The Institute for Supply Management’s December Manufacturing ISM Report on Business was ballyhooed by the market on Monday. The headline PMI increased to 53.9%, up 1.2% percentage points compared to last month. A reading above 50% indicates that the American manufacturing sector is expanding, and the higher the number the more accelerated the growth. Take a closer look at the numbers below and they’re decent, but mixed. Manufacturers’ backlogs of orders are decreasing, though at a slower rate than last month. And the time it takes for suppliers to deliver materials is dropping, an … [Read more...]
Capacity Utilization: 2 Sectors That Win
This month’s Industrial Production and Capacity Utilization report from the Federal Reserve fell short of economists’ predictions. Capacity utilization remained essentially flat in April, with growth failing to meet analysts’ expectations. Parts shortages created by the continued troubles in Japan contributed to the lackluster performance of American industry. If you’re not familiar with capacity utilization rate, it is the percentage of total possible production an industry is employing at any given time. In other words, if I own a machine that can make 1,000 baseballs a day, and I’m … [Read more...]
Kentucky Derby Owner Hits 52-Week High
This year a record-breaking 164,858 people attended the 137th running of the Kentucky Derby, breaking a 37 year record. The race was watched by an additional 14.5 million people on television. The stock price of the Derby owner, Churchill Downs Inc. jumped to a new 52-week high on the news, and in response to an earnings report that showcased strong revenues from a number of recent acquisitions. Shares of Churchill Downs (NASDAQ: CHDN) climbed to $45.08 on May 12. The acquisitions helped boost the results at Churchill Downs. To diversify away from horse racing, a seasonal industry, … [Read more...]
Coal, an Export Story
Over the past year U.S. exports of metallurgical coal (met-coal) have nearly doubled in dollar terms. Increased trade of metallurgical coal, used in the steelmaking process, has led to consolidation in the coal mining industry as major players scale-up to meet the demands of globalized competition. Toward that end, Arch Coal (NYSE:ACI) announced a deal to buy International Coal Group (NYSE:ICO) on May 2, pushing ICO’s price up 32.23% last week, making it this week’s Market Mover. Arch Coal’s management estimates that world steel consumption will increase by 60% over the next decade, and … [Read more...]
Bottom Fishing the Stock Market
Markets are bullish, as new highs on the NYSE, AMEX, and NASDAQ outpaced news lows by 8 to 1 last week. A total of 1,109 new highs were recorded, compared to only 137 new lows. Investors should thoroughly examine any stocks trading at new lows in this market. There are probably some hidden gems, but beware stocks of companies whose industries are structural quagmires. One company getting hit by a double whammy of structural changes is newspaper publisher Lee Enterprises (NYSE:LEE). The publisher owns dozens of newspapers with a total Sunday circulation of 1.65 million. Its most notable … [Read more...]
Low Fliers
The airline industry has predictably been hit hard by recently elevated oil prices. AMR and Delta Air, along with jet leasing company Air Lease all hit 52 week lows last week. Jet fuel alone could represent 40% of airlines’ operating costs when oil prices are above $100/barrel. Jet fuel kerosene closed at a price of $3.3067/gallon last Thursday. According to airline industry group, IATA, sustained high fuel prices will drive a decline in airline industry profits of nearly 46% in 2011. IATA reports that “In this economic environment business travel and air freight demand will be more robust … [Read more...]
Chinese Fraud: Tip of the Iceberg?
Welcome to the first post in our new Stock Market Movers column. This new area of the website will focus on explaining and analyzing some of the market’s best and worst performing stocks. The focus will be on stocks reaching 52 week highs and lows, and those with extreme short term price changes. Below you’ll find the first addition to this new column, a review of a much lauded Chinese water industry company. Hitting a new low last week, was China based Duoyuan Global Water. The one-time high flying Chinese water play, closed at $3.11 yesterday, 86% below its $22.65 June 2009 IPO … [Read more...]
G.E.’s Strategies Let It Avoid Taxes Altogether
While large corporate giants like GE have the resources to hire hundreds of tax avoidance specialists and to lobby Congress for specific provisions, the life-blood of the U.S. economy, America’s small and medium sized businesses do not. America will soon have the highest corporate tax rate in the OECD. Streamlining the corporate tax code, as has been suggested by the president’s Deficit Commission is vital to maintaining America’s economic might. Will we actually see real reform? With Jeff Immelt acting as an outside advisor to President Barack Obama, I wouldn’t bet on it. As this New York … [Read more...]