Volatility Amid Nuclear Instability (VRA, PSUN, WFT, RMBS, GMCR, URZ)
Stocks were hit pretty hard today, as worries about the nuclear situation in Japan persisted. Word from the Street is also that some pretty large hedge funds were caught leaning a little too long, so margin pressure could also be contributing to some of the sell-off. We warned investors over a month ago to become more cautious as we expected a pullback, and so far that has proven to be solid advice to heed. We expect some more volatility in the days and weeks ahead, but think investors can soon start to take advantage of the market weakness to wade into some solid names. Put selling is also another strategy to consider to help build positions.
The Coffee Stocks Index was the top performing tickerspy Index on the day, led by Green Mntn Coffee Roaster (GMCR) with a 4% gain. The Uranium Stocks Index was the day’s worst performing tickerspy Index, with Uranerz Energy (URZ) down -10%.
Stocks dropped of the day, with the Dow plunging -242 points to 11,613. The S&P shed -25 points to close at 1,257, while the Nasdaq tumbled -51 points to 2,617. Oil rose 80 cents to $97.98 a barrel, while gold moved $3.30 higher to $1,396.10 an ounce.
In economic news, producer prices rose in February at their most rapid clip in over 1.5 years with the Labor Department reporting a jump of 1.6%, double the 0.8% increase seen in January. Economists were expecting an increase of 0.7% in February. Excluding food and energy costs, core CPI rose 0.2%. Housing starts, meanwhile, plunged to their lowest level in 27 years last month to annual rate of 479,000 units, according to data released by the Commerce Department. The January reading was revised up to 618,000 units from 596,000, but economists were expecting a February reading of 570,000 units.
In earnings news, shares of Vera Bradley (VRA), the maker of hadbags and accessories, surged 14.3% after the company’s fiscal fourth-quarter earnings beat Wall Street estimates. The Indiana-based company posted a profit of $14.2 million, or 35 cents a share, compared with $17.3 million, or 49 cents a share, a year earlier. Sales rose 29% to $109.4 million. Excluding one-time items, Vera Bradley earned 39 cents a share. Analysts were expecting a profit of 27 cents on sales of $95.6 million.
Shares of teen retail Pacific Sunwear (PSUN) plunged -13.9% after the company reported a fourth-quarter loss of -$35 million, or -53 cents per share, compared with a loss of -$36 million, or -56 cents per share, a year earlier. Sales slipped -10% to $263 million. Excluding one-time items, Pacific Sunwear lost -33 cents compared with a loss of -26 cents a year earlier. Analysts were expecting a loss of -27 cents on sales of $272 million. The company expects a first-quarter loss of between -29 to -35 cents a share on an adjusted basis.
Oil services firm Weatherford International (WFT) reduced its first-quarter profit outlook to 18 cents a share from prior guidance of 27 cents a share due to poor weather and political instability in the Middle East and North Africa. Analysts were expecting a profit of 23 cents. The company also said in an SEC filing that it wasn’t able to give full-year guidance because of the issues in the Middle East and North Africa and volatile energy prices. Weatherford previously said it expected to earn $1.30 a share this year. The stock fell -2.8%. Fifty-one pros held Weatherford in their portfolios at the end of 2010, and 740 tickerspy members own the stock in their portfolios.
Shares of Rambus (RMBS), which licenses its designs for memory chips, jumped 4.0% after the company said it renewed a deal with Toshiba that allows that Japanese firm to license patents pertaining to certain chips. The five-year agreement governs Toshiba chips that provide dynamic random-access memory, including SDR, DDR, DDR2, DDR3 and other DRAM technology. Three pros held Rambus in their portfolios at the end of 2010, and almost 230 tickerspy members own the stock in their portfolios.
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