It’s Friday April 28, 2006, and investors and traders alike got some guidance when Federal Reserve Chairman Ben Bernanke indicated that interest rate hikes would stop sooner rather than later. We are probably facing a ceiling of 5%, which means that one more rise in interest rates is yet to come.
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political front
Not long ago, President Bush tried to push through the ports deal that would have given control of major US ports to a Dubai company, but that deal was blocked. The US government recently purchased or was about to purchase millions of dollars worth of Lenovo computers for the US government. Lenovo is now a Chinese-owned company and is no longer part of IBM (NYSE: IBM ). The latest is the go-ahead from President Bush who would hand over control of 9 US plants that produce parts for US military vehicles and aircraft to a soon-to-be Dubai-owned company, Doncasters. Now, if there was ever a red flag, it would be here, but it seems the administration pushed it through the review process to avoid public debate, but the New York Times ran the story and there may be public interest in it.
Not a big surprise, but it seems that Iran is not going to comply with the United Nations Security Council’s request to stop enriching uranium. Now the question is what will happen once the UN Security Watcher delivers his report.
China raises interest rates
China joins the ranks of the United States and Europe as China raised its key interest rate. On that news, US stocks fell, raising concerns of slower growth in the most populous nation.
Sectors affected include oil and mining, and companies such as Phelps Dodge (NYSE: PD) and Exxon Mobil (NYSE: XOM) may feel the impact in today’s trading session.
movers and shakers
Some of the major moves in yesterday’s trading session included Libbey (NYSE:LBY), which was up $2.80 to close at $12.85, Fidelity National Financial (NYSE:FNF), which was up $8.51 to close at $43.50, Diagnostics Products (NYSE: DP), up $9.36 to close at $57.81, Spartan Motors (NASDAQ: SPAR) up $2.72 to close at $14.00, Interdigital Communications ( NASDAQ:IDCC) which was up $4.56 to close at $27.01 after receiving $253 million against Nokia (NYSE:NOK), Luminex (NASDAQ:LMNX) which was up $2.34 to close at $15.73 and OfficeMax (NYSE: OMX) which rose $5.14 to close at $38.49.
Analyst promotions/demotions
Recent Analyst upgrades include Citigroup (NYSE: C), which was upgraded to outperform from market performance by Piper Jaffray, Western Digital Corp (NYSE: WDC) was upgraded to outperform from neutral by Robert W. Baird , and Everest Re Group (NYSE: RE) was upgraded to Buy from Hold by Citigroup Investment Research.
Recent analyst downgrades include Microsoft (NASDAQ: MSFT), which was downgraded to Equity from Overweight by Morgan Stanley and Downsector from Topsector by CIBC World Markets, Siemens AG (NYSE: SI) was downgraded to Neutral from Banc of America Securities downgraded its overweight JP Morgan and Millennium Pharmaceuticals (NASDAQ: MLNM) to Sell from Neutral.
Recent analyst coverage initiations include Transdigm Group (NYSE: TDG), which started with Neutral and a $28 price target, and Cherokee Inc (NASDAQ: CHKE), which started with Neutral and a $45.00 price target.
TidBits
Microsoft (NASDAQ:MSFT) is going to feel some pain in today’s trading session and a bad way to end the week. They reported earnings of $2.98 billion, or 29 cents per share, compared with $2.56 billion, or 23 cents per share, in the same period a year earlier. The analyst estimate was 33 cents. The company also lowered its guidance for 2006 and 2007. So, let the downward movement begin.
On the subject of the move lower, there was blood on the street in the healthcare industry as Aetna (NYSE:AET) led the way down by trading down $9.43 to close at $37.00, they didn’t want to stand alone, so they dragged the industry down. with them with companies including CIGNA Corp (NYSE: CI) trading down $11.94 to close at $106.58, Humana (NYSE: HUM) trading down $2.87 to close at $43.39, UnitedHealth Group (NYSE : UNH) trading down $1.22 to close at $47.75 and Wellpoint (NYSE: WLP) trading down $2.94 to close at $67.50.
Micron Technology (NYSE: MU) may be looking to merge with German chipmaker Infineon Technologies, Micron is interested in Infineon’s dynamic random access memory business
Archer Daniels (NYSE: ADM) has appointed Patricia Woertz, a former long-time senior executive at Chevron Corp (NYSE: CVX), to the role of president and chief executive officer, replacing Allen Andreas, who will remain company president. This is a good move for Archer Daniels as they look to the future and need a powerful leader with global experience to lead the way and they found it in Patricia Woertz.
readers speak
We got a question from one of our Marni reader/listeners from New York, NY, and he wanted to know what we thought about Energy Partners Limited (NYSE: EPL).
Marni, first of all thank you for contacting us, Energy Partners Limited (NYSE: EPL) is an oil and natural gas exploration company. There are a few things I’m seeing that have me on the ropes with the company, first just looking at the chart, the last time the stock traded in the $27 or higher range was Jan 26, 2006 and it slid down as low as $21 on March 9, 2006 then rallied back up to the $27 range and seems to be pulling back, it may have a little bounce here and there but it looks like it may be on its way back down the valley.
Another thing is their CFO just resigned, and the latest thing is we’re heading into hurricane season and the company is headquartered in New Orleans, Louisiana and about 14% of its net daily production comes from offshore land area of the gulf
Those are some things to think about, we don’t see it as a buy situation right now.
One last note, the company set up an earnings call on May 9, 2006 to discuss its earnings with analysts and investors.
FURIOUS FIVE
This is the fifth of our “Furious Five” companies we see excelling in their industry in 2006. The best is for last, as our fifth addition to this week’s Furious Five is Advanced Micro Devices (NYSE: AMD) listed on on the New York Stock Exchange under the symbol AMD.
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We cannot stress enough that investors should do their due diligence, call the companies, get the information, consult with your investment advisor, and if you don’t have one, consider getting one. Spend just as much time researching these companies as when you go shopping for a new TV, it’s just for your protection. When it comes to low-priced stocks, stagger your orders or place a limit order to avoid a rally.
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