Thursday, February 8, 1996
MARKET CLOSE
INDEX:
I. Market News: Markets Surge Ahead To New Records
II. Heroes: Molecular Biosystems, Allergan, Maxis, Adobe, Intelligent Electronics, North American Mortgage, Burlington Coat Factory, Dollar General, Talbot's, Hilton Hotels, EndoVascular Technologies, Raptor Systems
III. Goats: EMPI, Tencor, Cerprobe, OnTrak Systems, Solectron, Piercing Pagoda, Checkmate Electronics
IV. Investment Perspective: Those Nifty Same-Store Sales
MARKET CLOSE
DJIA: 5539.45 +47.33 (+0.86%) -- RECORD
S&P 500: 656.07 +6.14 (+0.94%) -- RECORD
NASDAQ: 1093.15 +8.27 (+0.76%) -- RECORD
MARKET NEWS
Where the heck did the rally come from? Were we asleep here at Fool HQ or something when the Dow snuck up nearly 50 points? Yesterday the story was disaster with DRAMs killing semiconductor equipment shares; today it is hope for the Internet and networking stocks, as Cisco Systems reports its earnings after the bell. (See our special section thrown together by MF Fletch and MF Templar in the listbox on our main screen.) 30 year bonds were sold for the lowest price ever today, which may have driven the hapless Wise back into stocks from bonds. You know---asset allocation and all that jazz. Today, for our Investment Perspective, we list those hard-to-find Same-Store Sales numbers for your edification and enjoyment.
HEROES
Analysts hit the Street today with a raft of upgrades, driving share prices higher in furious trading. Molecular Biosystems <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:MB)") else Response.Write("(NYSE:MB)") end if %> was started with an "outperform" rating by Donaldson, Lufkin and Jenrette, with DLJ analyst Alex To putting a twelve month price target of $20 a share on the stock. Molecular started to chug its way up there, rising 2 1/8 to 9 1/8. Merrill Lynch continued with the biotechnology theme by upgrading Allergan <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:AGN)") else Response.Write("(NYSE:AGN)") end if %> to near-term above average from near-term neutral and maintained its long term buy rating, boosting the shares 2 1/2 to 37 3/4. Lastly, Piper Jaffray upgraded to strong buy the beaten down shares of Maxis Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:MXIS)") else Response.Write("(NASDAQ:MXIS)") end if %>, stating that the maker of educational software had just been beaten up too badly after industry bellwether Broderbund <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:BROD)") else Response.Write("(NASDAQ:BROD)") end if %> announced it would not make estimates because its core business was slowing down. Maxis maxxed out for the day at 25 3/8, up 5 1/8. Adobe Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:ADBE)") else Response.Write("(NASDAQ:ADBE)") end if %>, a maker of authoring tools for digital publishing, also rose 3 1/8 to 38 3/4 after Alex Brown upgraded its shares.
Intelligent Electronics <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:INEL)") else Response.Write("(NASDAQ:INEL)") end if %> rose 2 3/8 to 6 1/8 today after the "information technology products" manufacturer told the Street that it would have revenues of between $935 and $940 million in their fiscal fourth quarter. The company also benefited from the announcement that it would create a new subsidiary devoted to the internetworking market. After three quarterly earnings disappointments running and the suspension of its dividend, it appears that Intelligent Electronics might finally be getting its act together. The shares sold for close to $15 back in July, revealing how fast and how far this electronics maker has fallen.
North American Mortgage <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:NAC)") else Response.Write("(NYSE:NAC)") end if %> reported strong earnings this morning, buoying the shares 1 3/4 to 26. North American's net income came in 17% higher than consensus estimates, something it attributed to strong refinancing activity given the low prevailing interest rates. Down-and-out retailer Burlington Coat Factory <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:BCF)") else Response.Write("(NYSE:BCF)") end if %> also bested analyst expectations, growing earnings by 13% in spite of flat sales. This put Burlington 7% ahead of consensus estimates and quite a ways further from bankruptcy than it had been previously. Burlington closed at 11 1/4, up 1.
Strong same store sales at Dollar General <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:DG)") else Response.Write("(NYSE:DG)") end if %> and Talbot's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:TLB)") else Response.Write("(NYSE:TLB)") end if %> caused both stocks to rally today, igniting the beleaguered retail group. Dollar General rose 1 7/8 to 25 1/4 on the news that its same-store sales increased 4.6% and its total sales increased 20.6% for January. Dollar General is a dollar store that has hung tight to its dollar-an-item format in a period where many of its competitors have tried to sell items for $5 or $10. Talbot's was up 1 5/8 to 30 3/4 on news that its same-store sales were up a whopping 13.1% for the month and that year-to-date profits had increased by 1.2%.
Hilton Hotels <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:HLT)") else Response.Write("(NYSE:HLT)") end if %> continued to rally on the news that Steve Bollenbach, the man who ushered in the Disney-Capital Cities merger, was coming on board as Chief Financial Officer (CFO). Hilton was up 3 7/8 to 89 3/4. Analysts at institutions have been growing more positive on Hilton as a result of this development, demonstrating how much emphasis the Street puts on quality management. Salomon Brothers most recently upgraded Hilton, putting estimates for the hotel management chain at $4 a share in 1996 and $4.80 for 1997. Analyst Bruce Turner also hazarded a guess that 1998 earnings would probably come in at $5.50 per share.
EndoVascular Technologies <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:EVTI)") else Response.Write("(NASDAQ:EVTI)") end if %> rose 1 3/4 to 11 3/4 today, after giving underwriter Hambrecht & Quist a big black eye yesterday when it tanked right after its initial public offering (IPO). One of the most important jobs of an underwriter is to set the price for a stock accurately---which means low, but not too low. To have a stock trade under its offering price ($12 for EndoVascular) constitutes a disaster. Hambrecht's other offering yesterday, Internet phone maker VocalTec <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:VOCLF)") else Response.Write("(NASDAQ:VOCLF)") end if %>, also fizzled, falling 1 3/4 to 15 1/2 today after coming public at $19 yesterday. Hambrecht will probably not be the firm of choice for IPOs after this mess. The offering of Internet security-software firm Raptor Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:RAPT)") else Response.Write("(NASDAQ:RAPT)") end if %> is moving in the opposite direction for Hambrecht & Quist's main competitor, Montgomery Securities, rising 6 to 30 3/4 today after it first came public at $15 yesterday.
A few weeks back we trashed shares of Viasoft <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:VIAS)") else Response.Write("(NASDAQ:VIAS)") end if %>, something MF Yon has hounded us about ever since. Today, when Viasoft rose 2 3/8 to 22 3/8, MF Yon cheerfully appeared in the Evening News mailbox, rubbing this in. Viasoft makes software to deal with the upcoming year-2000 problem---apparently, quite a bit of code written for mainframes, minicomputers and microcomputers will start to have strange errors come 2000 because it is not set to change millennia (but then again, who is?). Viasoft, one of the two leading companies in this niche, has been doing very nicely. It is also located (surprise, surprise) in Arizona, from where MF Yon hails.
GOATS
Sales for medical equipment maker EMPI Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:EMPI)") else Response.Write("(NASDAQ:EMPI)") end if %> had a bout with incontinence today, losing 4 1/8 to 20 1/2 after the U.S. Government denied the company a crucial concession. EMPI is seeking Medicare reimbursement for sales of EMPI's Innova system for treating female incontinence, but Medicare says that EMPI is just all wet. EMPI's revenues also came in a little light on the revenue side when it reported earnings yesterday.
Semiconductor equipment shares continued to be volatile today, with disappointments resulting in punishing stock sell-offs. Factory automation specialist Tencor Instruments <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:TNCR)") else Response.Write("(NASDAQ:TNCR)") end if %> came in a penny light when it reported earnings and was batted down 2 1/8 to 21 7/8 for its troubles. Chip-testing equipment maker Cerprobe <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:CRPB)") else Response.Write("(NASDAQ:CRPB)") end if %> got hosed for having the audacity to come up with earnings in line with expectations, losing 1 7/16 to 15 3/4.
Chemical-mechanical planarization manufacturer OnTrak Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:ONTK)") else Response.Write("(NASDAQ:ONTK)") end if %> slid 7/8 to 13 1/2 in spite of the fact that Hambrecht & Quist analyst Mark Fitzgerald saw rosier prospects for CMP equipment, given that it is heavily used in logic chips and not the DRAM that is under pressure. Unfortunately, few analysts are factoring in that semiconductor equipment sales are *unit* driven and not revenue driven, meaning no matter how low the price of DRAM goes, if they still sell, then equipment companies are sitting in the catbird seat.
Solectron <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE:SLR)") else Response.Write("(NYSE:SLR)") end if %> made a convertible note offering today, causing the shares to slide 2 to 47 1/2. Convertibles are tricky financial instruments that act like bonds for a while until the day that the holder can convert them into a shares at a specified price. This whole complicated procedure makes them difficult to value but offers decent returns for the investor willing to do her homework. Solectron has appreciated an average of 89% per year since it came public in 1989, according to Morgan Stanley's Technology IPO Yearbook (done by their star analyst, Mary Meeker).
A few companies slid on earnings disappointments today. Piercing Pagoda <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:PGDA)") else Response.Write("(NASDAQ:PGDA)") end if %>, a company that thrives off of ear piercing kiosks in malls, had its price pierced 2 to 14 1/4. Exide Electronics <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:XUPS)") else Response.Write("(NASDAQ:XUPS)") end if %> joined the likes of Duracell when it reported disappointing battery earnings, falling 1 5/8 to 11 3/4. Store security-tag kingpin Checkmate Electronics <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ:CMEL)") else Response.Write("(NASDAQ:CMEL)") end if %> also reported results that were a hair below the numbers that the Street was looking for, resulting in a drubbing of 3/4 to close at 13. Disappointing the Street in nervous times is not a good idea if you are a publicly-traded company!
INVESTMENT PERSPECTIVE: Those Nifty Same-Store Sales
For the month of January :
Store Total Same-StoreAmerican Eagle +41.4% +5.6%
Ames Department -13.4% -12.8%
AnnTaylor +22.3% -17.0%
Carson Pirie Scott N/A +9.8%
Catherine's Stores N/A +2.7%
Cato Corp. +4.0% -1.0%
Charming Shoppes -9.0% -5.0%
Claire's Stores +50.0% +13.0%
Consolidated Stores +28.8% -2.5%
Dayton Hudson +8.3% +2.0%
Dollar General +20.6% +4.6%
Dress Barn -8.0% -15.0%
Edison Brothers +7.8% -10.6%
Family Dollar +5.4% -1.4%
Federated Dept. +43.2% +5.1%
Filene's Basement +1.0% -16.0%
Fred's Inc. +3.8% -0.9%
Gantos Inc. +18.0% -6.0%
Gap +48.0% +6.0%
Gymboree Corp. +60.0% +1.0%
Hechinger +4.5% -19.7%
Heilig-Meyers Co. -3.7% -23.6%
Hill's Stores +19.2% -9.0%
K-Mart +2.9% +5.5%
Kohl's Dept. +45.0% +5.0%
Lechters Inc. +9.3% -10.2%
Limited +6.0% -2.0%
MacFrugal's +2.5% -4.9%
Melville -13.4% +4.3%
Men's Warehouse +40.4% +7.2%
Mercantile Stores -3.2% -2.9%
Natural Wonders +15.0% -9.8%
Pacific Sunwear +39.0% +4.0%
Penney, J. C. -2.5% -4.3%
Perfumania +29.4% -6.6%
Profitt's -1.0% -2.0%
Ross Stores +48.0% +10.0%
Sears +3.9% +0.6%
Sharper Image -6.0% -12.0%
ShopKo +4.7% -5.7%
TJX Cos. +88.0% +0.0%
United Retail Group -2.0% -8.0%
Value City +19.2% -12.0%
Waban +11.1% +1.4%
Walmart +11.8% +1.3%
Woolworth -0.2% -0.7%
Byline: Randy Befumo (MF Templar)