Wednesday, March 01, 2006

Early Bounce

Morning News of Note:
  • CECO EDMC: Online Colleges Receive a Boost From Congress It took just a few paragraphs in a budget bill for Congress to open a new frontier in education: Colleges will no longer be required to deliver at least half their courses on a campus instead of online to qualify for federal student aid. That change is expected to be of enormous value to the commercial education industry. (Full Story) NY Times
  • SBUX: SEATTLE SLAM Starbucks is pushing out the head of its music unit, which has become an increasing powerful marketing tool for the record industry, The Post has learned. The impending move comes as Starbucks prepares to move its entertainment business from Seattle to Los Angeles — the latest sign that the coffee chain has serious Hollywood ambitions. (Full Story) NY Post
  • Autos: CEO Rick Wagoner said co is in no hurry to sell GMAC and wont sell until it find right buyer; EU division to break even in 2006, 5% margins in EU realistic; liquidtiy very strong; co planning no new incentives in US; GMs Lutz says co still mulling future of Saab brand; sees new pick up truck line launched in US in 3Q/4Q
  • TEVA: Teva Pharma-TEVA decent Q4, guidance expected in May, reit OP@PIPR The firm expects guidance in May to combine TEVA/IVX and to be more accretive than Street expectations. The firm expects some share volatility around the March FDA Panel meeting and PDUFA for Tysabri.
  • Mad Money Summary: At the beginning of his show last night, Jim Cramer reminded his audience of his positive call on Sherwin-Williams (SHW) on Monday. The stock was up 7% on the day and he said if it wasn't for the broader market being down, the stock would have risen to $52 a share. Then Cramer suggested his viewers read trade publications such as PR Week. He discussed Nektar Therapeutics (NKTR), Nuvelo (NUVO) and Cambridge Antibody Technology (CATG), the last two of which "stood out." Cramer then discussed Costco (COST), a company he says is "en fuego," and would recommend buying. The company is not a short term idea, but a longer term idea, at least 18 months. Then Cramer discussed ViroPharma (VPHM), which dropped 9% after reporting Q4 earnings with guidance that was not as good as expected. He believes after the sell-off the company is a good buy because he believes they are "playing the UPOD game," under-promising on guidance and overdelivering on earnings. In the "Lightning Round," Cramer was bullish on CVS Corp (CVS), Walgreen (WAG), Commerce Bank (CBH), Principal Financial Group (PFG), Prudential (PRU), Metlife (MET), Conexant (CNXT), Omnova (OMN), Allegheny (ATI), Fluor (FLR), Foster Wheller (FWLT), Medco Health (MHS), Conoco Phillips (COP), Occidental Petroleum (OXY), Apple (AAPL), JDS Uniphase (JDSU), NMT Medical (NMTI) and Evergreen Solar (ESLR), and was bearish on PNC Financial (PNC), Chicago Bridge (CBI), Turbochef (OVEN), Chevron (CVX), Earthlink (ELNK), Drew Industries (DW), Dell (DELL), Ciena (CIEN), and American Axel (AXL).

Market Comments: The market is up a little in the early going. Personal income and spending both came in stronger than expected, while core PCE (inflation) data was benign.

Oil is trading up a bit to around $61.70, giving the energy stocks a small bounce following yesterday's selloff. 10-year yields are around 4.57%.

Semis are seeing the most strength so far, while biotechs and retail are weak. But it is early, so let's see if the market can build on this strength or if the selling resumes later.


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