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(Best) CHDX, NDN, TEN (Worst) AMP, CRDN, LHO from Better Trades
June 16, 2009
In the previous weeks’ trading sessions, investors struggled to mount a charge into positive territory earlier in the week, but traders could not shrug off economic news, as well as government reports that gave some insight to the nation’s banking environment.
Investors are maintaining their pessimism within the markets due largely to mixed signals on the health of the economy. Much of the concerns are coming from those that remain highly suspect that the government's debt load is growing so large that it will lead to higher inflation and soaring interest rates.
Nevertheless, investors throughout the week hailed a better-than-expected jobless report, as well as growth in retail sales, which helped push stocks higher throughout the week. Investors continue to cling to any signs of improvement within the economy.
Top 3 Stocks
CHDX - Chindex International, Inc. ($9.33 to $15.20) +62.9%
One of the more profitable companies, in relation to stock gains over the past week, was Chindex International, Inc. (CHDX), which witnessed their stock surge throughout the week, based solely on the company’s exemplary earnings report on June 11. The report showed that Chindex’s medical product revenues more than doubled over the prior year’s sales figures.
Founded in 1981, Chindex offers healthcare services through various networks, while selling medical products manufactured by other major multinational companies. The company also provides financing for the supply of medical products to hospitals in China, through the U.S. Export/Import Bank and the German KfW Development Bank.
Chindex is also an exclusive distribution partner for the sales and servicing of color ultrasound systems for Siemens AG (SI) and surgical robotic systems for Intuitive Surgical Inc. (ISRG).
Released late last week, CHDX announced their quarterly results, which led to the company posting net income for the 4Q of $3.4M, or $0.22 per share, versus a loss of $2.7M, or $0.20 per share a year ago. The main catalyst to the company’s increased profits were sales surging from $34.6M to $59.7M, an increase in revenues of nearly 73%.
Chindex’s medical product sales jumped from $17.5M to $39.5M, based on increases in the company’s inpatient and outpatient sales in their hospital sector, as well as from government-backed loan programs. Furthermore, sales from the company’s healthcare services advanced as well, climbing from $17.5M to $20.2M, a jump of more than 15%.
Although the company’s stock surged nearly 63% over the past five trading sessions, while gaining nearly $6 per share, the start of the new trading week reversed the stock’s momentum. By the close of trading on June 15, shares of CHDX slipped more than 15%, losing $2.32 to end the day at $12.88 per share. Over the course of a year, shares of Chindex have ranged between $3.50 and $21.20 per share.
NDN - 99 Cents Only Stores ($10.10 to $13.31) +31.8%
Another company benefiting from an earnings report exceeding expectations came from 99 Cents Only Stores (NDN), which posted higher profits during the 4Q, as budget-conscious shoppers continue to stretch the buying powers of the dollar during the current recession.
99 Cents Only Stores is a leading deep-discount retailer of name brand, consumable general merchandise. The company's stores offer a wide assortment of regularly available consumer goods as well as a broad variety of first quality, closeout merchandise. They provide customers significant value on their everyday household needs and an exciting shopping experience.
For the most recent period, NDN booked a profit of $7M, or $0.10 per share, in sharp contrast to the previous year’s loss of $4.4M, or $0.06 per share. With the value-focused retailer remaining optimistic during these tough times, NDN is convinced that the company should post and increase in pre-tax earnings of 5% of sales by 2012.
As for the company’s quarterly revenues, sales jumped more than 13% year-over-year to total $329.2M, while same store sales increased more than 6% and gross margins advanced from 37.2% to 39.3%. Analysts, on average, were looking for the discount retailer to post quarterly earnings of $0.04 per share on overall revenues of $327.8M.
For the company’s upcoming fiscal year, 2010, NDN is looking to open 15 new stores, with the majority of those to be in California. Currently, NDN has more than 200 stores in California, in addition to 34 in Texas, 25 in Arizona and 12 in Nevada.
Heading into Friday’s close, NDN shares posted a yearly high of $13.31, after a previous high of $12.61 per share, which had been the company’s highest closing price in more than seven months. Ending the week up more than $3 per share, the start of the new trading week added to the company’s upward momentum.
At the close of the June 15 trading session, shares of NDN were up $0.36, or 2.7%, to close out at $13.67 per share, a new 52-week closing high. Over the past 52 week, shares have traded as low as $5.37 and as high as $13.58 per share.
TEN – Tenneco Inc. ($8.14 to $9.95) +22.2%
Rounding out the top three, Tenneco Inc. (TEN) managed to put together a solid trading week, as the company’s stock advanced more than 20% in market value on the backs of a reaffirmation of the stock’s analyst rating.
Tenneco operates as one of the world's largest designers, manufacturers and marketers of emission control and ride control products and systems for the automotive original equipment market and the aftermarket.
Tenneco markets its products principally under the Monroe, Walker, Gillet and CleviteElastomer brand names. Among its products are Sensa-Trac and Monroe Reflex shocks and struts, Rancho shock absorbers, Walker Quiet-Flow mufflers and Dynomax performance exhaust products.
Advancing throughout the week, shares of TEN were pushed higher after an analyst from KeyBanc Capital Markets Inc. restated its "buy" rating on the company, conveying assurance in the auto supplier's ability to sustain itself during the auto industry’s lack of sales and production slowdown.
"While financial risk remains high, we are incrementally confident that the risk is manageable," analyst Brett Hoselton commented. "At our conference management affirmed that its new business wins are exceeding expectations. Specifically, Tenneco is winning more commercial vehicle business than it had originally anticipated."
In early May, Tenneco announced the company’s 3Q performance results, which ended up showing that the company posted a loss in the quarter of $49M, or $1.05 per share, in dire contrast to the previous year’s 3Q profit of $6M, or $0.13 per share.
During the course of last week’s trading, shares of TEN added nearly $2 per share, or 22.2%, to increase their market cap to over $450M. In doing so, the company managed to comply with the NYSE’s requirements of maintaining a market cap over $248M for a 30-day period. In early March, the company’s market cap slipped to below $75M, thus in jeopardy of being delisted.
Heading into the new week, shares of TEN slipped in Monday’s session, losing $0.48, or 4.8%, to end the opening session at $9.47 per share. During the course of a year, Tenneco’s stock has traded as high as $20.80 and as low as $0.67 per share.
Worst 3 Stocks
AMP – Ameriprise Financial Inc. ($29.65 to $24.32) -18.0%
One of the leading percentage losers for the past week came from the financial sector, as Ameriprise Financial Inc. (AMP) posted losses in lieu of the company’s offering of additional shares for sale used for potential acquisitions. This in turn upset the company’s shareholders.
Ameriprise Financial is a financial planning and services company with financial advisors and registered representatives that provides solutions for clients' asset accumulation, income management and insurance protection needs.
The Company's financial advisors deliver tailored solutions to clients through a personalized financial planning approach built on a long-term relationship with a knowledgeable advisor. Financial planning services and investments are available through Ameriprise Financial Services, Inc. Member FINRA and SIPC.
Upon announcement of the public offering, which came in at a total of nearly $900M or $25 per share, AMP shares slipped almost 9% the day of declaration. Shareholders stand fast that adding additional shares to the marketplace will significantly dilute current outstanding shares.
Taking into account the potential dilution, AMP is forecasting that the company’s earnings forecast for 2010 will be reduced by 12% to $2.80 per share. For the upcoming 2Q, AMP is anticipating a more modest earnings reduction between 3% and 4%.
Following the discontent of shareholders last week, sentiment on the company’s forward direction leveled-off, pushing shares of AMP higher by the close of the June 15 trading session. By the sound of the closing bell, Ameriprise shares added $0.46, or 1.9%, to close out the day at $24.78 per share.
AMP shares have ranged between $11.74 and $49.76 per share over the course of a year.
Following the announcement of a public offering on June 1, shares of FCBC continued to trade in the red for the remainder of the week. At its conclusion, the company’s stock lost more than 28% throughout the week, falling almost $5 per share. With the start of a new trading week, shares of First Community reversed course and traded in the green by the end of Monday’s trading, adding $0.01, or 0.1%, to close out at $12.51 per share.
During the past year, shares of FCBC have traded as high as $39.00 per share and as low as $7.90 per share.
CRDN – Ceradyne Inc. ($23.43 to $19.50) -16.8%
Taking substantial hits throughout last week’s trading session, Ceradyne, Inc. (CRDN) witnessed the company’s stock slip nearly $4 per share during the week on news of a lowered 2009 revenue outlook, along with the acquisition of a specialized unit of Diaphorm Technologies LLC
Ceradyne is in business to develop, manufacture and market advanced technical ceramic products and components for industrial, defense, consumer and microwave applications. The company’s advanced technical ceramics can withstand extremely high temperatures, combine hardness with lightweight, are highly resistant to corrosion and wear, and have excellent electrical insulation capability and other special electronic properties.
The acquisition from Diaphorm, which was specific to the company’s ballistic combat and non-combat helmets, was priced at $9.5M in cash, along with a payout of $300,000 in liabilities for the purchase. Furthermore, the purchase price is accompanied with a contingent consideration of upwards of $10M over the next 5 years. These figures are based upon performance objectives and sales from Diaphorm's new and existing product-lines.
Following the news of the acquisition, Ceradyne revised their yearly earnings estimates once costs and fees for the purchase were administered. Ceradyne is now looking to post annual earnings near $0.70 per share, well below the company’s previous prediction of around $1.60 per share. The company now seeks sales between $420M and $440M, also below the previously stated range of $465M and $500M.
Analysts are looking for annual earnings from Ceradyne of $1.48 per share on overall revenues totaling $461.9M.
Monday’s trading session brought similar results as did the previous week. With the sound of the closing bell, shares of CRDN dipped 0.4%, falling $0.08 to end the session at $19.42 per share. Over the past year, shares of CRDN have raged between $14.27 and $50.51 per share.
LHO – LaSalle Hotel Properties ($16.74 to $14.20) -15.2%
Rounding out the list of those posting losses for the week is LaSalle Hotel Properties (LHO), which saw their stock’s price dip more than $2.50 per share over the last five trading session, due largely to a stock offering of 10 million shares.
LaSalle Hotel Properties, which intends to operate as a real estate investment trust for federal income tax purposes, has been formed to own hotel properties and to continue and expand the hotel investment activities of LaSalle Partners Incorporated and certain of its affiliates collectively.
LaSalle is an institutionally respected real estate services and investment firm that has extensive experience in the acquisition, investment management, finance, development and disposition of hotel properties.
During the middle of last week, the company announced that they were issuing 10 million shares offered at $14.75 per share, in efforts to pay down some of their unsecured credit obligations. A portion of the $141.1M generated from the sale will be put towards other general corporate purposes as well.
"With only about $13 million of debt coming due in 2010 and $20 million in 2011, our sense is the equity sale was made with an eye on future development activity and even more likely on property acquisitions," confirmed C. Patrick Scholes, analyst with FBR Capital Markets.
Analysts believe that the stock offering will only dilute between 10% and 15% of the company’s current market price.
With LHO shares falling more than 15% to close out the previous week, the new week showed similar results, as LaSalle shares dropped 8% by the close of Monday’s session, losing $1.13 to end the day at $13.07 per share. During the past year, LHO has traded within a range between $3.57 and $30.24 per share.
2009 Better Trades Article
brought to you by
BRIAN MULLIN
