MARKET CURRENTS
real-time news and commentary for investors
MARKET CURRENTS
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Today - Tuesday, May 22, 2012
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11:12 AM Shares of Hugoton Royalty Trust (HGT -22.9%) plunge as a Sir Perfluis analysis on Seeking Alpha says "purchasing HGT units at current prices is like buying 60 cents for a dollar... Quite literally, unless natural gas prices stage a rally, a current HGT unit-holder can expect to receive total cash flows of less than the current share price." Comment!
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10:56 AM Investors can grab Plains All American Pipeline (PAA +1%) and its 5.3% dividend yield even cheaper than director Gary Petersen did when he bought 5K shares on May 17 at $79.47 each, DividendChannel writes. A long-term dividend history chart strongly suggests PAA is likely to continue paying a comparably attractive dividend. Comment!
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10:22 AM The selloff in Chesapeake Energy (CHK +0.2%) creates a buying opportunity, Oppenheimer says while maintaining its Outperform rating and $28 price target. CHK is accelerating its liquids production growth and asset monetization, and the firm thinks its net asset value after pending asset sales is above its current share price.
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10:09 AM EnerNOC (ENOC +12%) shares surge after Needham raises its rating to Buy from Hold, believing the stock has bottomed and should become more attractive to long-term investors. The firm says ENOC isn't another Comverge (now private), "as the company has far more substantial scale, prior history of profitability, and healthier overall capitalization." Comment!
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9:39 AM Half of all S&P 500 stocks now yield more than the 10-year Treasury note's record low 1.74%, according to Bespoke. There are 271 stocks in the S&P 500 with a greater yield than the 10-year Treasury; of the remaining 229 stocks in the index, 126 have a dividend yield less than the 10-year, while 103 pay no dividend at all. Comment!
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6:25 AM Piper backtracks on a recent upgrade of Lowe's (LOW) after yesterday's guidance blunder, shuffling LOW to Neutral from Overweight, and reducing price-target to $28 from $41. "We still expect home remodeling growth to run above GDP growth for 2012-3, but no longer believe LOW is fully participating in the remodeling cycle," firm says. Shares -10% Monday to $25.60. 1 Comment
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Monday, May 21, 2012
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5:22 PM Henry Blodget sets a target range of $16-$24 for Facebook (FB -11%), based on a valuation of 20x-30x a 2013 EPS estimate of $0.80. Blodget's retort to those bullish due to Facebook's growth potential: Facebook has already been working on monetization for years; Mark Zuckerberg cares more about Facebook's "social mission" than its business; and the company's next billion users, weighted towards emerging markets, will be much less valuable than its first billion. (previous) 21 Comments
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4:01 PM Though it sold off from the day's highs, Envivio (ENVI +3.8%) closed with a decent gain after underwriters launched coverage with bullish ratings. Stifel thinks the TV Everywhere hardware/software vendor will see its addressable market grow at a 34% CAGR through 2015 with the help of new products, and Goldman argues deals with Time Warner Cable, Verizon, and Cablevision validate Envivio's technology lead. Comment!
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2:45 PM The sharp pullback in shares of Martin Marietta (MLM +1%) and Vulcan (VMC +3.5%) since February is overdone, KeyBanc says in upgrading each stock to Buy from Hold. On MLM, the firm thinks industry structure remains favorable, reflecting price power on a locally sourced and shipped product. On VMC, the firm sees a "nascent recovery" in its cyclically depressed aggregates. Comment!
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2:29 PM Goldman Sachs downgrades XL Capital (XL -1%) to Sell, believing XL’s professional liability-heavy book, along with last year's hiring ramp-up, will make it difficult to see margin expansion despite moderately improved pricing. "Margin improvement at XL will lag peers with a lower expense load or without books of business that require fixing." Comment!
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2:12 PM Coverage of Penn Virginia (PVA +12.9%) is started at Brean Murray with a Buy rating and a $10 price target, as the firm says proceeds from the company's anticipated Granite Wash divestiture should shift market focus from liquidity concerns to the value of its Eagle Ford acreage. Comment!
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2:11 PM Splunk (SPLK +1.5%) receives more positive analyst coverage (previous) courtesy of Barclays' Raimo Lenschow, who argues the potential market for Splunk's software, used to analyze machine data, could be much larger than is currently believed. In Lenschow's view, Splunk's solutions for analyzing petabytes (thousands of terabytes) of data per day, are "creating a whole new market." (earlier) Comment!
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1:45 PM SA author Kevin Quon highlights 5 firms that are prospering from low natural gas prices, including those that benefit from the use of gas as a fuel source and those that make it readily available. The five are Clean Energy Fuels (CLNE +7.55%), Fuel Systems (FSYS +2.9%), Golar LNG (GLNG +3.6%), Chart Industries (GTLS +5.3%) and Westport (WPRT +11.3%). 8 Comments
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12:08 PM Nabors Industries (NBR +6.5%) is one of today's top S&P gainers after Guggenheim upgrades shares to Buy from Neutral, "first and foremost" a valuation call. "Improving U.S. gas market fundamentals and expanding international margins [may] prompt investors to consider how oversold the stock has become" relative to its underlying asset value and strong cash flow. Comment!
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12:05 PM Crosstex Energy (XTEX) +4.1%, possibly due to BrightonMarkets releasing new coverage on the stock. The firm says that despite concerns about volatility in 2012, it "continues to identify high momentum situations with growth potential." Forbes argued last week that Crosstex was "very oversold." Comment!
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11:26 AM Polycom (PLCM +4.1%) bounces off multi-year lows with the help of a bullish Wells Fargo note. The firm argues the impact of Polycom's recent CFO transition should be minimal, and that the company's financial health is strong. Comment!
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10:28 AM J.J. Abodeely is "jumping into the abyss" in pursuit of downtrodden gold mining stocks. If shares are being weighed by a negative view of the gold price and concern over input costs, he thinks they should rally if either conditions is resolved favorably; he also believes evidence of further economic weakness would be met with a policy response that will benefit gold. 1 Comment
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8:54 AM Alpha Natural Resources (ANR) is raised to Buy from Hold with a $15 price target at Brean Murray, citing valuation: "The fundamentals and the outlook of the company and the met coal market did not materially change over recent weeks. What did change is the stock price." Shares, -46% YTD, +2% premarket. 1 Comment
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8:41 AM Boeing (BA) +1.3% premarket after Argus upgrades shares to Buy from Hold with an $85 target price. The firm cites favorable trends helping BA: commercial flight demand continues to recover, airlines are eager to replace aging aircraft with more fuel-efficient planes, and BA's strong international and commercial market sales help insulate it from cuts in U.S. defense spending. Comment!
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Friday, May 18, 2012
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5:54 PM The time may be right for long-term investors to find winning bargains in natural gas, Intrepid Capital's Mark Travis says, listing Bill Barrett (BBG) and Patterson-UTI Energy (PTEN) as examples of stocks with solid balance sheets to go along with attractive valuations. But there's too much debt at Chesapeake (CHK): "Shareholders need to be aware that the bankers eat first." 3 Comments
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