InfoSpace Surges, Who Knew?

Who knew that InfoSpace (INSP) was still around? The search company was popular in the early stages of the Internet, way back in the 1990s. But the company said today that revenue and earnings are going to far exceed the current projections for the fourth quarter. It’s stock rose close to 25% on the news.

Not anywhere near it’s 2000 peak of $1,305, the stock closed the day at $11.59. One of the dot-com darlings, the company has survived and even acquired a number of mobile properties since the bursting of the bubble, including Go2Net, Moviso, and Switchboard.

InfoSpace now expects revenue to be close to $70 million or an increase of 90% from the same quarter a year ago. The prior estimate was for only $57-60 million in revenue. New earnings forecasts are in the range of $6.3 million to $7.5 million compared to analysts estimates of $3.4 million to $4.4 million. The company lost $6.8 million last year.

If you have dotcom fever once again, InfoSpace looks attractive with a 38.63 price to earnings ratio and 90% growth.

Goldman Sachs (GS) Begins Climb to Earnings

Even with the overall markets declining slightly in light trade on New Year’s Eve, Goldman Sachs continues to climb heading into their fourth quarter earnings in mid to late January. Up close to 2% on Thursday, Goldman began to move higher on Tuesday after three months of lackluster movement. A report from Bloomberg came out the same day detailing the leading role Goldman has over others in underwriting fees for Initial Public Offerings.

Earnings Estimates

The earnings estimates have not improved too much, despite the report, as the current quarter has a recent decrease in expectations from 5.56 a share to 5.47 a share. Next quarter is a little more promising with profit estimates improving from 4.38 a share to 4.46. Year end buying by portfolio managers is more than likely the reason for the uptick. But the company’s earnings announcement shortly after the beginning of earnings season, January 11th, should provide additional support in the coming weeks.

Options Volume

The Call Options for Goldman Sachs also saw some volume on Thursday as strike prices in January of 165, 170, and 175 were popular. Later months did not see an significant volume increases.

© 2009 FastSwings.com

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