Europe Woes Suggest Weak Summer (CPB, KKD, TECD, HRB, JVA, CIS)

Stocks opened the week on a sour note, pulled down by more European debt woes and a weaker-than-expected Chinese manufacturing reading. Italy became the latest European Union country to face debt issues, with S&P warning that it could lower its rating on the country if it doesn’t lower its borrowing and increase economic output. The sound beating of Spain’s ruling Socialist party in local elections also fueled worries about the government’s ability to enforce spending cuts. Today’s concerns and market action continue to lead us to believe that it’s going to be a weak summer for the market, but we think that could be a prelude to a solid rebound in the fall.

The Coffee Stocks Index was the top performing tickerspy Index on the day, led by Coffee Holding Company (JVA) with a 5% gain. The Chinese IT Stocks Index was the day’s worst performing tickerspy Index, with Camelot Information (CIS) down -10%.

Stocks fell on the day, led lower by a -44 point, or -1.6% decline, in the Nasdaq to 2,759. The Dow tumbled -131 points to 12,381, while the Nasdaq fell -16 points to 1,317. Oil slid -$2.40 to $97.70 a barrel, while gold rose $6.50 to $1,515.40 an ounce.

In earnings news, Campbell Soup (CPB) said its fiscal third-quarter profit rose 11% to $187 million, or 57 cents per share, from $168 million, or 49 cents per share, a year earlier, as sales increased to $1.81 billion from $1.80 billion. Analysts were expecting a profit of 52 cents a share. For its fiscal year ending in July, New Jersey-based Campbell expects an adjusted profit of $2.47 a share versus analyst estimates of $2.42. Shares of Campbell fell -0.8%. Five pros counted Campbell Soup among their top holdings at the end of Q1 and more than 160 tickerspy members own the stock in their portfolios.

Shares of Krispy Kreme Doughnuts (KKD) surged 25.8% after the company said its first-quarter profit more than doubled to $9.2 million, or 13 cents a share, from $4.5 million, or 6 cents a share, a year earlier. Revenue jumped 14% to $104.6 million. Analysts were expecting a profit of 9 cents on revenue of $96.5 million. The company reaffirmed fiscal 2012 operating income guidance of $22-$24 million.

Shares of information technology products distributor Tech Data (TECD) plunged -12.3% after the Florida-based company’s fiscal first-quarter results missed Wall Street estimates. Tech Data said its profit for the quarter rose to $48.7 million, or $1.03 per share, up from $45.6 million, or 88 cents per share, a year earlier. Revenue climbed 13% to $6.33 billion. Analysts were expecting a profit of $1.05 a share on revenue of $6.4 billion. The company said it expects operating income and earnings to grow by double digits this year, but did not give specific guidance.

The Justice Department filed an antitrust lawsuit today attempting to block H&R Block’s (HRB) $287.5 million purchase of 2SS Holdings, the owner of TaxACT, on the grounds that the deal would stifle competition in the market for do-it-yourself tax preparation. The Justice Department says it has evidence that H&R Block believes eliminating a competitor is one of the primary reasons for the acquisition. Shares of H&R Block fell -0.4%. Sixteen pros held H&R Block in their portfolios at the end of Q1 and more than 140 tickerspy members own the stock in their portfolios.

Tags: CIS, CPB, HRB, JVA, KKD, TECD