Posts by Lawrence Lewitinn
- Lawrence Lewitinn at Talking Numbers2 days ago
Barbie may have boldly asked its fans to "be who you want to be," but apparently, one of the things Barbie isn't right now is a growing toy product.
Mattel reported net sales at $946.2 million, about 5 percent lower than last year. And, it also reported a loss of $11.2 million in the most recent quarter compared with a $38.5 million profit a year ago. One of the big reasons: Its iconic Barbie sales fell 14 percent.
According to Steve Cortes, founder of Veracruz TJM, Mattel products like Barbie and Thomas the Tank Engine are having a tough time keeping children's interests.
"It is a digital world," Cortes said on the "Talking Numbers" segment of CNBC’s “Street Signs.” "If you were to put those toys on the floor next to a tablet that has games on it, almost every child now is going to play with the tablet. So, in this space, I much prefer that you look to names like Electronic Arts or even Disney, the creators of the next wave of kids' entertainment, not Mattel."
- Lawrence Lewitinn at Talking Numbers3 days ago
Chipotle is hot!
The restaurant chain bringing Mexican cuisine to malls and downtowns in 1,637 locations is reporting fantastic revenue growth. For the most recent quarter, the company saw a 24.4 percent increase in revenue, to $904.2 million. That growth didn't just come from increasing the number of Chipotle restaurants; it's also from the 13.4 percent increase in same-store sales compared to last year.
However, higher food prices took a bigger bite out of profits. The company reported that food costs came to 34.5 percent of sales, 1.5 percentage points higher than last year thanks to higher prices in beef, avocado, and cheese. For that reason, the company announced that it will be increasing its menu prices for the first time nearly three years. The company's lower-than-expected net income of $83.1 million for the quarter was part of the reason shares of Chipotle were down 6 percent on Thursday.
- Lawrence Lewitinn at Talking Numbers5 days ago
Tuesday’s steep selloff breaks gold's five-day winning streak. The yellow metal had hit a three-week high to $1,328 per ounce as tensions mount between Ukraine and Russia.
But, according to “Talking Numbers” contributor Richard Ross, global technical strategist at Auerbach Grayson, the rout is providing a good buying opportunity, as the charts are doing something they haven't done in a while: flash a buy sign.
"There are some signs that make gold very attractive at these levels," said Ross. "I'm not a gold bug per se but I do like a nice chart and I think that's what we can see here with gold. It has a lot of things in its favor."
- Lawrence Lewitinn at Talking Numbers5 days ago
Want an idea of what companies may be big in the future? Take a look at where the kids are spending money now.
And, one of the biggest recipients of teens' (or their parents') money besides clothing retailers are quick-service restaurants, otherwise known as fast food.
Recently, Nicole Miller Regan, senior research analyst at Piper Jaffray, conducted a survey of 7,500 teens and found some surprising results which she shares with “Talking Numbers”: 1. Starbucks leads the preference for teens in the limited-service segment
Miller Regan's survey shows that 59 percent of teens prefer the limited-service segment (which includes quick service and fast casual), up from 43 percent just five years ago.
"The big picture element here is, from a decade ago, we see a trend where limited service is taking share from full service," said Miller Regan.
Though 11 percent of average-income teens and 12 percent of upper-income teens prefer Starbucks, it's the leading brand in this segment. Miller Regan's research shows that over the past seven years, Starbucks is the only company to maintain double-digit market share preference in the category.
That's what a couple of research teams are saying about Visa and MasterCard on Monday morning. Both Pacific Crest Securities and Baird upgraded their rating on the two credit card giants. Baird wrote this to investors Monday:
"We are upgrading MasterCard & Visa to Outperform as risk/reward has become more attractive, in our view. Key factors in our upgrade include the strong secular tailwinds in the business model, solid FCF [free cash flow] generation, our view that regulatory/competitive fears are overblown, and what we view as a compelling valuation. We see the recent pullback as a good opportunity to buy and view risk/reward as solid over the next year."
For Visa, Baird assigned a $245-per-share price target, while for MasterCard Baird sees an eventual price of $83 per share.
While they both had a phenomenal run over the past five years (Visa gained 304 percent while MasterCard is up 403 percent), things haven't been so smooth for the two companies since the start of the year. Both are lower since their record highs in January.
At what point could things get really bad for the market? That's the question traders are asking themselves after a tumultuous week.
And that fear is being seen in the charts. Roughly half of the stocks in the S&P 500 are trading below their 50-day moving average and about a quarter of the index is trading below their 200-day moving average. The S&P 500 index itself closed below its 100-day moving average on Friday.
All of this is happening as the market is heading into the busiest time for corporate earnings.
So, what does this mean for investors?
"The key is to let the market tell you what it wants to do," said CNBC contributor Andrew Busch, editor and publisher of The Busch Update. "And, right now, it's starting to tell us that it's turning over a little bit.”
Busch notes that over the past year, each successive pullback's low was higher than the previous one. Thus, even though the S&P 500 is now below its 100-day moving average, he sees the uptrend still intact. "So far, this is not telling you necessarily that we're going to break the trend," said Busch.
The moment of truth for the markets is here.
As investors lick their wounds after a bad week in the markets, a huge chunk of the S&P reports first-quarter results this week. Among those releasing numbers are Citigroup, Coca-Cola, Bank of America, Google, General Electric and Goldman Sachs.
Despite the negative tone the market has taken recently, one important strategist remains positive when it comes to earnings for the most recent quarter.
In a recent research note, Adam Parker, chief U.S. equity strategist at Morgan Stanley, said lowered earnings expectations will make it so companies "clear the lowered bar" this earning season.
"About 4½ companies have issued negative guidance for every one that's issued positive guidance," Parker told “Talking Numbers.” "It's not about me being positive in absolute terms. It's about the expectations being set low enough that they can be exceeded. And, we think we'll see upside during the earnings season."
Ford shares were a relative beacon of strength Friday after Deutsche Bank upgraded the automaker to "buy" from “hold,” with a target price of between $18.50 and $19 per share. The stock closed flat in a very tough tape.
The investment bank was particularly optimistic about Ford's F150 pickup truck and the company's overseas prospects, writing:
"Ford’s pickup truck price premium vs. GM’s has declined to the lowest level in years (to ~$150/unit vs. a 5-year average of $3,000), which seems to offer a significant pricing opportunity. And perhaps just as significantly, we now believe that Ford’s new F150 will be significantly more cost competitive than we originally perceived (the aluminum body may only add $750-$800 cost, and there have been opportunities to save elsewhere in the vehicle). This conclusion, combined with our favorable views of Ford’s prospects in Europe and China, leave us increasingly confident that Ford is heading for a significant earnings inflection in 2015-2016. We are upgrading Ford to Buy with a $19 target."
The market continues to fall but one of the worst-performing Dow stocks of 2013, Caterpillar, is cleaning up the market debris this year.
Last year was a different story. In 2013, the Dow Jones industrial average return 26.5 percent—its best since 1995. The index's second-worst performing stock was Caterpillar, which gained a measly 3.5 percent. Even Cat's then-dividend yield of 2.6 percent didn't help much.
What was hurting the equipment-maker was a slump in the mining business. With metals such as gold dropping (the yellow metal was down 28 percent, its worst since 1981), last year was terrible for Caterpillar's top and bottom line as mining companies cut back on capital expenditures. Revenue fell 15.5 percent to just under $55.7 billion while net income, at $3.8 billion, was one-third lower than it was in 2012. Along the way, the company cut 10,000 jobs.
Thursday wasn't just bad for the markets, it stunk.
While the Nasdaq composite index saw its worst loss since 2011, the market benchmark S&P 500 index lost 2 percent and is now negative for the year. Only 21 stocks in the S&P 500 were either positive or flat Thursday and the index ended the day at 1,833.08.
And, it may get worse before it gets better.
Chad Morganlander, portfolio manager at Stifel's Washington Crossing Advisor, sees the potential for a 5 to 7 percent correction in the S&P 500 over the coming months. That could come as the Federal Reserve continues to taper its monetary stimulus program. During that time, according to Morganlander, investors will flee to more defensive, quality names.
However, the year may end on a positive note, Morganlander believes.
"We think in 2014, a 6 to 8 percent total return on the S&P 500 could in fact happen," he said. "That would be on the back of around 3 percent GDP growth [and] earnings growth of 6.5 percent, which would get your S&P earnings to $115."