Fiscal Cliff Fears Creating Potential for Bargain Buys

Indie Research

Stocks finished higher in a seesaw session to end the week. With the election over, the fiscal cliff and increased taxes have become the main focus of the market. As such, until this issue is resolved, expect a volatile market into year-end. That said, we think some bargains are starting to be created.

The Vehicle Rental Stocks Index was the top performing tickerspy Index on the day, led by Zipcar (ZIP) with a 16% gain. The Media Technology and Software Stocks Index was the day's worst performing tickerspy Index, with DTS (DTSI) down -28%.

Stocks rose on the day, with the Dow up 4 points to 12,815. The S&P added 2 points to 1,380, while the Nasdaq jumped 9 points to 2,905. Oil rose 98 cents to $86.07 a barrel, while gold rose $4.90 to $1,730.90 an ounce.

In economic news, the Thomson Reuters/University of Michigan initial reading of November consumer sentiment rose to 84.9 from 82.6 in October. Economists had expected a November reading of 83.0. Elsewhere, the Commerce Department said wholesale inventories climbed 1.1% to $494.2 billion. Economists had been looking for a 0.4% increase.

In earnings news, chip maker NVIDIA (NVDA) said its fiscal third-quarter profit rose to $209 million, or 33 cents per share, from $178 million, or 29 cents per share, a year earlier. Revenue increased 13% to $1.2 billion. Analysts had expected a profit of 30 cents per share on revenue of $1.19 billion. NVIDIA forecast fourth-quarter revenue of $1.02-$1.18 billion, just below the $1.2 billion consensus. Shares of NVIDIA fell -3.9%.

Shares of retailer J.C. Penney (JCP) slid -4.8% after the company reported a third-quarter loss of -$123 million, or -56 cents a share, compared with a year-earlier loss of -$143 million, or -67 cents per share. Revenue fell almost -27%to $2.93 billion, while same-store sales plunged -26.1%. Analysts had expected a -15 cent loss on revenue of $3.27 billion. Fifteen pros counted J.C. Penney among their top holdings at the end of Q3 and nearly 250 tickerspy members own the stock in their portfolios.

Groupon (GRPN) shares plunged -29.6% after the daily deal purveyor reported a third-quarter loss of -$3 million, or breakeven on a per share basis. That compares to a year-earlier loss of -$54.2 million, or -18 cents per share. On an adjusted basis, the company earned 3 cents per share. Revenue jumped 32% to $569 million. Analysts had expected a profit of 3 cents on revenue of $591 million. Groupon forecast fourth-quarter revenue of $625-$675 million. Analysts were expecting $634.9 million. Five counted Groupon among their top holdings at the end of Q3 and nearly 50 tickerspy members own the stock in their portfolios.

Shares of online travel site Kayak (KYAK) surged 27.8% after rival Priceline (PCLN) agreed to acquire the company for $1.8 billion. The deal values Kayak at $40 per share, a 29% premium to the stock's closing price on Thursday.

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