DJIA 8602.65 +36.04 (+0.42%) S&P 500 1092.81 +4.67 (+0.43%) Nasdaq 1797.88 +7.06 (+0.39%) Value Line ndx 845.65 -3.12 (-0.37%) 30-Year Bond 101 +18/32 5.43% Yield
Luxury homebuilder Toll Brothers <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TOL)") else Response.Write("(NYSE: TOL)") end if %> hammered out a $2 1/8 gain to $29 5/8 after reporting fiscal Q3 EPS of $0.67, up from $0.46 a year ago and $0.12 ahead of the First Call mean estimate. The company said its construction backlog remains at record levels despite logging record delivery numbers during the past quarter. It expects to see a "great" 1999 as well, based on the $1 billion worth of building contracts it has signed in the past nine months. Toll Brothers, whose "move-up" and "empty nest" homes sell for an average price of $419,000, finds itself in the middle of the biggest housing boom in this country in over a decade. According to the Commerce Department, housing starts hit a seasonally adjusted annual rate of 1.72 million units in July, which was up 5.7% from June's figure and is the fastest rate since March 1987.
London-based insurer, reinsurer, and consulting company Sedgwick Group PLC <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SED)") else Response.Write("(NYSE: SED)") end if %> rocketed $5 1/8 to $17 3/8 after agreeing to be acquired by insurance broker and Putnum mutual fund owner Marsh & McLennan Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MMC)") else Response.Write("(NYSE: MMC)") end if %> for about $2.05 billion in cash, or $18.45 per American depositary share. Marsh & McLennan expects the deal will add to earnings and yield $150 million in annual cost savings starting in fiscal 2000. With a combined $7.6 billion in fiscal 1997 revenues, the new entity will be the largest player in the insurance brokering biz, where a broker forms a syndicate with other insurers to cover large policies for oil tankers, Hollywood movies, and other mammoth undertakings. Other heavyweights in the brokering arena are Chicago's Aon Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AOC)") else Response.Write("(NYSE: AOC)") end if %> and Britain's Willis Corroon Group PLC, which is currently being acquired by the U.S. buyout firm Kohlberg Kravis Roberts. Marsh & McLennan fell $1 1/8 to $55 9/16.
QUICK TAKES: PC maker and direct marketer Dell Computer Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DELL)") else Response.Write("(Nasdaq: DELL)") end if %> climbed $4 7/8 to $124 after saying it will open a new Brazilian manufacturing and customer center next year... Consumer products and appliance maker Sunbeam Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SOC)") else Response.Write("(NYSE: SOC)") end if %> picked up $5/16 to $9 1/8 after newly installed president and CEO Jerry Levin unveiled a plan to reorganize the company into three operating groups -- outdoor leisure, household products, and international operations... Fiber-optic network operator Qwest Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: QWST)") else Response.Write("(Nasdaq: QWST)") end if %> advanced $2 15/16 to $34 5/16 on news that it will replace DSC Communications Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DIGI)") else Response.Write("(Nasdaq: DIGI)") end if %> on the Nasdaq-100 Index on Friday. DSC is being acquired by French telecommunications equipment maker Alcatel Alsthom <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ALA)") else Response.Write("(NYSE: ALA)") end if %>.
Breakfast cereal maker Kellogg Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: K)") else Response.Write("(NYSE: K)") end if %> popped up $1 7/16 to $32 3/16 after purchasing a plant in Malaysia to manufacture its Rice Krispies Treats and other goodies for convenience stores in Southeast Asia. Also, Deutsche Bank Securities upgraded the firm to "buy" from "hold" with a 12-month price target of $40 per share... Insurance and financial services giant Travelers Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TRV)") else Response.Write("(NYSE: TRV)") end if %> voyaged $1 3/8 higher to $55 1/4 after The Wall Street Journal reported that the company's profitability may increase due to its decision to close the risky equity and bond arbitrage operations of its Salomon Smith Barney trading unit. Merger partner Citicorp <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CCI)") else Response.Write("(NYSE: CCI)") end if %> also rose $2 11/16 to $136 1/8... Pearle Vision and Things Remembered mall retailer Cole National Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CNJ)") else Response.Write("(NYSE: CNJ)") end if %> eyed a $2 1/4 gain to $25 after reporting fiscal Q2 EPS of $0.64 versus $0.56 a year ago, beating the Zack's mean estimate by a penny.
Online enterprise software reseller Software.net Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SWNT)") else Response.Write("(Nasdaq: SWNT)") end if %> rose $13/16 to $13 5/8 after changing its name to Beyond.com <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BYND)") else Response.Write("(Nasdaq: BYND)") end if %>. The company also introduced an enhanced website and launched a national ad campaign to promote its new brand name... Industrial air compressor maker Gardner Denver <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GDI)") else Response.Write("(NYSE: GDI)") end if %>, no relation to the Fool's David and Tom Gardner or to Bob Denver of Gilligan's Island, moved up $1 3/8 to $21 5/8 after being chosen to replace Steris on the S&P SmallCap 600 Index... Healthcare information services firm National Data Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NDC)") else Response.Write("(NYSE: NDC)") end if %> rose $2 1/16 to $38 1/8 after saying it would not make any earnings announcements this week, quieting market rumors of an impending earnings warning from the firm... Secure electronic payment technologies developer CyberCash <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CYCH)") else Response.Write("(Nasdaq: CYCH)") end if %> advanced $1 9/16 to $9 3/16 after saying the number of online merchants using its products has reached 7,000, up from 280 at the end of 1996. President and CEO Bill Melton also said he purchased an additional 350,000 shares of CyberCash stock last week for $3.5 million.
Integrated telecommunications services provider Intermedia Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ICIX)") else Response.Write("(Nasdaq: ICIX)") end if %> gained $1 1/2 to $30 3/8 after its Digex Internet services unit signed a strategic partnership with privately owned electronic enterprise services firm US Interactive... Local area networking (LAN) products maker Bel Fuse Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BELFA)") else Response.Write("(Nasdaq: BELFA)") end if %> picked up $7/8 to $15 7/8 after agreeing to buy Lucent Technologies' <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LU)") else Response.Write("(NYSE: LU)") end if %> signal transformer business for unspecified terms... Enterprise software firm Sapient Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SAPE)") else Response.Write("(Nasdaq: SAPE)") end if %> gained $3 15/32 to $47 7/8 after acquiring privately held interactive products and brand consulting firm Studio Archetype for about $23 million in cash and stock... Medical endoscopes and video systems maker Circon Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CCON)") else Response.Write("(Nasdaq: CCON)") end if %> tacked on $1 1/8 to $15 1/4 after saying it is open to bids for "strategic transactions or relationships" from other companies. The firm has been fending off a hostile takeover bid from U.S. Surgical <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: USS)") else Response.Write("(NYSE: USS)") end if %> for more than two years.
Infection prevention and surgical support systems maker Steris Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: STRL)") else Response.Write("(Nasdaq: STRL)") end if %> gained $3 1/8 to $30 after being selected to replace Viking Office Products <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: VKNG)") else Response.Write("(Nasdaq: VKNG)") end if %> on the Standard & Poor's MidCap 400 Index... Premium brand cigar distributor 800-JR Cigar <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: JRJR)") else Response.Write("(Nasdaq: JRJR)") end if %> moved up $1 5/16 to $11 13/16 after its board approved a $10 million stock buyback plan... Temporary staffing services provider Western Staff Services <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: WSTF)") else Response.Write("(Nasdaq: WSTF)") end if %> climbed $1/2 to $13 after acquiring privately held Career Temporaries Inc. yesterday for an unspecified sum... Railroad operator Union Pacific Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: UNP)") else Response.Write("(NYSE: UNP)") end if %> rose $3 1/16 to $43 7/8 thanks to a Schroder & Co. upgrade to "outperform significantly" from "perform in line"... Radio station operator Chancellor Media Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AMFM)") else Response.Write("(Nasdaq: AMFM)") end if %> gained $1 13/16 to $46 3/8 after Morgan Stanley Dean Witter reiterated its "strong buy" rating with a 12-month price target of $64 per share.
Land and marine exploration equipment company Input/Output <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IO)") else Response.Write("(NYSE: IO)") end if %> was drilled for a $4 5/8, or 33%, loss to $9 3/8 after warning that though it expects to be profitable in its fiscal first quarter, earnings will be "substantially below" market expectations of $0.31 a share and below last year's EPS of $0.26. The Stafford, Texas-based company said business has been hurt by decreased exploration spending by oil and gas companies, caused by low oil prices. The warning came as somewhat of a surprise, because analysts had expected oil companies to continue spending money on seismic data acquisition equipment to map geological formations for future drilling. Input/Output said although it remains optimistic about its long-term position, it expects the oilfield equipment market to stay down for the next several months. Other companies in the industry fell as well: National-Oilwell <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NOI)") else Response.Write("(NYSE: NOI)") end if %> dropped $1 1/4 to $9 3/4, BJ Services <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BJS)") else Response.Write("(NYSE: BJS)") end if %> fell $11/16 to $15 5/16, and Lone Star Technologies <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LSS)") else Response.Write("(NYSE: LSS)") end if %> slipped $5/8 to $11 13/16.
K&G Men's Center <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MENS)") else Response.Write("(Nasdaq: MENS)") end if %> plunged $4 15/16 to $10 15/16 on concern that the discount men's apparel superstore chain won't be able to meet sales and earnings expectations for the rest of the year. The Atlanta-based retailer raised concerns today after the company reported second quarter earnings of $0.13 a share, up from $0.11 a year ago and in line with analysts' estimates. The company said its business was hurt by severe heat in Texas, where the company operates five of its 29 stores, and by its newly opened store in Los Angeles, where it is difficult to advertise for a single location. Anticipating that the summer heat likely will also affect Q3 sales and taking into account lower-than-expected sales at some of K&G's new stores, some analysts downgraded the stock and are taking a more conservative approach with earnings estimates.
QUICK CUTS: Gap Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GPS)") else Response.Write("(NYSE: GPS)") end if %> dipped $1 15/16 to $64 after Paine Webber downgraded its rating on the casual apparel retailer to "attractive" from "buy"... Ciena Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CIEN)") else Response.Write("(Nasdaq: CIEN)") end if %> fell back $2 to $34 1/8 as the board of merger partner Tellabs <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TLAB)") else Response.Write("(Nasdaq: TLAB)") end if %> met to discuss their proposed merger. The board adjourned without comment... Turf and forage seed company AgriBioTech <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ABTX)") else Response.Write("(Nasdaq: ABTX)") end if %> plummeted $4 to $11 5/16 on concern that the company may have to restate earnings following a SEC review. The company has said it won't have to do that... Insurance company SAFECO <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SAFC)") else Response.Write("(Nasdaq: SAFC)") end if %> fell $7/8 to $45 1/4 after announcing it has moved into "catastrophe mode" as Hurricane Bonnie makes its way toward the Eastern Seaboard.
Real estate finance and equipment leasing firm Resource America <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: REXI)") else Response.Write("(Nasdaq: REXI)") end if %> dropped another $1 1/4 to $19 1/8 after an independent research firm issued a report questioning the company's accounting practices... Cable-based information services provider Source Media <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SRCM)") else Response.Write("(Nasdaq: SRCM)") end if %> dropped $1 7/16 to $8 3/16 after Abbey, Gardy & Squitieri LLP announced another class action lawsuit against the company for allegedly disseminating "false and misleading" financial statements to investors, following a similar suit Friday... Electronic hardware and software design solutions company Mentor Graphics Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MENT)") else Response.Write("(Nasdaq: MENT)") end if %> lost $3/4 to $8 after yesterday saying it remains committed to acquiring Quickturn Design Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: QKTN)") else Response.Write("(Nasdaq: QKTN)") end if %> despite Quickturn's board's rejection of Mentor's takeover offer of $12.125 per share in cash.
Specialty finance trust Capital Trust <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CT)") else Response.Write("(NYSE: CT)") end if %> tumbled $1/2 to $6 15/16 after announcing it has completed a new $100 million acquisition financing, the proceeds of which were used to buy a subordinate interest in a pool of second mortgages with a total principal balance of about $516 million... Healthcare computer network management company Daou Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DAOU)") else Response.Write("(Nasdaq: DAOU)") end if %> lost $11/16 to $11 after Weiss & Yourman announced it has filed a class action suit against the company alleging that it misstated revenues and profit and misled investors... Leaf tobacco dealer DIMON Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DMN)") else Response.Write("(NYSE: DMN)") end if %> was down $1 1/8 to $8 13/16 after reporting fiscal Q4 EPS of $0.20 (before charges), down from $0.61 in the year-earlier period and short of analysts' expectations of $0.26. The company also warned about the next fiscal year on account of the economic downturn in Asia.
Proposal management, information systems, systems engineering, and program integration firm SM&A Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: WINS)") else Response.Write("(Nasdaq: WINS)") end if %> was cut $1 3/4 to $24 after announcing it has filed a registration statement with the SEC to sell 5 million shares, half by the company and half by certain shareholders, at an as yet undetermined price... Sears Portrait Studios operator CPI Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CPY)") else Response.Write("(NYSE: CPY)") end if %> shed $2 7/16 to $21 7/16 after reporting a 34% drop in Q2 operating earnings to $3.8 million from $5.8 million. The company reported EPS of $0.13, a penny higher than last year and short of analysts' mean estimate of $0.22... Computer aided design software firm Autodesk <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ADSK)") else Response.Write("(Nasdaq: ADSK)") end if %> slid another $15/16 to $23 3/16 after the company warned on Friday that the Asian financial crisis will result in fiscal Q3 EPS about $0.05 to $0.08 below the First Call mean estimate of $0.50.
FOOL
ON THE HILL
An Investment Opinion
by
Dale Wettlaufer
The Speed Way, Pt. 1
Americans love leisure time. In fact, we've got so much free time that some economists spend all their time trying to figure out at what point a marginal unit of leisure is worth more than a marginal dollar of income. As a consequence of our national standard of living, we have lots of leisure time and expendable dollars of income with which we entertain ourselves during that leisure time.
How can we as investors benefit from that basic fact? It's not a new theme in the American economy, so it's not as if there are explosive new industries to exploit with our leisure dollars. Athletic wear makers are seriously sucking wind after years and years of high secular growth and price increases. Network sports broadcasting has increasingly become a phenomenon where all the dollars aren't made through actual profits on showing the games but on using the game broadcasts as platforms for other programming. And there aren't that many opportunities to buy professional sports teams, though they are increasing. One interesting opportunity, however, is stock car racing. If you are looking for higher secular growth and good returns on capital, the entire industry is pretty interesting. In particular, International Speedway Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ISCA and ISCB)") else Response.Write("(Nasdaq: ISCA and ISCB)") end if %> is very interesting.
Run by the France family, whose scion Big Bill France started the National Association for Stock Car Racing (NASCAR), the company is a picture of rational investment and understanding of modern sports entertainment dynamics. The first fulcrum to which International Speedway applies the financial levers is the devoted body of NASCAR fans. Like Grateful Dead fans who used to follow that band, there is a core contingent of fans that forms the nucleus of stock car racing fanatics. There just isn't as much patchouli oil and tie-dyes at a NASCAR event.
In addition to the hardcore fans, there are a number of other fans in the picture. These extend from the families that come out to the racetrack, to the corporate attendees who rent out luxury boxes, to the TV viewer at home. Together, they form a growing mass of Americans that tune into NASCAR racing events and have become true devotees of the sport.
It's important to note that International Speedway receives broadcast revenues directly from the networks that air coverage. Unlike the NFL, where every team gets an equal cut of TV revenue and then has to make money on other revenue streams, International Speedway gets to negotiate its own contracts, as Robert Hagstrom points out in his recently published book, The NASCAR Way. International Speedway doesn't mind this sort of arrangement at all -- the company owns a lineup of absolutely premier motorsports facilities and, dare we say it, brand names.
Among these facilities are Daytona International Speedway, Talladega Superspeedway, Darlington Raceway, and Watkins Glen. The company also operates Tucson Raceway Park and owns a one-eighth interest in Penske Motorsports Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SPWY)") else Response.Write("(Nasdaq: SPWY)") end if %>. That company owns The California Speedway outside Los Angeles and operates Michigan Speedway and Nazareth Speedway in Pennsylvania. While racing fans will immediately recognize these names, investors that have been less exposed to NASCAR should sit up and take notice of the contribution that these facilities, the races that take place there, and especially the fans that attend them contribute to the company's outstanding financial performance, which we'll detail on Thursday.
Please see the Motley Fool's Conference Calls page for call information and links to synopses.
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Contributing Writers Yi-Hsin Chang (TMF Puck), a Fool Brian Graney (TMF Panic), Fool Two Alex Schay (TMF Nexus6), Fool, too Dale Wettlaufer (TMF Ralegh), Final Fool
Editing |