Stocks in the News — week of March 11, 2013 (March 15 update)

Aeropostale Inc. Competitive Pressures Worsen (Morgan Stanley Research)

“We have increased conviction Aeropostale [ARO, $13.91] is a structurally challenged business,” reports Morgan Stanley Research today.

Margins are on a downtrend, and more earnings disappointments are on the horizon as the company loses traffic to rivals.

The stock price is in the same low-teens trading range as it was in 2004.  Nobody is making money in Aeropostale except three astute day-traders in Peoria.  There are many more attractive retailers for growth stock investors and growth & income investors to hang their hats on.  (03/15/13)

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Ulta Salon Earnings Report Disappoints Wall Street

Ulta Salon, Cosmetics & Fragrance, Inc. (ULTA, $74.64) reported fourth quarter profit below analyst’s expectations, and guided analysts to scale back first quarter numbers as well.  The company is attempting a turnaround by strengthening its supply chain, warehouse systems and e-commerce site.

Ulta had been projected to grow its earnings by 26%, 27% and 33% in the next three years, but watch for analysts to now revise those numbers downward.

The stock has been trading sideways for a full year, between $84 and $102, and fell through price support today.  We would sell shares in Ulta and invest in growth stocks with more bullish earnings growth.  (03/15/13)

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BofA and Wells Fargo Boost Payouts After Fed Stress Tests  (Bloomberg)

American banks announced over $23 billion dollars in share buybacks and dividend increases yesterday after passing U.S. tests of their financial health.  Since the Financial Meltdown of 2008, banks are now required to get annual approval of their capital plans by the Federal Reserve before making such decisions.

JP Morgan (JPM, $49.32) and Goldman Sachs were approved, however, they are required to resubmit their capital plans to address financial weaknesses.

We recently discussed JP Morgan’s (JPM) lackluster earnings growth.  While a rising financial sector may lift all banks in the stock market, stick with bank stocks that have better earnings growth.  (03/15/13)

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Philip Morris International Insider Promoted to CEO

Andre Calantzopoulous is taking the reins of Philip Morris (PM, $91.42) as its new CEO.  Mr. Calantzopoulous has extensive experience mentoring the company’s senior leadership, and developing successful business strategies for the company.  (03/14/13)

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Vistaprint Launches New Product  (Zack’s/Townhall)

“Vistaprint N.V. (VPRT$39.82)) recently announced the launch of its new product named Pagemodo Posts for small business owners.  The new Posts from the Pagemodo suite of tools facilitates small business owners to find, create and post quality content in minimal time.”

Vistaprint is projected to have flat earnings this year.  We would therefore avoid shares of Vistaprint.  (03/14/13)

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Asian Stocks Outside Japan Fall Amid China Tightening Concern  (The Washington Post)

BHP Billiton Ltd. (BHP, $72.77) is down as China steps up efforts to cool the property market.  BHP is a diversified natural resource company.  Earnings are projected to fall 29% in 2013 and its stock chart is weak.

We would avoid shares in BHP.  (03/14/13)

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Adidas Vowing to Outrun Nike in U.S. With Bouncier Shoes  (Bloomberg)

Adidas (ADDYY on the NASDAQ, $50.62) has promised to come from the back of the field — sixth place — and overtake rival Nike (NKE) as the U.S. leader in running shoes within five years.

While Adidas and Nike are neck-and-neck as international competitors, Adidas lags Nike in the running shoe market in the U.S.  Adidas’ new running shoe is named Energy Boost, and will retail at $150.  Adidas currently has only 4.4% of the U.S. running shoe market share.  Nike has 54%.

Adidas is a global seller of athletic footwear and apparel, including the Reebok brand, which it acquired in 2006 for $3.8 billion.  Reebok has turned into a boondoggle for Adidas, and the company took a large write-down on its Reebok assets this month.

2013 earnings are expected to climb 19%.  The stock pays a small dividend.

Want to know if Adidas is a buy or sell?  Read more to learn about the chart pattern and stock appeal.  (03/11/13)

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Nike Inc. (NKE, $54.57) is a leading worldwide seller of athletic footwear and apparel.

Wall Street projects Nike’s earnings to grow 11%, 14% and 13% in the next three years.  The 2013 PE is 20.6 within a ten-year range of 10-26.  The dividend yield is 1.54%.

Want to know if Nike is a buy or sell?  Read more to learn about the chart pattern and stock appeal.  (03/11/13)

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Costco Reports Strong Sales — (Townhall Finance)

Costco Wholesale Corp. (COST, $102.49) reported February comparable-store sales up 6%, after a January year-over-year increase of 4%, in stark contrast to most retailers who’ve been hard-hit by economic woes.  The company also saw comps increase 6% for the 26-week period ending March 3.

Costco is a membership warehouse retailer, with locations in North America, Mexico, the U.K. and the Far East.  They plan to report second-quarter 2013 earnings tomorrow.

Wall Street projects Costco’s earnings to increase 13%, 12% and 11% in the next three fiscal years.  The 2013 PE is 22.8, in a ten-year range of 11 – 27.  The dividend yield is 1.07%.

The stock has been climbing steadily for quite a few years, most recently trading between $94 and $104 since July.  Growth stock investors should consider accumulating Costco stock under $101.

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