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(Best) GIII, GROW, TIVO (Worst) FCBC, VLO, PLCE from Better Trades
June 9, 2009
Investors are maintaining their pessimism within the markets due largely to mixed signals on the health of the economy. Despite the markets surge of more than 30% since their lows in early March, expectations inside the markets have remained low, forcing investors to reevaluate their positions as bullish expectations begin to increase.
Coming off their 12-year lows in March, the S&P and NASDAQ both hit their highest levels of the year this past week, while the Dow has yet to return to positive ground for 2009.
Top 3 Stocks
GIII – G-III Apparel Group Ltd. ($6.69 to $10.79) +61.3%
As the biggest percentage gainer for the past week’s trading, G-III Apparel Group Ltd. (GIII) stock surged throughout the previous trading sessions, as the company’s performance was bolstered by an earnings report that showed the company’s quarterly loss coming in less than the previous year’s comparative quarter. In addition to the G-III’s earnings report, the company also issued guidance for the upcoming quarter as well.
G-III, which is involved in the designing, manufacturing, importing & marketing of an extensive range of leather & non-leather apparel including coats, jackets, pants, skirts & other sportswear items. For the company’s most recent quarter, GIII posted a 1Q loss of $6.8M, or $0.41 per share, in contrast to last year’s 1Q loss of $6.9M, or $0.42 per share.
Sales, which came as somewhat of a shock, advanced from $75.4M to $115.9M, an increase in quarterly revenues of nearly 54%. Analysts, within the industry, were looking for the sportswear and accessories maker to record a quarterly loss of 0.51 per share on overall sales totals of $103.77M, both of which GIII came in ahead of, also propelling the stock higher.
GIII affirmed that increased operating profitability throughout their dress and women's sportswear businesses were offset by the seasonal losses associated with the company’s retail outlet business. Looking ahead to the 2Q, GIII has anticipated a quarterly loss per share between $0.28 and $0.32, or $4.8M to $5.4M, as the retail environment remains turbulent. Analysts are looking for a loss of $0.30 per share on total sales of $135M for the 2Q.
By the close of the week, shares of GIII were up more than 61%, adding more than $4 per share. However, the start of the new trading week, brought different fortune to the company’s stock. At the closing bell on June 8, G-III shares were down nearly 3%, falling $0.30 to end the session at $10.49 per share. Over the course of a year, the company’s stock has ranged from $3.24 to $20.58 per share.
GROW – U.S. Global Investors Inc. ($6.80 to $10.60) +55.9%
Operating within the mutual fund management business, U.S. Global Investors Inc. (GROW) provides investment advisory services to institutions, namely, mutual funds and other persons, along with operating as a transfer agency and record keeping service provider. Other services offered by the company include mailing services, custodial and administrative services, primarily through its wholly owned trust company and administrator for IRAs and other types of retirement plans and distribution services.
Over the course of a week, shares of GROW surged nearly 56% on relatively no influential news released by the company, or any analysts following the stock. There are, however, a few particular circumstances that investors have taken notice of before placing their capital and faith into the stock.
Included in these factors is that GROW is well-known for their investments within metal-based mutual funds, in which analysts believe should increase in size due to the fact that mining shares have started an upward trend over the past several weeks. Another sign of growth for the company is that investors have seen a double bottom in the stock’s chart, dating back to last November, and is now approaching recent highs.
Lastly, analysts believe that U.S. Global Investors’ stock typically moves in conjunction with mining shares, the stock usually has a lag time, but may still attract investors if the company’s technicals continue to set up.
Throughout last week’s trading, shares of GROW added nearly $4 per share, gaining 55.9% in market value over that period. Despite the recent surge in performance, the company’s stock was halted to start the new week. By the sound of the closing bell on June 8, shares of GROW were down 6%, losing $0.64, to end the day at $9.96 per share. Trading relatively in the middle of their yearly range, shares of GROW have slipped as low as $2.90 per share, and as high as $20.20 per share.
TIVO – TiVo Inc. ($7.00 to $10.65) +52.1%
As a pioneer of a brand new category of products with the development of the first commercially available digital video recorder (DVR), TiVo Inc. (TIVO) shares posted substantial gains over the past week, due largely to a court ruling in favor of the company.
On June 3, a U.S. District Court, Eastern District of Texas, ordered rival Dish Network Corp. (DISH) to pay TiVo $103M, plus interest, for violating a patent held by TiVo in use of a modified DVR technology. The ruling determined that Dish Network violated TiVo's DVR “Time Warp” technology, which allows users to pause, rewind and fast-forward live shows.
A corporate representative commented on the ruling, “in addition, the court's award of an additional $103 million plus interest through April 2008 makes this victory all the more important. EchoStar may attempt to further delay this case but we are very pleased the Court has made it clear that there are major ramifications for continued infringement."
EchoStar Corp, (SATS), which operates as a digital set-top box business and a fixed satellite services business, once controlled Dish Network before the two split at the start of 2008. Analysts following TiVo, remain positive on the stock with a “buy” rating, citing that the company retains intellectual value on their products and services.
On the day of the court’s ruling, shares of TIVO surged nearly 50%, adding $3.72 to end the session at $10.70 per share. By the end of June 5 trading, shares of TIVO established a new 52-week high of $11.02 per share, before settling at $10.65 per share, up 52.1% for the week. Beginning the new week, the stock remained relatively flat on the session, adding $0.12, or 1.1%, concluding the day at $10.77 per share.
Worst 3 Stocks
FCBC – First Community Bancshares Inc. ($17.44 to $12.50) -28.3%
Adversely to the top three performing stocks of the past week, there were those that were less fortunate in the marketplace. Included in those was First Community Bancshares Inc. (FCBC), which posted extensive losses throughout the week.
As a multi-state holding company, First Community provides financial, mortgage brokerage, origination, and trust services to individuals and commercial customers through full-service banking locations.
The company’s lack of performance came as investors pondered the actions of the company, in which FCBC announced a public offering for 4.6 million common shares to be auctioned at $12.50 per share on or about June 10.
The total amount of the sale, $57.5M, will be allocated to the buying back of preferred company shares issued to the U.S. Treasury. Last November, First Community received $41.5M from the Treasury under the TARP Capital Purchase Program. Other uses from the sale could include support for organic and opportunistic acquisition-based growth and additional corporate purposes.
First Community Bancshares also noted that the underwriters would have a 30-day provision in which they could purchase upwards of an additional 690,000 shares of FCBC at the current offering price of $12.50 to cover any over-allotments.
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.
VLO – Valero Energy Corp. ($22.37 to $18.21) -18.6%
Despite the prices of energy slowly creeping higher these days, Valero Energy Corp. (VLO) could not benefit from the rising prices, following a dismal forecast for the company’s approaching 2Q. In response to an extended downtime at the company’s Delaware City and McKee refineries, as well as lower diesel margins, Valero announced last week that the company would offer 40 million shares in a public offering priced at $18 per share.
In regards to the upcoming quarter, Valero stated that the company would more than likely post a loss of $0.50 per share for the 2Q. Contributing to the company’s forecast were Valero’s recent acquisitions, which totaled seven, all involving ethanol plants.
Our newly acquired ethanol plants are performing well and meeting our expectations. In addition, the pending acquisition of Dow's interest in Total Raffinaderij Nederland N.V. (TRN) is an extension of our favorable long-term outlook for distillates, and we believe the purchase price is less than 50% of replacement cost for this world-class distillate hydro-cracking facility," commented Bill Klesse, Valero's Chairman and CEO.
As for the public sale of their common stock, estimated to be near $720M, Valero is expected to use the proceeds for general, corporate uses, including their capital spending programs, in addition to financially securing their recent acquisitions.
Upon the announcement of the company’s stock offering and news of an impending 2Q loss, shares of VLO slipped nearly 20% over the course of the week. Losing more than $4 per share, Valero’s stock continued their downward spiral heading into the new trading week. At the close of the markets on June 8, VLO shares advanced 0.2%, gaining $0.03, to end the day at $18.24 per share.
PLCE – The Children’s Place Retail Stores Inc. ($35.91 to $30.66) -14.6%
Last, but not least, The Children’s Place Retail Stores Inc. (PLCE), which is a growing specialty retailer of apparel and accessories for children between newborn and twelve years of age, lost nearly 15% of their market share over the past week, solely on news that the company’s comparable sales dipped from last year’s results.
On June 4, PLCE announced that the company’s same store sales for May plunged 9% year-over-year as retailers continue to be pummeled in today’s economic environment. Throughout their Canadian stores, The Children’s Place witnessed revenues slip 7%, yet managed to post a 1% gain in online sales. Analysts, in the meantime, were looking for PLCE to book an increase of 0.1% in same store sales for the month.
Operating more than 900 stores in North America, total sales for The Children’s Place dropped more than 7% to $101.7M by the end of May, compared to the previous year’s results of $109.4M. Although shoppers remain in the mainstream for retailers, they are more discount conscience these days and are not willing to purchase the first item they see without comparing prices.
At the close of last week’s trading, shares of PLCE were down nearly 15% as monthly sales comparisons were the stock’s downfall for the week. Losing more than $5 per share by the conclusion of the previous week, shares of The Children’s Place reversed course to start the following week. The stock added $0.11, or 0.4%, to end the June 8 session at $30.77 per share.
Throughout the year, shares of PLCE have traded within a range between $16.45 and $43.40 per share.
2009 Better Trades Article
brought to you by
BRIAN MULLIN
