BetterTrades

AIG – American International Group Inc. ($13.14 to $27.14) +106.5%

For the first time in nearly two years, one of the world’s largest insurers, American International Group Inc. (AIG), announced at the end of last week’s trading that the company profited in the 2Q, the first gain since the 3Q of 2007. Following the company’s announcement on August 7, shares jumped more than 20% by the close.

AIG, the leading international insurance organization with operations in more than one hundred thirty countries and jurisdictions, confirmed that profits during the period came in at $1.8B, or $2.57 per share, in sharp contrast to the previous year’s net loss of $5.4B, or $41.13 per share. Adjusted for payments to preferred shareholders, net income came in at $311M, or $2.30 per share.

Edward Liddy, Chairman and CEO of AIG commented on the company’s results, "The primary drivers of our positive second quarter results were reductions in net realized capital losses, primarily due to the decline in other than temporary impairments resulting from the adoption of new accounting guidance and improved market conditions. Positive valuation changes for our Maiden Lane interests on a net basis, continued reductions in the risk profile of the AIG Financial Products Corp. portfolio, a reduction in the allowance for recoverability of deferred tax assets, reflecting the effect of recently announced transactions, and gains on hedges not accounted for under FAS 133." (Financial Accounting Standard No. 133 is an accounting standard that provides companies with the ability to measure all assets and liabilities on their balance sheet at “fair value.”)

Having received more than $100B in federal aid, AIG is now more than 80%-owned by the American taxpayers. Prior to the company’s earnings release, the stock had gained more than 70% leading up to the August 7 announcement.

Although no guidance on the company’s upcoming quarterly performance was released, CEO Liddy added, "We continue to focus on stabilizing and strengthening our businesses, but expect continued volatility in reported results in the coming quarters, due in part to accounting charges related to ongoing restructuring activities. In particular, we expect that permanent reductions in the Federal Reserve Bank of New York credit facility related to the issuance of the preferred interests in the ALICO and AIA special purpose vehicles, which upon closing will substantially reduce our debt to the FRBNY, will result in accelerated amortization of a portion of the prepaid commitment asset approximating $5 billion before tax."

Leading up the company’s earnings release, shares of AIG were trading in the low-teens. By the close of trading on August 7, shares had gained more than $14 per share, more than doubling in price.

With the new week’s trading commencing, the company’s stock continued their upward march, adding nearly 6%, or $1.56, to conclude the August 10 session at $28.70 per share. During the past year, AIG’s stock has traded as high as $503.20 and as low as $6.60 per share.

ROCK – Gibraltar Industries Inc. ($7.77 to $12.06) +55.2%

Added to the list of top performing stocks are Gibraltar Industries Inc. (ROCK), a leading manufacturer, processor, and distributor of metals and other engineered materials for the building products, vehicular, and other industrial markets. The stock’s performance was due in large part to the company’s recent earnings report, which came in ahead of market expectations, despite being down considerably year-over-year.

For the 2Q Gibraltar recorded net income of $72K, or breakeven, compared to the previous year’s 2Q profits of $20.1M, or $0.67 per share. Revenues, meanwhile, came in at $217.1M, much lower than the previous year’s tally of $347.2M, a decrease in sales of more than 37% year-over-year.

Analysts, in the meantime, were looking for the steel processor and building-materials supplier to post a quarterly loss of $0.09 based on overall revenues of $229.9M.

With the company’s recent release outperforming analysts’ projections, KeyBanc Capital upgraded the stock from a “hold” to a “buy” rating. The brokerage increased their target price for the company to $15 per share, and raised their 2009 earnings estimate from a loss of $0.40 per share to a profit of $0.15 per share. KeyBanc also adjusted their 2010 EPS outlook upwards from $0.42 per share to $1.15 per share.

Looking at similar results as KeyBanc, an analyst from R.W. Baird increased their rating on ROCK, from “neutral” to “outperform,” while increasing their price target from $7 per share upwards to $12 per share.

"We are incrementally more confident that ROCK's normalized earnings power could exceed $1.50 per share, indicating that current valuation may not credit ROCK sufficiently for its improved cost structure," commented Peter Lisnic, analyst at R.W. Baird, on Gibraltar’s earnings potential in 2010.

Over the course of the stock’s past five trading session, ROCK gained nearly $5 per share, or more than 55% in market value. However, the novelty of the stock’s recent performance did not transfer over into the new trading week. By the sound of the closing bell on August 10, shares of ROCK slipped more than 4%, falling $0.52 to end the session at $11.54 per share.

UFS – Domtar Corp. ($18.96 to $27.42) +44.6%

Rounding out the list of prosperous companies over the past week was Domtar Corp. (UFS), a major North American manufacturer of pulp and forest products, fine papers and packaging that fosters sustainable development through the rigorous application of its integrated forest management policy. Much like the other top performing stocks of the week, shares surged on news of the company’s quarterly earnings release.

Reporting for the 2Q, Domtar announced that the company booked net profits of $48M, or $1.12 per share, versus the prior year’s loss of $45M, or $1.05 per share. However, excluding one-time charges, a refundable tax credit of $79M, Domtar would have posted a net loss during the period of $33M, or $0.76 per share.

As for overall sales, the company witnessed revenues slip from $1.64B to $1.32B, a decrease in sales of nearly 20% year-over-year. Analysts, within the industry, were looking for the pulp and paper manufacturer to record a quarterly loss of $0.74 per share on total revenues of $1.29B.

Commenting on the company’s results was Daniel Buron, CFO at Domtar, "Pulp prices have increased significantly in the past few weeks, and we expect average prices in the third quarter to be higher than the average prices experienced in the second quarter."

The company did not release any tangible figures related to the upcoming 3Q or full-year results. Nevertheless, Domtar representatives did mention that the company remains optimistic about the overall economic recovery and that market conditions within the paper industry should continue to stabilize.

Gaining just under $9 per share during the first week in August, shares of UFS continued their trek higher into the second week of the month. With the sound of the closing bell, shares of Domtar added more than 3%, or $0.88, in the August 10 session, closing the day at $28.30 per share.

Throughout the past year, shares of UFS have traded as high as $78.36 per share, and as low as $6.12 per share.