Tuesday, February 21, 2006

Back In The Saddle

Morning News of Note:
  • TOL: Raising the Roof WITH WALL STREET FEARFUL ABOUT A BURSTING of the housing bubble, home-building stocks have been crunched -- and none as hard as Toll Brothers, the country's top producer of luxury homes. In just seven months, Toll has gone from being the Street's favorite major builder to the least-liked. Toll shares (ticker: TOL), at around 30, are down nearly 50% from their peak of 58 last July. The backdrop for builders has worsened in recent months as Toll has warned of weakening orders, rising cancellation rates and greater discounting. (Full Story) BARRONS
  • WEBX TWX: AOL, WebEx team up for new AIM services AOL is expected on Tuesday to launch two new versions of the company's instant message service that are designed specifically for businesses. In a partnership with Web-conferencing leader WebEx Communications, AOL is launching the tentatively named AIM Pro. One AIM Pro package will target small businesses and the self-employed, while another is intended to appeal to larger companies. Both will differ from the free AIM service by offering a customized interface, additional security, voice, video and Web collaboration capabilities, the companies said in a statement. (Full Story) CNET
  • Oil: Violence in Nigeria Sends Oil Higher Oil prices rose sharply yesterday after a series of attacks in the Niger Delta that shut down nearly a fifth of Nigeria's oil production. Brent crude oil for April delivery jumped $1.57 a barrel, to $61.46, on London's ICE Futures exchange. The market in the United States was closed because of Washington's Birthday. (Full Story) NY Times
  • PG: P&G sells deodorant brands to Germany’s Henkel KGaA for $420M-The Deal.com. Proctor & Gamble (PG) solds deodorant brands, including Right Guard, Dry Idea and Soft & Dri, to Germany’s Henkel KGaA for $420 million, a low end of the expected range. The brands were expected to go for 1.5 to 2 times annual revenues, which totaled $275 million in 2005. The deal puts to end an auction that P&G started as part of an agreement with the FTC to win approval for its $57 billion acquisition of Gillette Co
  • Mad Money Summary: On Friday's show, Cramer advised his viewers to look at Newell Rubbermaid (NWL), a "fabulous brand" which ousted a bad CEO. The company's replacement, Mark Ketchum, announced he will stay on as the company's permanent CEO. Cramer then discussed DRS Technologies (DRS), which was recommended to him by TheStreet.com's Michael Comeau and Will Gabrielski. The $2B company was recently awarded $87M in new contracts from the Pentagon, which is a substantial number for a company of that size. Cramer then said Gap (GPS), a stock he has hated, could make investors a lot of money. He believes the key to the company's turnaround is their Old Navy unit, which he said has cut down lead times on its fashions. This will mean they will have the right clothes this spring. Cramer then welcomed Remi Barbier, the CEO of Pain Therapeutics (PTIE), to the show. Mr. Barbier said the stock may be stagnant because the company is not getting any analyst coverage or because it takes time for stories to catch investor's attention. Cramer was bullish on Blackboard (BBBB), KeySpan (KSE), FPL (FPL), Cummins (CMI), Genzyme (GENZ), @Road (ARDI), Powerwave Technologies (PWAV), Peabody Energy (BTU), Akamai Technologies (AKAM), Crystallex International (KRY), JDS Uniphase (JDSU), DTE Energy (DTE), Texas Roadhouse (TXRH) and Pepsi (PEP), and was bearish on Krispy Kreme (KKD), Under Armour (UARM), Sulphco (SUF), Elan (ELN), Sonus Networks (SONS), International Coal (ICO) and Coca-Cola (KO).

Market Comments: The market had a solid week last week. I was out Friday, but it looked like just a mild pullback. The strong open this morning has been faded, and the markets are now in the red.

Some of this is likely related to the spike in oil prices. Energy stocks have been trashed lately, so they should get a bit of a bounce. The Canadian oil trusts have come back nicely from last week's panic selling.

The SPX came within 3 points of a new high this morning, so it remains in good shape. The Nazz is trying to hang on to its 50-day here. It has been unable to break above the downtrend that has been in place since the Jan. 11 highs. But I would not be surprised to see this downtrend broken soon.

long PG, TWX


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