 tickerspy members own the stock in their portfolios.
Overseas Shipholding Group (OSG) shares slid -4.3% after the company reported a fourth-quarter loss of -$55.3 million, or -$1.83 a share, compared with a loss of -$23.2 million, or -86 cents a share, a year earlier. Excluding one-time items, the company lost -$1.96 a share. Revenue slid -4% to $232 million. Analysts were expecting a loss of -$1.98 a share on revenue of $230.3 million.
Shares of Nationwide Health Properties (NHP) surged 9.7% after rival Ventas (VTR) said it would acquire the company for about $7.4 billion, including the assumption of debt, in an all-stock deal. The deal values NHP at about a 15% premium to where the shares closed on Friday and will create one of the largest U.S. healthcare REITs. Nationwide shareholders will get 0.7866 Ventas shares for each Nationwide share they own. The transaction is expected to close in the third quarter. Fifteen pros held Nationwide Health Properties in their portfolios at the end of 2010, and almost 70 tickerspy members own the stock in their portfolios.
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