68.76 -0.08 (-0.12%)
After hours: 4:18PM EST
|Bid||68.69 x 800|
|Ask||68.79 x 3200|
|Day's Range||68.07 - 69.55|
|52 Week Range||59.92 - 80.96|
|PE Ratio (TTM)||308.70|
|Beta (3Y Monthly)||1.15|
|Expense Ratio (net)||0.13%|
Tim Seymour of Triogem and Andrew McOrmond of WallachBeth Capital join CNBC's Bob Pisani on 'ETF Edge' to discuss where they see industrial and airline ETfs going.
Tony Dwyer, Canaccord Genuity, says new highs are coming this year. With CNBC's Melissa Lee and the Fast Money traders, Tim Seymour, Karen Finerman, Steve Grasso and Guy Adami.
GE Stock Fell 4% on Uncertainty about Airline Leasing Unit SaleGE stock plunged General Electric (GE) fell ~4.4% yesterday after market experts questioned how much the company could make from selling its airline-leasing unit, or whether a sale would
United Rentals: What Could Drive Its Q4 Earnings?Fourth-quarter expectations United Rentals (URI) is scheduled to report its fourth-quarter results on January 23. The equipment rental company has an impressive record of beating analysts’ earnings
AAR: US Rail Traffic Grew 8.4% in Week 2 of 2019(Continued from Prior Part)KSU’s rail trafficAfter reporting the weakest rail traffic growth in Week 1, Kansas City Southern (KSU) posted a decline in rail traffic growth for the second week in a
AAR: US Rail Traffic Grew 8.4% in Week 2 of 2019(Continued from Prior Part)Strong carload traffic growth CSX’s (CSX) total rail traffic volumes increased 11% YoY (year-over-year) to 124,446 units in Week 2 due to strong growth in its carloads. The
AAR: US Rail Traffic Grew 8.4% in Week 2 of 2019(Continued from Prior Part)Highest traffic gainerCanadian National Railway (CNI) reported 12.2% YoY (year-over-year) total traffic volume growth in the second week of 2019. Canada’s largest freight
Industrial ETFs are building up momentum after data revealed U.S. manufacturing activity strengthened despite concerns over falling exports and global trade. Industrials were the best performing sector ...
GE Stock Gains on Asset Divestment AnnouncementDivests TPS assets General Electric (GE) gained ~1.8% yesterday after the company showed its intent to improve its liquidity position. Late Wednesday, the industrial conglomerate revealed that MUFG Union
GE Transportation-Wabtec Merger Gets Another Step CloserDOJ approvalGeneral Electric’s (GE) transportation unit and Wabtec got another step closer toward their proposed $11.1 billion merger with approval from the US Department of Justice (or
GE Received Bullish Remarks from Another Top Research FirmGeneral ElectricGeneral Electric (GE) CEO Larry Culp’s intent and quick actions to get the company on a growth trajectory have been helping General Electric stock gain analysts’
Shares of Arconic Inc. slid 1.0% in morning trade Monday, after the lightweight metals product company was downgraded by J.P. Morgan analyst Seth Seifman, who cited valuation. Seifman cut his rating to neutral, after being at overweight since July 2017, and trimmed his stock price target to $22 from $24. The stock has run up 20% since it closed at a record low of $16.14 on Dec. 24. Arconic, which was spun out of Alcoa Corp. in 2016, has reportedly been in talks with private-equity firms over a potential potential buyout. "With frequent press reports about negotiations to sell Arconic to Apollo, the return construct here seems straightforward," Seifman wrote in a note to clients. "The latest press reports...suggest a deal at $22/share, with an announcement possible soon, and we see a high likelihood that this occurs." Despite the recent gain, the stock has lost 3.5% over the past three months, while the SPDR Industrial Select Sector ETF has declined 8.6% and the S&P 500 has shed 6.8%.
US Railroads Kick-Start 2019 with Strong Traffic Growth (Continued from Prior Part) ## Strong carload traffic growth CSX’s (CSX) cumulative rail traffic rose 9.9% YoY to 98,954 units in Week 1 due to strong growth in its carloads. The company posted 18.4% YoY carload traffic growth in Week 1. CSX hauled 60,134 railcars excluding intermodal units in the week compared to 50,777 wagons in Week 1 of 2018. Compared to US rail carriers’ overall 6.2% carload gains, CSX’s carload traffic saw much higher gains during the week. The company’s carload traffic growth was the second highest among Class I railroad carriers (XLI) after Norfolk Southern (NSC), which witnessed a 24.4% increase in carload traffic in the first week. CSX’s commodity group carloads except coal and coke accounted for 75% of its total carload traffic in the week. The company’s coal and coke traffic made up the remaining 25% of its total carloads. The traffic of commodity groups excluding coal and coke grew 13.6% YoY in Week 1 to 44,979 railcars from 39,590 railcars. Moreover, coal and coke traffic jumped 35.5% YoY to 15,155 units from 11,187 units. Commodities excluding coal and coke that reported remarkable volume growth in the first week included chemicals, grain, farm products, petroleum and petroleum products, metal products, and metallic ores. Commodities other than coal and coke that recorded a YoY fall in volumes in Week 1 were nonmetallic minerals and motor vehicles and parts. ## Intermodal units During the first week of 2019, CSX’s intermodal units fell 1.1% YoY. During the week, the company hauled 38,820 units compared with 39,243 units in Week 1 of 2018. Its container traffic inched down 1.3% YoY to 36,961 units in Week 1 from 37,439 units in Week 1 of 2018. However, trailer volumes for the week grew 3% YoY to 1,859 units from 1,804 units. Apart from CSX, BNSF Railway and Canadian Pacific (CP) also registered a decline in their respective intermodal traffic. Union Pacific (UNP) was the top gainer with intermodal volume gains of 8.8%. Next, we’ll discuss Canadian National’s rail traffic performance. Continue to Next Part Browse this series on Market Realist: * Part 1 - US Railroads Kick-Start 2019 with Strong Traffic Growth * Part 2 - Norfolk Southern Was Top Traffic Volume Gainer in First Week * Part 4 - Strong Carloads Drove Canadian National’s Rail Traffic Higher
'Dean of Valuation' Says to Bet on NVIDIA, Boeing, and GE ## Good buys for long term? Aswath Damodaran, better known as the “Dean of Valuation,” yesterday in an interview with CNBC said to consider NVIDIA (NVDA), Boeing (BA), and General Electric (GE) for long-term buys. The finance professor stated that the three stocks are currently undervalued and can make a sharp upswing if the broader market trends higher. Damodaran said NVIDIA is a long-term growth company, and the stock is currently available at an attractive price. NVIDIA is among the most battered stocks in the semiconductor space over the last three months due to multiple headwinds including a decline in memory chip prices, softness in industrial and automotive semis, and the broader market sell-off in December last year. On January 9, 2019, the closing price was $142.58, which is over 51% lower than its 52-week high of $292.76 attained on October 3, 2018. Damodaran believes that the stock price might decline further this year, but he would still bet on NVIDIA’s long-term growth prospects. ## Boeing punished for wrong reasons The finance professor said that Boeing has been “punished for all the wrong reasons” due to growing concerns over the trade war between the US and China. He told CNBC, “Let’s face it, you can substitute for Apple (AAPL). You can’t easily substitute for Boeing.” He further added, “I don’t think you can tar all these companies which have China exposure with the same brush.” The company’s China exposure and broader market sell-off in December led to a massive decline in its stock. The company’s stock fell to a new 52-week low of $292.47 on December 26. Just within three months, it attained a 52-week high of $394.28 on October 3. Since December 26, Boeing stock has made a remarkable recovery with gains of ~18%, but it is still down ~13% from its 52-week high. Damodaran’s optimism toward Boeing seems to be due to the company’s huge order backlog and massive cash flow generating abilities. ## GE may recover significantly Damodaran sees long-term opportunity in General Electric (GE) stock if CEO Larry Culp succeeds in offloading the company’s underperforming assets and lowers debt. The world’s largest industrial conglomerate’s (XLI) stock plunged drastically last year after the company reported a $23 billion loss for the third quarter of 2018. Additionally, a high debt level of $115 billion and negative cash flows, further raised concerns over its liquidity crisis, sending GE’s stock down to the ten-year low of $6.66 on December 11. However, Culp’s speedy divestment and spin-off actions have somewhat helped the company gain investor and analyst confidence. The stock has made a sharp recovery in the last one month and is up ~30% since the December 11 closing price of $6.75.
The broader U.S. stock market as measured by the S&P 500, after a dismal drop into Dec. 26, has since recovered or bounced about 9%. Many areas of the stock market after this initial bounce are now getting near-term overbought and reaching technical resistance areas. Industrial stocks as represented by the the Industrial Select Sector SPDR (NYSEARCA:XLI) are one such area where active investors and traders could now look for short-side opportunities. I often point out to readers of this here column that stocks are a highly correlated asset class. In other words, when the broader stock market rises say 1% on a given day, most stocks likely go up that day, and the same correlation (or even higher) applies on the downside. This is to say that by picking one individual stock to express ones view on the broader market or on a sector or group of stocks, one has to also deal with the idiosyncratic risk specific to that stock. Conversely by buying/selling a sector or group ETF, this single-stock risk can largely be avoided. Case in point: at the current juncture in industrial stocks, which as we will see on the below charts in my eye are getting overbought for the near term. One could express a bearish view using one individual industrial stock or just use an ETF that covers the entire space, without dealing with single stock risk. InvestorPlace - Stock Market News, Stock Advice & Trading Tips ### XLI ETF Charts Click to Enlarge Moving averages legend: red - 200 week, blue - 100 week, yellow - 50 week On the multiyear weekly chart, we see that the sharp drop in the XLI ETF in the fourth quarter 2018 led it to retrace back to the 2009 support line (pink), which also coincided with the red 200-week simple moving average. Industrial stocks there bounced as they "should have," but now are entering a first layer of technical support as we will see on the next chart. * The 7 Best Stocks in the Entrepreneur Index Also note that the XLI ETF in September 2018 made a marginal lower high versus its January 2018 high, which through the lens of technical analysis does not bode well for the bulls through a multimonth/quarter time frame. Click to Enlarge Moving averages legend: red - 200 day, blue - 100 day, yellow - 50 day On the daily chart, we see that the recent bounce in the XLI ETF now has it nearing the simple horizontal purple box around the high $60s, which previously acted as support but now could become technical resistance. Furthermore, it is rare for stocks not to at least attempt a second re-test of recent lows after a decline as sharply as we saw in Q4 2018. Thus, a simple trade idea here in the XLI ETF would be to short it around $68.50-$69, using a stop loss at $70 and an initial profit target at $62. Get FREE ACCESS to Serge's renowned Stock Market Scanner with actionable trade ideas. Get it HERE. ### More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Retail Stocks to Buy for Winning the Online Battle * The 7 Best Stocks in the Entrepreneur Index * 7 5G Stocks to Buy as the Race for Spectrum Tightens Compare Brokers The post Trade of the Day: Industrial stocks XLI ETF Is Setting Up for a Short appeared first on InvestorPlace.
Shares of General Electric Co. powered up 5.5% toward a sixth-straight gain in afternoon trade Monday, enough to pace its industrial-sector peers, after Bloomberg reported that Apollo Global Management LLC was readying a bid to buy GE's jet-leasing business, which could be valued at as much as $40 billion. CFRA analyst Jim Corridore followed by upgrading GE to buy from hold, and lifted his price target to $11, which is about 27% above current levels. "With GE preparing to spin-off healthcare and sell-off its share in Baker-Hughes, we think this news could provide a path to fix GE's highly leveraged balance sheet," Corridore wrote in a note to clients. Meanwhile, J.P. Morgan analyst Stephen Tusa, the long-time bear who caused a stir last month when he upgraded GE to neutral from underweight, said he struggles to see support for a $40 billion valuation, and believes the business is worth closer to $30 billion, and doesn't believe a sale would be the "silver bullet" to leverage issues that bulls expect. He reiterated his $6 stock price target, which is 31% below current levels. The stock has gained 29.5% over the past since it closed at a 9 1/2-year low of $6.71 on Dec. 12, while the SPDR Industrial Select Sector ETF has declined 3.7% and the Dow Jones Industrial Average has lost 4.0% over the same time.
US Rail Traffic Saw Impressive Growth in the Last Week of 2018 (Continued from Prior Part) ## CP’s rail traffic Canadian Pacific Railway (CP) reported 12.3% YoY total traffic volume growth in Week 52 of 2018. It hauled 41,658 railcars compared to 37,110 railcars in Week 52 of 2017. The company ranked second in terms of Week 52 traffic volume growth among all Class I railroad companies. Canadian National Railway (CNI) was the top volume gainer with a YoY rail traffic increase of 13.5%. Norfolk Southern (NSC), BNSF Railway, and CSX (CSX) were in third, fourth, and fifth places with traffic gains of 11%, 6.8%, and 6.2%, respectively. Canadian Pacific’s YoY rail traffic gain was 3.9% in 2018. Its traffic growth was higher than US railroad companies’ (XLI) overall 3.7% gain but lower than Canadian rail companies’ 4% gain during the same period. ## Carload traffic Canadian Pacific’s carload traffic increased 17% YoY to 28,131 in the period. Commodity groups other than coal made up 82% of its total carload traffic. Coal carloads made up 18% of its total carloads. The traffic of commodity groups excluding coal rose 19.7% YoY to 22,957 railcars in Week 52 from 19,181 railcars in Week 52 of 2017. Coal carloads grew 6.2% YoY to 5,174 railcars from 4,870 railcars. During the week, the company recorded volume growth in every commodity group. It registered double-digit volume growth in grain, potash, fertilizer and sulfur, forest products, energy, chemicals and plastics, and automotive. ## Intermodal units Canadian Pacific’s intermodal traffic grew 3.6% YoY in Week 52. The railroad company hauled 13,527 containers and trailers in the week compared to 13,059 units in the same week last year. Unlike other Class I railroad companies, CP doesn’t report trailer and container traffic separately. In the next article, we’ll look at Norfolk Southern’s rail traffic. Continue to Next Part Browse this series on Market Realist: * Part 1 - US Rail Traffic Saw Impressive Growth in the Last Week of 2018 * Part 2 - Canadian National Railway Was the Top Volume Gainer in Week 52 * Part 4 - The Uptrend in Norfolk’s Rail Traffic Continued in Week 52
US Rail Traffic Saw Impressive Growth in the Last Week of 2018 (Continued from Prior Part) ## Canadian National’s rail traffic Canadian National Railway (CNI) reported 13.5% YoY total traffic volume growth in the last week of 2018. The railroad company carried 96,690 railcars compared to 85,200 railcars in Week 52 of 2017. Canada’s largest freight company was first in terms of traffic volume growth among all Class I railroad companies in the week. The company’s rival Canadian Pacific (CP) was the second-highest volume gainer, registering 12.3% YoY growth in rail traffic in the same period. For 2018, Canadian National’s rail traffic grew 4% YoY to ~6 million. The company’s traffic growth was significantly higher than US railroad companies’ (XLI) overall 3.7% gain as well as Canadian rail carriers’ 4% gain during the same period. ## Carloads and intermodal traffic Strong growth in carload and intermodal units drove Canadian National’s overall rail traffic in Week 52. The company’s carload traffic increased 16.5% YoY to 56,194. The company remained the third-highest carload traffic gainer in Week 52 after BNSF Railway’s and Canadian Pacific’s gains of 17.5% and 17%, respectively. Commodity groups excluding coal and coke accounted for 88% of Canadian National’s total carloads in Week 52. Coal and coke railcars accounted for 12% of total carloads. Commodity groups’ carloads excluding coal and coke grew 12.6% YoY in Week 52 to 49,504 railcars from 43,983 railcars in Week 52 of 2017. Coal and coke traffic expanded 57.3% YoY to 6,690 railcars from 4,254 railcars. The commodity groups excluding coal and coke that reported notable volume growth in Week 52 included chemicals, petroleum, automotive, and grain. The commodity groups that recorded YoY declines in Week 52 volumes included forest products, metals, and minerals. Canadian National’s intermodal volumes grew 9.6% YoY in Week 52, the highest among all Class I railroad companies. Norfolk Southern (NSC) and Union Pacific (UNP) were in second and third places with YoY gains of 8.4% and 7.3%, respectively, in their intermodal units. Canadian National hauled 40,496 containers in the week compared to 36,963 containers in the same week of the previous year. Next, we’ll discuss Canadian Pacific’s rail traffic. Continue to Next Part Browse this series on Market Realist: * Part 1 - US Rail Traffic Saw Impressive Growth in the Last Week of 2018 * Part 3 - Strong Carload Growth Drove Canadian Pacific’s Rail Traffic * Part 4 - The Uptrend in Norfolk’s Rail Traffic Continued in Week 52
Will Restructuring Initiatives Put GE Back on Growth Trajectory? (Continued from Prior Part) ## Attractive valuation Last year’s ~57% plunge in General Electric (GE) stock has made its valuation attractive in the industrial sector. At current market prices, GE trades at a PE ratio of 9.96x, a significant discount to the industrial sector’s (XLI) PE ratio of 24.32x. The stock also trades at a lower PE multiple to its top peers. The company’s main competitors such as Honeywell International (HON), 3M Company (MMM), and United Technologies (UTX) are trading at PE multiples of 16.77x, 19.50x, and 14.65x, respectively. Furthermore, based on analysts’ next-12-month earnings projections, GE is trading at a discount to competitors. Forward PE ratios for GE, HON, MMM, and UTX are pegged at 8.91x, 16.70x, 17.68x, and 13.71x, respectively. The PE valuation multiple is used widely because of its simplicity, but the measurement has some flaws. For example, earnings of a company can be easily manipulated, thus making the ratio meaningless. Therefore, we’ll compare these companies based on EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) multiple. Currently, GE has an EV-to-EBITDA ratio of 31.54x, which is higher than HON, MMM, and UTX’s EV-to-EBITDA multiple of 10.87x 15.10x, and 10.87x, respectively. However, based on analysts’ next-12-month EBITDA estimates, GE is trading at a discounted EV-to-EBITDA multiple against HON and MMM, while at a premium to UTX. Forward EV-to-EBITDA ratios of GE, HON, MMM, and UTX are pegged at 9.40x, 11.85x, 12.38x, and 8.71x, respectively. ## Analysts’ rating and target price GE has received a consensus “hold” recommendation from analysts polled by Reuters. Of the 20 analysts tracking the stock, four recommended a “strong buy,” five recommended a “buy,” nine recommended a “hold,” and the remaining two recommended a “strong sell.” Analysts have lowered their target price and EPS estimates for General Electric since its third-quarter results. The stock’s current 12-month consensus target price of $12.37 is ~20% lower than its target price of $15.50 on October 30, the day it reported its third-quarter results. The mean estimate for GE’s 2018 EPS fell to $0.71 from $0.83 on October 30. The company’s 2019 EPS estimate has been revised downward to $0.85 from $0.93. Browse this series on Market Realist: * Part 1 - GE Was Worst Performer in the Industrial Sector Last Year * Part 2 - Will Restructuring Initiatives Bring GE Back to Growth Trajectory? * Part 3 - Aviation Segment to Drive GE’s Revenues in 2019
Will Restructuring Initiatives Put GE Back on Growth Trajectory? (Continued from Prior Part) ## JPMorgan ups rating It seems that General Electric’s (GE) newly appointed CEO Larry Culp’s quick actions on implementing restructuring plans has helped the stock gain analyst confidence. In December 2018, GE received rating upgrades from analysts at two big firms, JPMorgan’s (JPM) Stephen Tusa and Vertical Research’s Jeffrey Sprague. On December 13, the long-time bearish analyst, Tusa, upgraded his rating on GE stock to “neutral” from “underweight.” In a note to clients, Tusa wrote that the struggling company’s risk-reward looks to be balanced at current levels. However, the analyst maintains his previous target price of $6.00. Justifying his rating upgrade, Tusa wrote, “We now believe a more negative outcome on these liabilities (equity dilution is one) is at least partially discounted, and it’s possible the company can execute its way through an elongated workout that limits near-term downside.” The analyst had been bearish on GE since May 2016, raising questions about its earnings and future cash flow generation capabilities. At that time, he had also pointed out that the industrial conglomerate might cut dividends to improve its liquidity position. Over the past year, all of Tusa’s predictions about the stock have been true. On November 9, Tusa cut his target price on GE by 40% to $6 from $10. At the time, Tusa argued that the company’s third-quarter 2018 quarterly results were worse than expected. He also pointed out that with rising liabilities, a weakening cash flow, a dismal EBITDA outlook, and troubled Power and Financial divisions, GE lacks a fundamental growth driver. Therefore, a rating upgrade from the same analyst that has made accurate predictions in the past could help GE in gain investor confidence. ## Vertical Research raises target price GE got rating upgrade from another research firm within a week after Tusa upgraded his recommendation on the stock. On December 19, Vertical Research analyst Jeffrey Sprague upgraded his rating for the first time in ten years on the stock to “buy” from “hold” and raised the target price by $1.00 to $11.00. An institutional investor poll has awarded Sprague the top-ranked analyst several times. In a note to clients, Sprague said GE would complete its restructuring plan, which includes exiting from Baker Hughes (BHGE), healthcare, transport, and other smaller businesses. He believes the company won’t face a severe liquidity crisis in the long run. Sprague wrote, “While the work ahead is still hard, we think the lack of investor confidence will slowly subside.” He added, “New CEO Larry Culp has his hands full, but a talented outsider is what GE needs to fully break from the past.” The Industrial Select Sector SPDR ETF (XLI) has allocated 4.1% of its portfolio to the stock and 5.8% in GE competitor 3M Company (MMM). Continue to Next Part Browse this series on Market Realist: * Part 1 - GE Was Worst Performer in the Industrial Sector Last Year * Part 2 - Will Restructuring Initiatives Bring GE Back to Growth Trajectory? * Part 3 - Aviation Segment to Drive GE’s Revenues in 2019
Will Restructuring Initiatives Put GE Back on Growth Trajectory? In mid-November 2018, General Electric’s (GE) newly appointed CEO Larry Culp announced a leadership shuffle to help turn around the company’s ailing Power business. The leadership shuffle includes bringing back former GE executive John Rice from retirement to be the chair of the newly structured gas power business.
On January 3, Honeywell (HON) announced that it had bagged a project to modernize the Kunsan Air Base, a US Air Force base in South Korea. Honeywell expects the project to be completed in November 2020. Further, there will be lighting improvements and water conservation measures.
Will Restructuring Initiatives Put GE Back on Growth Trajectory? 2018 didn’t go well for the industrial sector, as stocks in the space were battered the most due to trade conflict worries, slowing Chinese manufacturing activities, the weakening housing market, and the Fed’s interest rate hike in December. The S&P 500 Industrials Index, which measures the performance of stocks in the industrial sector, fell ~18% last year, much higher than the value lost by the major US indexes.
The industrial sector, the sixth-largest sector weight in the S&P 500, languished last year. The Industrial Select Sector SPDR ETF (XLI) , the largest exchange traded fund dedicated to the sector, finished 2018 with a loss of 14.88%, more than twice as bad as the S&P 500's loss for the year. Industrials perform well when interest rates rise because rising rates can go hand-in-hand with economic growth.