To ‘Save’ Greece, Kick It Out (TXT, SEED, JAKK, CAR, DTG, HTZ, SQNS, CHME)
Europe continues to dominate the headlines and move the U.S. markets. Today, stocks surged after the leaders of France and Germany renewed their pledges not to let Greece default following Greek Prime Minister George Papandreou promising to take all necessary steps to implement fiscal reform. While the market liked the news, we continue to think it is just delaying the inevitable and that to “save” Greece, the country needs to be kicked out of the EU and have its own currency.
The France Stocks and ADRs Index was the top performing tickerspy Index on the day, led by Sequans Communications (SQNS) with a 68% gain. The Chinese Healthcare Stocks Index was the day’s worst performing tickerspy Index, with China Medicine (CHME) down -34%.
Stocks surged on the day, led by a 40-point, or 1.6%, increase in the Nasdaq to 2,573. The Dow jumped 141 points to close at 11,247, while the S&P advanced 16 points to 1,189. Oil fell -$1.30 to $88.91 a barrel, while gold slipped -$3.60 to $1,826.50 an ounce.
In economic news, the Labor Department said wholesale prices were unchanged last month following a 0.2% increase in July, inline with estimates. Excluding food and energy prices, core PPI edged up 0.1% in August, below the 0.2% reading economics were expecting. Elsewhere, the Commerce Department said retail sales were unchanged last month following a 0.3% increase in July. The July reading was revised down from an initial increase of 0.5%. Economists were expecting growth of 0.2%.
In earnings, industrial company Textron (TXT) pared its full-year profit guidance to 90 cents to $1 a share from an initial forecast of $1.00-$1.15 a share. Analysts were expecting $1.13. Shares of Rhode Island-based Textron, nonetheless, rose 6.4%. Two pros counted Textron among their top holdings at the end of Q2 and more than 200 tickerspy members own the stock in their portfolios.
Shares of Chinese agricultural company Origin Agritech (SEED) plunged -12.2% after the company said its fiscal third-quarter profit slid -86% to 9 cents a share on revenue of $37.4 million. That’s well below the 75 cents a share on revenue of $75.87 million that analysts were expecting. The company also lowered its full-year revenue guidance to $82.7-$85.8 million from $93.6-$101.4 million. The company’s CEO also resigned.
Shares of toymaker Jakks Pacific (JAKK) surged 22.3% after the California-based company received a $544 million buyout offer from Oaktree Capital Management. Oaktree is offering $20 a share for Jakks, a 25% premium to where the shares closed on Tuesday. Jakks said it is considering the offer.
Car rental firm Avis Budget Group (CAR) is abandoning its bid to buy rival Dollar Thrifty (DTG), citing current market conditions. Avis’ offer for Dollar Thrifty was worth about $1.67 billion, well below the $2.07 billion an offer made by rival Hertz (HTZ) is currently valued at. Hertz said it is continuing to try to get antitrust approval for its offer. Shares of Avis rose 6.3%, while Hertz gained 13.5%. Seven pros counted Avis among their top holdings at the end of Q2 and nearly 200 tickerspy members own the stock in their portfolios.
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