Tuesday, January 22, 2008

Earnings Preview Wednesday

Companies of note...

Abbott Labs (ABT), St Jude (STJ), Varian Medical (VAR) - big, boring, healthcare; just what the market likes

Alleghenyy Technologies (ATI) - former fund holding in the titanium (and other metals) space - dropped 1/3rd in past 2 months. But what hasn't.

Capital One Financial (COF) - credit card company which already warned. On any spikes due to Fed cuts this one is a short... for years. Direct tie to US consumer.

Fund holding CNH Global (CNH) - this is an agricultural equipment name who I've dropped the exposure to quite a bit. Based on what I see on this earnings call, I will make a decision whether to keep holding or not. Going for it is the exposure to big ticket agriculture equipment - think Deere (DE). On the negative side it has a construction business and it is based on Europe; with a strong Euro I am worried about some degradation of exports. This is one benefit Deere (DE) has - with the Fed trashing our dollar to bail out the banking system Deere's products only get cheaper by the month. So this is one I am keeping a close eye on.

Coach (COH) - I have been on the short case for Coach since August, although I certainly would of covered a few weeks ago. At some point, maybe mid to late 2009 we will like this name from the long side - I'd like to see a big push into China. At this point its a brand heavy into Japan and US. Oops. Still a worldwide brand name. With a potential short term turn in retail it might bounce very nicely here.... Surely it will bounce somewhere along the way as will all the retail names, but aside from a trade I don't see much here as earnings will constantly be under threat.

ConocoPhillips (COP) - don't follow it closely but its a large cap oil name

Delta Airlines (DAL), Southwest Airlines (LUV) - hey it's an airlines - everyone's favorite sector (blah) [note I think this sector is putrid, I am just stating in the past 2 weeks its been the hottest sector due to merger rumors]

Ebay (EBAY) - slaughtered tech name. This is how growth stocks die; but gosh its now under 20x earnings.

F5 Networks (FFIV) - this name started the slaughter in Riverbed Technology (RVBD) and Blue Coat Systems (BCSI) 3 months ago, although it is only remotely related. What can you say for this group - no matter what is said, perception is reality. Perception is enterprise won't spend on networking product so the stocks die. At some point there will be great value in this space.

Freeport-McMoran Copper & Gold (FCX) - former fund holding that I abanonded a few months ago anticipating world slowdown scaring people out of this type of stock. This was an accurate call but world slowdown has scared people out of most every stock. So it's only a 'relative' victory. The name is misleading, 80% of its business is copper, only 10% is gold - hence the gold run has not helped the stock.

General Dynamics (GD) - large defense 'safety' stock. Surprised it has not held up better than it has.

Gilead Science (GILD) - one of the few biotech companies I'd actually consider. It has held up great in this sell off; only problem is valuation - this is exactly the type of high value stock that one wrong word in guidance can drop 20%. But its a company hitting on all cylinders.

Motorola (MOT), Qualcomm (QCOM) - MOT do they ever report a good quarter? QCOM is so 1990s

Noble Energy (NE) - this is a quality oil driller - not quite the deep sea type I prefer but until recent carnage it's been a solid stock.

Parexel (PRXL) - I am a bit peeved I did not go into this group about 2 months ago when I was poking around. Instead I went to their Chinese competitor WuXi PharmaTech (WX), as I thought the US names were pricey. This whole group has been on fire as drug research outsourcing is hot (in the US). I still think over the long run they will be at major risk as this work is outsourced cheaper to China, but for now it does not matter. I highlighted PPDI in an earnings preview for last week - despite "good, not great" type of quarter, the stock ripped higher. This is where investors want to be it appears. Another name in this group is Covance (CVD) - again we get healthcare exposure without drug risk much like MedcoHealth Solutions or Express Scripts (ESRX) - diagnostic companies (which Cramer has been hot on) is the other area that has held up great. The valuations now are very rich as people pile into these same few names as safe havens. Makes me a bit worried at these prices.

United Technologies (UTX) - smaller version of GE and probably one of the best run companies in America. But it's considered an "industrial" and thus tied to economy and thus no love of late.

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