Hurry Up and Wait
Morning News of Note:
- COP UPL EOG XTO SWN: Conoco Purchase May Start Spree Of Energy Deals Who's next? ConocoPhillips's $35.6 billion cash and stock deal to acquire Burlington Resources Inc. could jumpstart a wave of consolidation as cash-rich energy companies snap up smaller natural-gas producers, according to energy analysts and investors. Burlington is one of several midtier companies that have substantial gas holdings in North America. With natural gas trading near all-time highs in the U.S. and a tight market expected in the fuel for some time, these companies are all potential acquisition targets. (Full Story) WSJ
- GM: General Motors-GM debt downgrades place turnaround in jeopardy-FT: GM is teetering dangerously close to defaulting on its bonds or declaring bankruptcy due to the weak performance of its North American business lines. S&P downgraded the company's debt again pushing their credit rating further into the junk level. S&P also raised concerns as to the viability of GM's turnaround effort and specifically cited the drastic 30,000-person work force reduction over the next three years
- AAPL: Apple to tackle consumer electronics; iPod "boombox" planned Sources familiar with the company's plans describe the new products as "iPod companions" rather than "accessories," and say Apple appears ripe to announce the first of the gadgets as early as the second week of January at the annual Macworld Expo in San Francisco, Calif. Sources familiar with the company's plans describe the new products as "iPod companions" rather than "accessories," and say Apple appears ripe to announce the first of the gadgets as early as the second week of January at the annual Macworld Expo in San Francisco, Calif. (Full Story) Apple Insider
- PEP: PepsiCo-PEP market value tops KO for the first time-FT: For the first time in 112 years of competition, PepsiCo (PEP) overtook Coca-Cola (KO) in market capitalization. This year, PepsiCo's stock rose 14%, while Coca-Cola's fell 1.2%. The success of PepsiCo has been its ability to diversify beyond sugary soft drinks. In addition to its "flagship" cola, the company also produces Gatorade sports drinks, Tropicana juices, Aquafina bottled water, Frito-Lay snacks and Quaker cereals
- Mad Money Summary: Cramer said he is switching recommendations for the Cosmetic Laser Field and recommends taking profits in Syneron Medical (ELOS) and buy shares of Cynosure (CYNO). Cramer believes the newly issued Cynosure still has "five more days of goodness." Responding to a question, Cramer said that he is not comfortable recommending Ionatron (IOTN) as the company is not profitable and does not have good revenue growth. Commenting on an article in the Engineering News-Record, that said "clean coal" was the new black gold, Cramer said he wants to do a "'mon back" on shares of URS (URS). Responding to a question, Cramer said he was not sure about the time frame for International Coal Group (ICO) and would buy Peabody Energy (BTU). Cramer found another reason to be bullish on shares of VeriSign (VRSN), he sees the acquisition of Jamba as a positive after Electronic Arts (ERTS) acquired Jamdat Mobile (JMDT). Responding to an email, Cramer said that Sony (SNE) is "getting its butt kicked by everybody" and he would sell shares. Cramer said that V.F. Corp's North Face brand is "smoking," but would wait until after the company reports earnings to buy the stock. Commenting on Six Flags, Cramer said "I need you to sell that thing nine ways to Sunday...there is nothing there whatsoever." Cramer was also concerned over the raw costs affecting Core Molding Technologies (CMT) and he prefers Paccar (PCAR) as a truck replacement cycle play. Cramer said that he is not a fane of the gaming stocks International Game Technology (IGT) or Shuffle Master (SHFL). Cramer also recommended getting out of OraSure Technologies (OSUR) as the company's AIDS test has too many false positives
Market Comments: The market opened slightly lower but has bounced into positive territory so far in early trading. Oil is back above $61, and energy stocks are trading higher. Bond yields are hovering around 4.52%.
The big event today is obviously the FOMC meeting, and while it is a given that they will raise rates to 4.25%, the question is will they change their statement to alter the wording and the term "accomodative". How the market reacts in the short-term is a toss up. But don't expect any big moves in the market until after the announcement.
BBY reported disappointing earnings this morning, and the stock is under pressure. This is weighing on the retail group a bit as well. Last night, Cramer recommended swapping out of ELOS and into competitor CYNO. But I am sticking with ELOS, as I think they have higher profitability levels and a still compelling valuation.
long ELOS, PEP