Strong Balance Sheets Mean More M&A (LYB, TEN, MNST, KO, SUN, ETP, ZAGG, PAY)
Stocks traded modestly lower on the day, breaking a four-session winning streak. The economic news was modestly weak, while Spain not surprisingly fell back into recession. On the positive front, it was a day filled with M&A activity, which helps exemplify the strong balance sheets throughout corporate America.
The Computer Peripheral Stocks Index was the top performing tickerspy Index on the day, led by Zagg Inc (ZAGG) with a 6% gain. The Point of Sales and ATM Technology Stocks Index was the day’s worst performing tickerspy Index, with VeriFone Holdings (PAY) down -12%.
Stocks fell on the day, led lower by a -23 point, or -0.7% decline, in the Nasdaq to 3,046. The Dow dropped -15 points to 13,214, while the S&P lost -5 points to close at 1,398. Oil edged -6 cents lower to $104.87 a barrel, while gold slipped -60 cents to $1,664.20 an ounce.
In economic news, the Commerce Department said personal incomes rose 0.4% in March topping the 0.3% increase economists expected. Spending rose 0.3%, missing the 0.4% increase economists expected. The Chicago Purchasing Managers Index dropped to 56.2% in April from 63.3% in March, good for a 29-month low. Economists had expected a 60.8% reading.
In earnings news, shares of LyondellBasell Industries (LYB) slid -8.5% after the chemical company said its first-quarter profit fell -9% to $600 million, or $1.04 per share, from $663 million, or $1.15 per share, a year earlier. Revenue dropped to $11.9 billion from $12.3 billion. On an adjusted basis, LyondellBasell earned $1.07 a share. Analysts had expected a profit of $1.03 a share on revenue of $12.08 billion.
Shares of auto parts maker Tenneco (TEN) plunged -14.6% after the company said its first-quarter profit fell to $30 million, or 49 cents per share, from $47 million, or 75 cents per share, a year earlier. Revenue increased to $1.91 billion from $1.76 billion. On an adjusted basis, the company earned 66 cents. Analysts had expected a profit of 73 cents per share on revenue of $1.88 billion.
Shares of Monster Beverage (MNST) surged after The Wall Street Journal reported soda giant Coca-Cola (KO) is in talks to buy the California-based maker of energy drinks. The Journal said if the deal happens, it would be Coca-Cola’s largest brand acquisition ever. However, a denial from Coca-Cola sent Monster’s shares plunging back down to Earth late in the day to finish lower by -0.8%. Nearly 350 pros held Coca-Cola in their portfolios at the end of Q4 and nearly 2,300 tickerspy members own the stock in their portfolios.
Shares of Sunoco (SUN) soared 20.5% after Energy Transfer Partners (ETP) agreed to acquire the company for $5.3 billion, a deal that values Sunoco at $50.13 per share. The acquisition includes nearly 8,000 miles of pipeline, as well as 4,900 gas stations in 24 Eastern states. Ten pros counted Energy Transfer Partners among their top holdings at the end of Q1 and over 1,000 tickerspy members own the stock in their portfolios.
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