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(Best) OSK, TRW, SNX (Worst) AIG, MYGN, SCHN from Better Trades
July 9, 2009
The market ended a holiday-shortened week on a bearish note, albeit on very low volume. Thursday’s selloff was prompted by a negative jobs report. The DOW closed the week lower, falling 153.27 points, or 1.8%, to close at 8,285.12. The S&P also finished the week in the red, losing 21.89 points, or 2.4%, ending at 896.91. The NASDAQ concluded the week lower as well, falling 41.70 points, or 2.3%, to close at 1,796.52.
Top 3 Stocks
OSK - Oshkosh Corporation ($14.52 to $19.93) +37.3%
Leading the charge for stocks that posted substantial gains over the shortened trading session in the previous week was Oshkosh Corp. (OSK). Oshkosh is a leading designer, manufacturer and marketer of a broad range of specialty access equipment, commercial, fire & emergency and military vehicles and vehicle bodies. Oshkosh products are valued worldwide in businesses where high quality, superior performance, rugged reliability and long-term value are paramount.
During the past week, Oshkosh saw their stock price surge more than 37% on news that the company received a $1.06B contract from the U.S. Army to produce new, off-road vehicles for ground forces fighting in Afghanistan. Oshkosh is now under contract to build more than 2,200 hybrid-armored vehicles, which provide the same type of protection as those mine-resistant, ambush-protected vehicles that have been used in Iraq.
Andy Hove, Oshkosh Executive Vice President and President of the company's defense unit, commented, "We and our suppliers have already made significant investments in materials and are well positioned to accelerate our manufacturing capabilities."
Following the company’s contract announcement on June 30, shares of OSK surged in after hours trading that day, gaining more than 20% to $17.45 per share. By the conclusion of the trading week, Oshkosh shares closed just under $20 per share.
By the start of the new trading week, OSK shares closed the July 6 session up nearly 7.8% at $21.48 per share. During the past year, shares of OSK have traded within a wide range, as high as $21.70 per share, and as low as $3.85 per share.
TRW – TRW Automotive Holdings Corp. ($9.18 to $11.57) +26.0%
Added to the list of top percentage performing stocks is TRW Automotive Holdings Corp. (TRW), which is an automotive supplier. The company’s products include integrated vehicle control and driver assist systems, braking systems, steering systems, suspension systems, occupant safety systems, i.e. seat belts and airbags, electronics, engine components, fastening systems and aftermarket replacement parts and services.
At the end of the previous week’s trading, investors took notice of the stock after the company announced that they had renegotiated the covenants on $2.5B worth of debt. The amended debt structure now gives TRW more room to operate. Although not without costs, TRW will now assume a $270M annual cost until the debt is repaid.
That same day, an analyst from JPMorgan upgraded shares of TRW, citing the news of a restructured debt-refinancing plan. Upon announcement, shares of TRW surged more than 16% in last Monday’s trading, as shares reached $11.35 by the closing bell.
With the July 6 session closed, shares of TRW advanced marginally throughout the day, adding $0.06 to end the day at $11.63 per share. Currently trading in the middle of the stock’s yearly range, shares of TRW have reached highs of $21.85 per share, and lows of $1.38 per share.
SNX - Synnex Corp. ($22.93 to $28.38) +18.7%
Rounding out the top three for the week, Synnex Corp. (SNX), which is a global IT supply chain service company offering a comprehensive range of services to original equipment manufacturers and software publishers worldwide, witnessed their stock’s price jump nearly 19% in last week’s trading. The recent surge in price came on the heels of the company’s increased profits during their 2Q.
Synnex, which offers product distribution, related logistics services and contract assembly, distributes their IT systems, peripherals, system components, software and networking equipment to such suppliers as Hewlett-Packard (HPQ), IBM (IBM), Intel (INTC), and Microsoft (MSFT).
In the company’s recent quarterly report, SNX posted net earnings of $19.2M, or $0.57 per share, compared to the previous year’s 2Q profit of $18.5M, or $0.57 per share, an increase in net income of nearly 4%. Meanwhile, overall sales for the period receded, falling from $1.88B to $1.81B, a drop in revenues of nearly 4% as well.
Analysts, within the industry, were looking for the business service provider to book quarterly profits of $0.48 per share on overall sales totals of $1.68B, both of which Synnex bettered. Looking ahead to the 3Q, SNX anticipates earnings per share to range between $0.58 and $0.61 on total revenues between $1.8B and $1.9B. Analysts are looking for 3Q earnings of $0.51 per share on sales of $1.75B.
Heading into the new trading week, shares of SNX gained more than $5 per share during the Fourth of July week. Monday’s session brought a different result from the previous week, as shares of SNX slipped more than 3.4% in trading, losing $0.97 to end the session at $27.41 per share.
Worst 3 Stocks
AIG - American International Group Inc. ($29.20 to $18.25) -37.5%
Leading the pack of those companies that posted substantial losses for the week, American International Group, Inc. (AIG) witnessed their stock’s price plummet nearly $11 per share by the conclusion of last week’s trading, primarily on the company’s sale of their 21st Century Insurance Group unit for nearly $2B.
AIG, renowned as world leaders in insurance and financial services, is the leading international insurance organization with operations in more than one hundred thirty countries and jurisdictions. AIG companies serve commercial, institutional and individual customers through the most extensive worldwide property-casualty and life insurance networks of any insurer.
Early last week, AIG confirmed that the company has sold their insurance arm to Farmers Group Inc. for a reported $1.9B. Farmers, a subsidiary of Zurich Financial Services Group Unit, accepted the deal on July2. The proposal was first mentioned in April at a cost of $1.7B, with $200M coming from Euro-based capital notes. The sale represents further restructuring from AIG amidst the global economic crisis.
In developing news, AIG is also in the process of receiving bids for their Taiwanese Life Assurance segment after recent interest from private equity firms were informed about the possible AIG sale.
By the sound of the closing bell on July 2, shares of AIG plunged more than 37% during the week. the start of the new trading week brought similar results as did the prior session. concluding the July 6 trading session, shares of AIG dropped more than 11%, or $2.06, to end the day at $16.19 per share.
MYGN - Myriad Genetics Inc. ($37.50 to $26.00) -30.7%
Included in the list of biggest percentage losses was Myriad Genetics Inc. (MYGN), which uses gene-based medicine to develop therapeutic and molecular diagnostic products. The company employs a variety of proprietary proteomic technologies to discover disease genes and to understand the role these genes and their related proteins play in the onset and progression of disease.
By the end of last week’s trading, shares of MYGN slipped more than 30% in market value, in large part to the company’s expected shortfall in molecular diagnostic revenues for 2009. In an announcement made on June 30, Myriad is now looking to post revenues for molecular diagnostics of about $326M, down from a previous stated range of nearly $330M.
Analysts are looking for the biotech company to post annual revenues of $336.8M. Myriad also offered projections for their 4Q in which the company is looking to record revenues of nearly $86M, as experts are expecting sales totals of $91.6M.
Following the company’s adjusted revenue forecast, shares of Myriad plummeted more than 21% in the June 30 trading session. Coupled with more down days that followed, shares of MYGN finished the week down $11.50 per share.
At the start of the new trading week, Myriad had lost nearly 31% of their market value and added to that loss by the end of the July 6 session. With Monday’s session complete, MYGN closed the day down 2.2% at $25.42 per share. During the past year, shares of Myriad have traded between $24.80 and $47.08 per share.
SCHN - Schnitzer Steel Industries Inc. ($60.20 to $50.20) -16.6%
Rounding out the bottom three, Schnitzer Steel Industries Inc. (SCHN) concluded the previous week down more than 16%, as a direct result of a poor quarterly performance report delivered on June 30.
Schnitzer, which collects, processes and recycles metals by operating one of the largest metals recycling businesses in the United States, confirmed last week that the company posted a loss for the 3Q of more than $1M.
For the recent period, Schnitzer recorded a net loss of $1.53M, or $0.05 per share, in sharp contrast to the previous year’s 3Q profit of $61.72M, or $2.14 per share. Meanwhile, quarterly revenues plummeted by nearly 58%, from $972.14M to $411.83M on lower volume and prices. Analysts, in the meantime, were looking for Schnitzer Steel to post earnings of $0.16 per share on overall sales totals of $382M.
Looking further into the company’s report, sales within the company’s metal recycling plunged from $810M a year ago to $318M. Additionally, revenues generated within the auto parts segment slipped from $101M to $61M, almost a 40% drop in sales. Lastly, the company’s steel manufacturing segment recorded net sales of $47M, down more than 72% from last year’s tally of $168M.
After losing $10 per share during last week’s trading, shares of SCHN continued their downtrend in Monday’s session, losing more than 4% to close at $48.02 per share. Over the course of a year, shares of Schnitzer Steel have ranged as high as $101.77 per share, and as low as $16.45 per share.
2009 Better Trades Article
brought to you by
BRIAN MULLIN
