Jackson Hewitt Jumps on Wal-Mart and Earnings

On back to back days the two largest tax preparation services released prior quarter earnings. H&R Block Inc (HRB) reported on Tuesday disappointing investors who sent the stock tumbling from $20.48 a share to $19.90 a share on the day. Today saw the opposite reaction for Jackson Hewitt (JTX) which saw their shares bounce higher 17% on a better than expected loss. These companies are both cyclical and usually post profits during the first 2 quarters of a calendar year only.

H&R Block Inc.

The H&R Block loss was better than expected at 38 cents compared to 40 cents. But the company also announced the closing of 400 stores in 2010 and their exit from Wal-Mart stores across the country. They also forecasted single digital revenue growth during the coming year. TaxCut is a popular software product available from H&R Block that allows tax filling through self preparation. This form of tax filing is become more popular as compared to the face to face tax preparation that has been the standard for the company for years.

Jackson Hewitt

Jackson Hewitt lost 66 cents per share during the most recent quarter. But the company is excited about manning 1,800 Wal-mart stores with tax preparers this coming tax season. The company also has a new online tax preparation product that they will be releasing for the first time this January. These two revenue growth outlets have investors feeling good about the company. The 17% jump in price is a good opportunity to take profits if you have help the stock for some time. Otherwise, wait for the stock to fall back to preannouncement levels before buying.

Federal Reserve Sees Economic Improvement and Some Jobs

Late year reports from the 12 different regions of the Federal Reserve saw improvement in consumer spending and manufacturing according to a report released today. This is the best report since the recession began as 8 regions reported an increase in economic activity. Can this recovery continue after the First Home Buyer Tax Credit expires next April, more than likely it can.

Jobs Improvement

The Fed plans to keep rates were they are as inflation, even in recent reporting, has not increased. And maybe the best news of all is job improvements in the Boston area and the service sector in St. Louis. Even with the two regions of job growth, the board doesn’t expect the unemployment rate (10.2%) to move downward until the middle of 2010.

S&P 500 Proshares

I still feel the best way to play the economic recovery is purchase Ultra S&P 500 Proshares ETF (SSO). There are other ETFs that you could also add to a portfolio but I tend to the use the double return S & P 500. It has fluctuated between $37 and $38 a share for the past month but should run if it breaks above $38.

© 2009 FastSwings.com

Coca Cola Reaches New 52 Week High

The Coca Cola Company (KO) fell slightly on Wednesday after reaching a new 52 Week High the past two trading sessions. On Monday a report came out from the Financial Times that the company plans to double it’s bottling capacity in China and triple it’s sales within the country over the next 10 years.

Call Options Volume

Options Volume for KO Shares rose nearly 2000% on Wednesday (According to Options Dragon) with over 350,000 contracts changing hands. December Calls for 52.50 and 55.00 were strong. Along with January Calls from a strike price of 40 up to a strike price of 52.50.

Expectations

Earnings estimates for the fourth quarter of 2009 don’t look to be improving much over time but first quarter 2010 and the full yearly earnings for 2010 have seen some expectation growth. Next quarter earnings are expected to be 15% better than a year ago while 2010 is expected to be 11% more profitable than 2009. Revenue is expected to grow at 1% this quarter and 8.7% next quarter.

KO Trade

The Forward Price to Earnings ratio (P/E) for Coca Cola (KO) is currently at 16.99, a little rich for the expected growth of the company next quarter. The stock has rallied 28% over the past 52 weeks and is due for a pull back from it’s high. I would wait for a correction of 5% before building a position.

Dell Falls on Poor Earnings

Dell Inc (DELL) reported today a 54% decline in income for it’s most recent quarter along with a 15% reduction in revenue. The company missed estimates on both fronts and the stock was battered 10% lower on Friday. The bad report has made some investors question the technology leadership and the overall market rally.

Opposite of Other Tech Giants

These earnings are in contrasts to a number of other technology companies that have beaten estimates and performed well during the 3rd quarter. HP, Intel, and IBM have all done well with HP and Intel both operating in the consumer PC space. Michael Dell stated during the announcement that the company has seen consumer strength in the last 30-60 days. This would correspond with the beginning of holiday shopping in the US.

Consumer Buying

Dell has not suffered because of the consumer in the last quarter but because of it’s reliance on business spending and government contracts. Both business and government revenue declined for Dell. Laptops and Netbooks have become hot items this year and Dell is missing some of this trend. At the same time Dell is moving into the services market with its recent acquisition of Perot Systems.

http://www.tradestockamerica.com

© 2009 FastSwings.com

Gold: Don’t Fight the Trend

An old saying in trading technical charts is ‘don’t fight the trend’. And this has been the case with Gold over the past year, every pause in the rally of the price of gold has been a good opportunity to buy. Of course this could reverse if the US dollar was to gain support with a monetary change by the Federal Reserve. But that doesn’t not appear to be on the minds of the Federal Reserve.

Gold rallied to a new high today as Federal Reserve officials spoke about keeping the current historic low interest rates in place until there is a more forceful economic recovery in America. Gold is moving in the reverse direction as the US Dollar which has fallen over the past 15 months and looks to continue falling until their is a policy change.

Inflation is also a concern for traders who are predicting a rise in consumer costs as the dollar continues to fall. Gold is then used as a hedge against the inflation and the fall in the dollar. Gold reached a new high of $1119.10 an ounce this morning on the NYME and closed slightly lower by mid-afternoon. Investors can play the price of gold rather conservatively by buying the Exchange Traded Fund, Spiders Gold Shares (GLD), and following practical trading guidelines.

Federal Reserve Holds Rates as Expected

The Federal Reserve continue to hold the Fed Funds Rate at 0.25 %, historically low rates. The news created a mid-day rally in the stock market that faded into the close. The Fed believes economic activity has improved but is fearful about new job losses in the US and the possibility of tightening credit for consumers. There is no plan to increase the rate in the near term.

Service Industry

The Service Industry also added support early in the day with a decent report. The ISM reported service industry growth for the 2nd quarter in a row last month. The reading came in at 50.6 compared to a reading of 50.9 in September. Both readings signal growth. The Market was expecting 51.5 but rallied on the report non-the-less.

Economic Calendar

The remainder of the week remains busy with Initial Claims and Continuing Claims being released on Thursday. While Friday is a very active reporting day with Nonfarm Payrolls at 8:30 am, the Unemployment Rate at 8:30 am, and Wholesale Inventories at 10 am in addition to many other government economic reports.

The late sell-off in the markets would likely be related to the unemployment numbers coming later this week. Initial Claims is expected to come in lower than the last report at 522,000. Non-Farm Payrolls will also improve if in-line with estimates of –175,000. But the Unemployment Rate will still climb to a troubling rate of 10%. The markets will struggle to find buyers until all the reports are out this week.

First Republic Bank Sold to Investors

The deal has been confirmed that First Republic Bank is being sold by Bank of America (BAC) to a group on investors which include the current management, Colony Capital, and General Atlantic. The bank had assets of $19 billion when it was sold as a part of Merrill Lynch in January. Banc of America was off slightly on the news today.

Merrill Lynch Purchase

First Republic was last purchased for $1.8 billion by Merrill Lynch in 2007 and is now reportedly being sold for near $1 billion. The banks wealth management division was similar to the currently owned US Trust asset under BAC ownership. Bank of America is selling assets to improve it's balance sheet at this time.

Wells Fargo and US Bancorp

Bank of America’s asset sales are occurring while other banks like Wells Fargo (WFC) and US Bancorp (USB) report earnings that are modestly higher than expectations. Wells Fargo reported a $2.6 billion profit for the third quarter even as loan losses expanded. US Bancorp reported a 4.7% profit growth for the quarter and stated that their loan loses have not grown as much as within previous quarters.

Bank of America

Bank of America missed it’s last quarterly estimate by 23.8% and has seen analysts reduce their expectations for the fourth quarter of 2009, the first quarter of 2010, and the year ending in December. BAC stock is not the strongest bank stock at this time and could experience selling pressure in the months to come.

© 2009 FastSwings.com

General Electric (GE) Falls after Earnings

General Electric Co (GE) fell on Friday after it released it’s most recent quarterly earnings. The mid-day decline was near 4.25% from the prior days close of $16.79 share. The profit for GE declined 44% from the previous year’s period as GE Capital struggled and revenue also declined 20% as jet engines, MRI machines, and other items saw weak orders.

GE Capital

The company said in their conference call that the revenue fall can be attributed to their downsizing of GE Capital mostly. The action of General Electric in addition to Bank of America caused some caution to arise in investors that had celebrated good earnings news from JP Morgan Chase and Goldman Sachs just yesterday.

Earnings Expectations

Revenues are expected to fall another 8.5% in the fourth quarter with earnings dropping 33% compared to the fourth quarter in 2008. Analyst are not anticipating any improvement in the numbers as they have held steady in their assessment for some time. The company had surprised to the upside the past two quarters which makes this quarter even more disheartening.

GE Trade

I would not be a holder of GE at this time as its stock price has increased from 10.78 in July to 16.79 just yesterday. If you currently holding the stock this would be a good time to take some of the profits you have made during this recent run-up.

Why Many Startups Fail

According recent statistics from the Small Business Administration (SBA) 90% of the small businesses fail within two years of starting due to many entrepreneurs lacking basic knowledge in handling company operations. Let’s explore the reasons why businesses fail and how you can avoid such a failure?

Starting a Business for the Wrong Reasons:

Many times Entrepreneurs start a business on the hope that they can quickly make money or have more free time with their families. A startup created for such a reason will have more chances to fail. Companies based on activities the entrepreneur loves to do and is passionate about often are more successful.

A Lack of Planning:

Most new businesses fail because of deficient planning. Careful planning focused on the industry is quite important for any startup to become successful. At times Entrepreneurs do not have a proper vision for their corporation and disregard the need of a healthy developed business plan. Be sure the product or service you are providing fulfills a need for your customers.

Inadequate Funding:

Another common reason for which startups fall short is underestimating the quantity of money they will need for their operation. Due to which, there is always a hazard to company strength and growth. Entrepreneurs should perform meticulous research on how much money they will need, including a range of expenses and the time it will take to create the business. You need to find unfailing investors who are consistent and can invest swiftly.

Good Location:

A high-quality Location plays a vital role in making a business successful and dreadful location can harm your business without difficulty. Factors like where your customers are located, location of your competitors, ease of access, traffic, etc. are required to consider in finding an appropriate location of your company.

Unreliable Employees:

Dependable employees are extremely important for the success of a business. A company should have employees with precise skills for the given field. A large amount of uncreative employees’ increases expenses whereas fewer employees then the workload requires, can be overpowering and tricky to handle. Hence, an entrepreneur should have appropriate facts to direct the work force.

Poor Marketing Strategy:

You cannot produce revenue when your customers are not aware of your products or services. You should have a successful marketing approach which entirely focuses on your target audience and tells them about your organization. Many startups fail because they do not promote themselves or do not promote to their target audience.

Overexpansion:

Most business owners get perplexed when it comes to the extension of their business. They want to expand very swiftly which leads them to situations like deficient capital and insolvency. A business should be extended once your company has a rock-solid client foundation.

Gagandeep Singh is working as an Internet Marketing Executive for Fortepromo, which provides high quality promotional products to help companies in promoting their brand.

Gold, Silver, Coal and Metal Mining Rallies on Weak US Dollar

On Monday energy prices rallied on the weaker US Dollar and some help from lower temperatures in the states, and the gold, silver, coal and metal mining rally continued. The weak dollar has led investors to pour money into commodities that are traded in the US Dollar including oil and natural gas over the past couple of months. 2009 has been a good year for commodities with Continuous Commodity Index (GCC) moving from $21.49 to a recent 3 month high of $24.54.

Gold and Silver

In the gold space the Spiders Gold Shares (GLD) is the safest and least volatile way to speculate in the trend continuing higher in commodity prices and gold in particular. The Exchange Traded Fund reach a new 52-week high of $103.64 just days ago. Some are warning of a bubble in commodities which is true but as long as the dollar continues to weaken, the chance of  a major change in direction is unlikely. The signs of economic improvement in America and in other major economies around the world boast well for commodities as supply will increase as countries begin to build new infrastructure again.

Coal & Metal Mining

Coal and Metal Mining is seeing similar interest from investors but taking a look at individual shares within the industry does not present a decent investment. BHP Billiton Ltd (BHP) is the largest company in the area which has some decent growth 54.5% earnings with –10.6% revenue for the year but is in the midst of a fairly tough quarter so could have topped out at a recent three month high. This is fairly representative of many of the stocks in the industry.