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Nike (NKE) Beats and Rallies After Hours

by srpatterson on Tuesday, September 29, 2009 8:02 PM

Nike (NKE) Beats and Rallies After Hours

Nike reported their most recent close after the close of trading today and beat the street with cost cutting on weaker revenue. A conservative forecast didn’t stop traders from buying shares in after-hours trading.

Quarterly Earnings

Nike Inc (NKE) made $513 million in profit or $1.04 a share compared to estimates of 97 cents a share. This was a slight improvement to what the company earned a year ago during the same quarter, $510 million or $1.03 a share. The revenue during the quarter is a slightly different story as it actually fell 12% down to $4.8 billion.

Future Orders

Nike also isn’t too optimistic about the current quarter which extends into the holiday season. Future orders are anticipated to be down 6% compared to last year’s same winter quarter. The stock has rallied from $53.31 on September 2nd to a three month high of $60.09 at the close today. This run-up doesn’t necessarily correlate well with the overall news tonight.

Analysts see revenue and earnings slightly negative for the next couple of quarters while the current price to earnings ratio is 19.83. This is not a situation that should persist. If future orders do not improve, look for the stock to fall over time.

RIMM Earnings Announcement Thursday After the Close

by srpatterson on Sunday, September 20, 2009 6:34 PM

RIMM Earnings Announcement Thursday After the Close

The big news this coming week is Research in Motion (RIMM) announcing their earnings Thursday after the close. October Options Call activity on Friday was strong at the $85 strike price and the $90 strike price. With little interest on the Put side. Analyst have raised their profit targets from 97 cents to $1 over the past three months. Sales growth remains strong at 40.5% with earnings growing at 16.3% for the current quarter year over year. A current price to earnings ratio of 23 makes the stock a little pricey but traders are looking for a decent pop this coming week.

Economic Calendar

The economic calendar is a little light this week with a Federal Research rate decision coming on Wednesday afternoon. No one is expecting a change in rates from the current historically low .25% rate. Initial Claims will be released Thursday morning with the possibility of a slight uptick in the number of American’s filing for unemployment claims the first time. Continuous Claims will be released at the same time with the expectation of a slight reduction.

Other reports of note at the end of the week include a decrease in Durable Orders compared to last month’s report, an increase in Michigan Sentiment, and a slight dip in New Home Sales. The reports are not great overall at the end of the week but an early week rally and a post RIMM rally in the overall market should offset any late week economic softness.

Goldman Sachs (GS) Continues to Climb

by srpatterson on Tuesday, September 15, 2009 6:50 AM

Goldman Sachs (GS) Continues to Climb

I sold my Goldman Sachs (GS) shares about two weeks ago after a decent gain and moved the funds into the more diverse SSO ETF. But I am now kicking myself as Goldman continues to rally to new highs and analysts upgrade their expectations for the dominant investment bank.

Past Quarter Performance

Goldman Sachs has rallied over the past six months from near $90 a share to now over $175 a share with a recent burst from the $160 range. This rally has occurred as profits have improved steadily and analysts have upgraded the company’s expectations for future quarters. The company has beat expectations the past two quarters after having a terrible November 2008 report. But the turnaround has been quick and explosive. They fell to a $5 loss per share in November of 2008 to only turnaround and report a $3.39 profit in March and then an even better $4.93 profit in June. And now analysts are steadily increasing their expectations for September, December, and the current year.

Profit Estimates

Estimates for the current quarter have rise over the past 3 months from $2.59 a share in profit to a recently adjusted $3.62 profit. Likewise the following quarter has improved expectations from $3.25 a share to $4.43 a share. Plus the stock is trading around a price to earnings (P/E) ratio of 39 with these two quarters growing at 100% and 189% respectively. No wonder the stock continues to move higher.

Goldman Sachs Trade

I think you can be long Goldman up until the next earnings release and even hold the position through the release with some put protection in place. The Wall Street Journal reported on Monday that Goldman led all stocks in selling into strength so you should wait for a pull back and begin to build a position as the stocks sells off slightly.

Small Cap Stocks and Funds Can be a Good Addition to Your Portfolio

by srpatterson on Wednesday, September 09, 2009 8:46 AM

You don’t hear too often about small cap funds or socks from Wall Street pundits, the media, or economic analysts on television at night. Small cap stocks involve investing in small market capitalization, lesser-known organizations which are up-and-coming; not typically the type of investments that veteran large investment firms seek out. However, though they obtain less notice than their “wealthier siblings”, small cap investments can be a huge opportunity for an individual shareholder to get in on the ground-floor of a fledgling corporation like Microsoft back in the 1980s. After all, that’s how many of the large cap players on the Street began!

The advantage of investing in small cap stocks is that there is a change of much superior growth, dollar for dollar over a year’s period. Your buck can grow exponentially as the business begins to increase momentum in revenue and earnings, thus allowing your asset to double, triple, or multiply by tenfold. This is not to say that merely focusing on small caps is the correct way to develop your investments either, however, giving them a section of your portfolio makes good logic.

Small caps, also called small cap stocks, are a condensed description of the name “small capitalization stocks” because they entail smaller companies with an undersized market capitalization. This normally refers to companies with market capitalizations below 2 million and above 300 million dollars. This expression, market capitalization, essentially refers to the price of the stock multiplied by the amount of outstanding shares. This equates to the company’s value, as determined by the market itself at any given time.

Large caps on the other hand ought to have a position in your investment portfolio too. Though some investors will direct putting your cash into strictly larger cap investments, the truth is that they aren’t always the steady, consistent, and secure places to be invested. Sure, blue chip stocks are a great investment if you are guarded and conventional in your risks. With the collapse of Enron and the recent banking industry (Bear Stearns) and insurance company woes (AIG), these bigger stock failures surely convey the real risks involved in any large cap funds as well.

Yet overall large cap stocks are not as risky of an investment as buying small cap stocks. However, with the safer route (the larger cap), you can expect to see safer, more old school gains. This is why small caps are such a great investment for the individual investor. By choosing a precise sum of money to risk, investing in a small cap stock or fund can set you up for better growth as the company’s return grows and as their status in the market gains traction. Increased risk can surely bring increased returns on investment as we saw during the early 90s. But buyers beware; diminish the total sum in each small cap stock you invest in so your portfolio is more diversified. In other terms, don’t put all o your eggs in one “small cap” basket!

Always confer with your investment professional before making a decision about which small or large cap investments to build. The bottom line is that, through cautious planning and examination, your investment portfolio can give you superior returns when you add small cap investments in the midst of your large cap stock purchases. Successful investing!

For more information about Small Cap Stocks check out: http://www.tradestockamerica.com

Over the Counter Derivatives Finally Market Traded

by srpatterson on Tuesday, September 08, 2009 9:01 PM

Over the Counter Derivatives Finally Market Traded

For over a year commentators and bloggers have been writing that Over the Counter (OTC) Derivatives need to be traded in an open market to avoid situations that occurred during the credit crisis which brought major financial institutions to the brink of bankruptcy. Now 15 major banks including JP Morgan Chase, Bank of America, Citigroup and Goldman Sachs have agreed to begin moving the credit default swaps and interest rate swaps through open markets. This comes no the heels of regulators looking to restrict both kinds of swaps if kept private.

The credit default swap (CDS) market is believed to be $25 trillion in value and was blamed for the demise of AIG, the insurance giant saved by the federal government. 80% of all CDS transactions will go through an open market beginning in October. With 70% of interest rate swaps going through an open market beginning in December. The only current provider of such open markets is The Intercontinental Exchange (ICE). The NYSE Euro next (NYX), another open market operator, has been vocal about the banks reluctance to make all OTC transactions public.

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