JT’s DAILY BLOG for Month Of March 2013
Note: All previous month's posts are available in the archives, as noted above.
All postings for the month are available here, sorted in descending order - i.e. most recent at the top.
All times are Eastern Time - same as the NYSE
1st Posting for Thursday 03/28/2013 9:00 AM
Stocks pulled back modestly on Wednesday, with the blue-chip averages posting small declines, the small-cap Russell 2000 index flat, and the NASDAQ with a small gain. Overnight, Asian markets ended mostly with losses, Shanghai over 2%. India, however, was an exception, as the Sensex was up .70%. European markets are trading in the green at this hour on all five bourses headlined by MarketWatch. Most of the economic data expected today has already come out, as the Weekly Claims for Unemployment ticked up a bit to 375K, and the 3rd GDP Estimate for Q4 came in at 0.4%, also a bit higher than expected. Even though an anemic number by historical standards, the up tick in Q4 GDP was enough to overcome the up tick in Unemployment Claims, as the futures have improved a bit, with less than an hour to go to the open.
Yesterday, after I posted, Realty Income (O) was initiated at Buy at Ladenburg-Thalmann.
Today, I only have two analyst actions to report on my stocks:
United Parcel (UPS) was initiated at Equal Weight at Stephens.
Emerson Electric (EMR) was initiated at Hold by Canaccord.
Yesterday, after the close, Paychex (PAYX) reported that FQ3 EPS was $0.40, beating by a penny. Revenue was $593.3M, beating by $0.7M.
Today will do it for March, as the market will be closed tomorrow for Good Friday. Interesting to note that the securities markets, unlike the government, observe the uniquely Christian holiday of Easter.
1st Posting for Wednesday 03/27/2013 8:45 AM
Stocks rallied strongly on Tuesday, with the S & P coming oh so close to closing above the high of 2007. In fact, it did reach that level intraday. Overnight, Asian markets posted gains on all of the five major bourses headlined by MarketWatch. Europe, however, is trading just the opposite, with the five major European bourses all posting losses at this hour. Renewed political turmoil in Italy is to blame, according to the news. U.S. futures are indicating a lower start is in store for the market here. Economic releases on tap for today are light, Pending Home Sales and Oil Inventories.
Only a couple of upgrades / downgrades on my stocks have come out so far today:
General Mills (GIS) was upgraded from Hold to Buy at Argus.
Fifth Street Finance (FSC) was initiated at OverWeight at JP Morgan.
Today looks to be a ho-hum day on Wall Street, with nothing big expected to happen. Of course, that is just when something big could happen – the so-called “black swan” event. The point is, never let your guard down when the market is trading, opportunity and / or danger can come along at any time.
1st Posting for Tuesday 03/26/2013 8:30 AM
Stocks succumbed to a mild sell off Monday, even though the futures had indicated an up day was in store. The change in sentiment was caused, so the news media reported, by a European official stating that the Cyprus agreement would be a model for dealing with similar situations going forward. Seeing as how this model involved confistication of bank deposits, a step not taken before Cyprus, markets sold off worldwide after the comment. Overnight, Asian markets finished mixed, with Japan and Shanghai down, Hong Kong, India, and Singapore up. European markets are trading mixed at this hour, with Britain, Germany, and France positive, Italy and Spain negative. U.S. futures are positive, as several economic releases are awaited; Durable Orders, the Case Shiller Housing Index, New Home Sales, and Consumer Confidence.
Yesterday, after I posted, two of my stocks had coverage initiated:
Verizon (VZ) was initiated at Neutral by Tigress-Financial.
AT&T (T) was initiated at UnderPerforml by Tigress-Financial.
Then, today, we have a few more:
TICC Capital (TICC) was downgraded from Market Perform to UnderPerform at Wells Fargo.
Prospect Capital (PSEC) was downgraded from Market Perform to UnderPerform at Wells Fargo.
PennantPark (PNNT) was downgraded from OutPerform to Market Perform at Wells Fargo.
In addition to these BDCs, several others not on my lists were also downgraded by Wells. It appears that Wells Fargo is not too keen on BDCs just now. What I’m wondering is, does this mean the bank has concerns about the economy, and that the BDC sector is vulnerable, or are these downgrades for company-specific reasons?
Moving on, I have a new article out on Seeking Alpha, the first in a while. Entitled “Yield, Value, Safety With Utilities – Redux”, it reviews a lengthy list of utilities evaluated a year ago in my first “Yield, Value, Safety” series article, updating my original findings, plus discussing where I went wrong in a couple of cases, and how I can improve my approach, incorporating lessons learned. A link is provided under the Published Articles selection.
1st Posting for Monday 03/25/2013 7:45 AM
The stock rally resumed right on schedule Friday after a week of hesitation, primarily over concerns over Cyprus and the Euro Zone. Asian markets traded with gains in Japan, Hong Kong, and Singapore, and losses in Shanghai and India. European markets are trading solidly in the green after the Cyprus bailout deal was announced. U.S. futures are up, indicating a positive open is in store for the market here. There are no economic releases scheduled for today.
So far this morning, I have noticed only two upgrades / downgrades on my stocks:
Darden Restaurants (DRI) was upgraded from Equal Weight to OverWeight at Stephens. DRI reported earnings Friday after my early morning post, that FQ3 EPS was $1.02, beating by a penny. Revenue was $2.26B, up 4.6% Y/Y, in-line. So much for my prediction for a shortfall. Yogi Berra is proven right once again, that "predictions is difficult, especially about the future!"
Realty Income (O) was reinstated at Neutral by Goldman.
Stocks on my lists going ex-dividend this week, by date, are:
Kraft Foods (KRFT), yield 3.91%.
Philip Morris (PM), yield 3.71%.
National Health Investment (NHI), yield 4.25%.
Nucor (NUE), yield 3.19%.
Windstream (WIN), yield 11.63%.
Prospect Capital (PSEC), yield 11.83%. PSEC pays monthly.
Annaly Capital Management (NLY), yield 11.16%.
Cisco Systems (CSCO) is overdue to announce the next dividend. It should be forthcoming any day now.
Only one of my companies is due to report earnings this week, Paychex (PAYX), Wednesday, 3/27/2013, after market hours.
As noted earlier, it appears that the stock rally is set to resume this week. Of course, a lot can happen in a week to change the sentiment, but right now, it is back to “risk on” mode.
1st Posting for Friday 03/22/2013 8:00 AM
Stocks declined Thursday in spite of a number of positive economic releases, as tech bellwether Oracle (ORCL) issued a disappointing earnings report, the Cyprus situation continued unresolved, and a purchasing managers survey from Germany indicated a slowdown might be coming there. Asian markets mostly declined overnight, with only Shanghai hanging on to post a tiny gain. Japan declined over 2%. European markets are surprisingly trading with gains at this hour, though not by much in most cases, even as the Cyprus pot continues to boil. U.S. futures are positive, and there are no economic releases scheduled for today.
None of my stocks have received any upgrades / downgrades so far this morning.
I have seen a number of articles recently prognosticating that the current bull run is getting tired, and that a correction is due. There seems to be broad agreement that the market is overbought right now. A correction could come at any time, yesterday certainly was not a bullish day. However, I can’t help but recall the situation in the second half of the 1990’s, whereby stocks, especially tech stocks, were wildly overvalued, yet the condition persisted for years after pundits called for a correction, until March 2000. Today, stock prices for high quality firms, especially in defensive sectors like consumer staples, are reaching ridiculous levels, but one thing we know, they can always reach even more ridiculous levels. Examples are Colgate-Palmolive (CL), Procter & Gamble (PG), and General Mills (GIS). All I can say is TGIF!
1st Posting for Thursday 03/21/2013 9:00 AM
Stocks opened up Wednesday and stayed there all day, as all of the major stock averages posted healthy gains. Overnight, Asian markets finished mixed, with Japan, Shanghai, and Singapore up, Hong Kong and India down. European markets are universally trading down, as the Cyprus issue continues to ferment, with no solution as yet. U.S. futures are flat, as the market awaits a full morning’s dose of economic data. The Weekly Claims for Unemployment has come out already, indicating that claims remain at a five year low, although still high by historical standards.
A number of my stocks received analyst actions this morning:
Diebold (DBD) had coverage resumed at Imperial Capital, with an Inline rating and a price target of $33. DBD was the subject of my most recent SA article. To quote the Chairman of the Board, “DBD is not a broken stock, it is an under performing stock”. I hope he is right, I am continuing to hold my shares.
Cisco Systems (CSCO) was downgraded from Market Perform to Under Perform at FBR Capital.
Medical Properties Trust (MPW) was initiated at Buy by Goldman. I have held this Tier 3 stock since 2007, I wish I had bought more when it was way down during the financial crises. It has paid faithfully all the while.
Ventas (VTR) had coverage resumed at Buy by Goldman.
HCP Inc (HCP) had coverage resumed at Neutral by Goldman.
Eaton (ETN) was initiated at Buy at Goldman.
3M (MMM) was initiated at Neutral at Goldman.
Nestle S A (NSRGY) was upgraded from Neutral to Buy at Citigroup.
Yesterday, before the open, General Mills (GIS) reported FQ3 EPS of $0.64, beating by seven cents. Revenue was $4.43B, up 8% Y/Y, beating by $0.07B. The stock continued to advance yesterday on the strength of the earnings report.
Time to get ready for another exciting day.
1st Posting for Wednesday 03/20/2013 7:00 AM
Stocks basically went nowhere Tuesday, with the Dow Industrials Index finishing just above the flat line, and the other major averages finishing just below it. Asian markets finished strong in Japan and Shanghai, up over 2%, with Hong Kong not far behind, up nearly 1%. India and Singapore, by contrast, ended with modest losses, each down .65%. Even as the Cyprus crisis continues, with no resolution in sight, European markets apparently have moved on, with all of the five major country indexes headlined by MarketWatch showing decent gains at this hour, about a third of the way through the European market day. Those five countries are Britain, Germany, France, Italy, and Spain. The only economic releases scheduled for today are Oil Inventories and the FOMC Announcement. The latter at one time was a guaranteed market-moving event, but is now nearly a non-event. Still, the Fed statement will be scrutinized closely for clues of any potential future policy changes. U.S. futures are positive, although it is early.
A few early analyst actions on my stocks to report this morning are:
Williams Partners LP (WPZ) had coverage initiated by UBS, with a Neutral rating.
Walgreen (WAG) was upgraded from Neutral to OverWeight at JP Morgan.
Walgreen was also upgraded from Sell to Buy at Citigroup. Going from Sell to Buy in one step is a big turnaround – it makes me leery of the rating firm. I do not believe things changed that much in such a short time.
Still waiting on earnings to be announced by General Mills (GIS), due out this morning before the open. Barring unforeseen developments over the next couple of hours, today is shaping up to be a positive market day.
1st Posting for Tuesday 03/19/2013 8:30 AM
Stocks opened Monday on a down note, as the futures had predicted. By midday, the initial drop had been largely regained, and it looked for awhile like the market might break above the flat line. It was not to be, as stocks drifted back down throughout the afternoon hours, ending down .43% on the Dow Industrials Index, and a comparable .56% on the S & P 500 Index. Still, as sell offs go, it was a fairly mild decline. Overnight, Asian markets finished mixed, with Japan , Shanghai, and Singapore up, Japan over 2%, and Hong Kong and India down, India nearly 1.5%. European markets are all trading with losses at this hour, as the debate rages over the Cyprus bank deposit tax, and the broader implications for the ongoing Euro-Zone sovereign debt crisis. U.S. futures are tipping towards the positive, indicating the Cyprus issue may not be enough to derail the U.S. stock rally for more than a day or so.
I have only one analyst action on my stocks to report this morning, as NextEra (NEE) was upgraded from Hold to Buy at KeyBanc.
My Monday morning recap of stocks on my lists reporting this week missed Walgreen (WAG), which reported this morning that FQ2 EPS was $0.96, beating by two cents. Revenue was $18.65B, missing by $0.07B.
I have nearly completed my 2012 tax return, including the onerous task of reconciling my records with the 1099-B forms received from brokerages, as required for completing multiple Forms 8949. To my amazement, the brokerage figures were all correct this year, unlike last year, when there were several discrepancies. I guess the brokerages are getting better at the task of complying with the new requirements.
Time to get ready for the day’s action.
1st Posting for Monday 03/18/2013 8:45 AM
Stocks took a breather Friday from the rally that has been raging these past few weeks, with all of the major averages posting small declines. The economic data released Friday was more or less in line with expectations, indicating the U.S. economy is outperforming most of the developed world’s nations. Asian markets sold off hard overnight, and European markets are doing the same as I write this, about half way through the European market day. According to the news, the sell off is because of concerns regarding the Cypriot bailout, as the Euro Zone returns to center stage of world economic concerns. U.S. futures are down significantly as well, portending a sell off at the open here.
Stocks on my lists receiving upgrades / downgrades this morning are:
JM Smucker (SJM) was downgraded from Neutral to Sell at Goldman.
Kimberly-Clark (KMB) was likewise downgraded from Neutral to Sell at Goldman.
Verizon (VZ) was upgraded from Neutral to Buy at Citigroup.
Vodafone (VOD) was also upgraded from Neutral to Buy at Citigroup.
Only four of my stocks will be going ex-dividend this week:
Solar Capital (SLRC), 3/19/2013, yield 9.74%.
TICC Capital (TICC), 3/20/2013, yield 11.09%.
PennantPark Investment (PNNT), 3/20/2013, yield 9.20%
Heinz H J Co (HNZ), 3/21/2013, yield 2.84%.
Two of my stocks will be reporting earnings this week:
General Mills, (GIS), 3/20/2013, before the open. It will be interesting to see if the share price run up into the stratosphere continues after the report.
Darden Restaurants (DRI), 3/22/2013, before the open. DRI has been under pressure lately, although the stock has been swept upwards, along with many others, in the recent rally. I expect a disappointing report, and that the stock price will take a hit. It would have to drop a lot to tempt me to be a buyer, even with a yield over 4%.
It appears the stock rally will be suspended for a second market day today, although things could change as we move through the day. Nearly all pundits concede that stocks are over-bought just now, and that a pull-back is due. That may be coming this week.
1st Posting for Friday 03/15/2013 8:00 AM
Stocks popped up at the open Thursday, then continued a gradual advance throughout the remainder of the day, such that all of the major averages ended the day with healthy gains. Overnight, Asian markets finished mixed, with Japan, Shanghai, and Singapore up, Hong Kong and India down. European markets are exhibiting no such variety, they are all trading in the red at this hour. European finance officials will begin meeting today to discuss solutions for Cyprus, as yet another bailout is going to be required to keep the island’s banks afloat. U.S. futures are flat, with a negative bias.
There are a number of economic releases on tap for today; CPI, Empire Manufacturing, LT TIC Flows, Industrial Production, Capacity Utilization, and the University of Michigan Consumer Sentiment Survey. After all of this data is released, by 10:00 AM, the market will likely have reacted to the news.
Eaton (ETN) was upgraded yesterday, after my posting, from Neutral to Buy at Buckingham.
Eaton (ETN) was also downgraded yesterday, by Barclays, from OverWeight to Equal Weight.
Eaton declared an 11% dividend increase on February 27, admirably, but at the current elevated price, the yield is still only 2.6%, not exactly mouth-watering.
This morning, we have a couple more analyst actions of interest:
Novartis AG (NVS) was upgraded from Neutral to OverWeight at JP Morgan.
Royal Dutch Shell (RDS.B) was downgraded from Neutral to UnderWeight at JP Morgan.
Ho-Hum, another day, another rally – or perhaps not. Time will tell. Like many market observers, I did not expect the rally that we have seen these last few weeks. It can’t last forever, can it? Nothing to do but hold on and wait for better entry prices on some of my favorite stocks.
1st Posting for Thursday 03/14/2013 8:00 AM
After being below the flat line all morning, stocks rebounded Wednesday afternoon to finish with modest gains on most of the major averages. Overnight, Asian markets mostly finished higher, with only Singapore posting a minor decline. European markets are all trading in positive territory at this hour, which is about half way through the European trading day. U.S. futures are positive as we await the Weekly Unemployment Claims data and the PPI numbers for February, all due out at 8:30 AM.
Only two upgrades / downgrades on my stocks to report this morning:
Coca Cola (KO) was upgraded from UnderPerform to OutPerform at CLSA. I tried to buy into this venerated name a couple of weeks ago, but missed it, and now, like everything else, the price has run up way too far to be a reasonable entry point.
NextEra Energy (NEE) was downgraded from OverWeight to Neutral at Atlantic Equities.
Soon it will be time to see if the bull run is going to continue.
1st Posting for Wednesday 03/13/2013 9:00 AM
Stocks did not move much yesterday, as the Dow Industrial Index posted a tiny gain, and the other major averages posted small losses. Overnight, Asian markets all ended with declines, at or exceeding 1% in the cases of Shanghai, Hong Kong, and India. European markets are likewise trading down, with Britain and Italy declining over 1%. U.S. futures are negative, with about an hour to go to the open. Retail Sales data is due out shortly, along with Export and Import Prices.
Cisco Systems (CSCO) was downgraded yesterday after I posted, from Buy to Hold, by Standpoint Research.
This morning, Walgreen (WAG) was upgraded from Neutral to Buy at UBS.
Today may be another low volatility day. This bull has to get tired sooner or later. With the action being what it has been over the past two weeks, the bears have to be in a state of shock and disbelief. As for me, I did not have any big bet going on a market decline, but I did (and still do) have a high cash position, awaiting a market pullback for better entry points. I’m still waiting.
1st Posting for Tuesday 03/12/2013 8:00 AM
After a shaky start, stocks recovered and continued to advance Monday, posting gains on all of the major averages. Overnight, Asian markets mostly declined, with only Singapore posting a tiny gain. European markets are mixed, as the markets there approach their halfway point, with Britain flat, Germany and Spain down slightly, while France and Italy are up slightly. U.S. futures are negative, but not by a lot, with an hour and a half to go before the open. The only economic release scheduled for today is the Treasury Budget, at 2:00 PM.
A couple of analyst actions of interest coming out yesterday after my posting are:
Main Street Capital (MAIN) was upgraded from Neutral to OutPerform by Robert W. Baird.
General Electric (GE) was downgraded from Buy to Neutral by Nomura.
Then, this morning, a couple more:
HCP Inc (HCP) was upgraded from Neutral to OutPerform at Macquarie.
Health Care REIT (HCN) was downgraded from OutPerform to Neutral at Macquarie, based on valuation.
One of my stocks, TICC Capital (TICC), reported this morning that Q4 Net investment income was $0.25.
I am still in recovery mode from my recent move. I am thankful that the market situation has been such that there is very little to do. The buying opportunity that I have been waiting for has obviously not materialized. Quite the contrary, most stocks are even more over-valued now than previously. At this point, I am reluctant to sell any good stocks, no matter how over-valued, since I have no idea how high things might go, and when I might be able to buy back in. Cash levels are already high, and I don’t need to raise more cash, which is earning effectively nothing at today’s money market rates. So, the best strategy is to wait and watch and collect dividends.
1st Posting for March 2013, Posted on Monday 03/11/2013 6:45 AM
This will be a catch-up posting covering the first 6 trading days of March 2013, from 3/1/2013 through 3/8/2013. I have completed my home sale and purchase and move to Texas, and established an office in my new home that will hopefully allow me to resume tracking my stocks this week.
What a week it was for stocks while I was away! U.S. markets advanced every day during the period. The Dow Industrials has actually gone past the 2007 high, and the S&P 500 is getting very close to its 2007 zenith. While the Asian and European markets did not advance every day like the U.S. market, they did end the period higher than where they started. The economic releases over the period reflected that the slow but steady U.S. economic recovery is continuing, punctuated by the better-than- expected Monthly Payrolls and Unemployment Rate report on Friday 3/8/2013.
Focusing on the upcoming day of trading, 3/11/2013, Asian markets overnight posted mixed results, with Japan and Singapore up, Hong Kong, Shanghai, and India down. European markets are all trading in the red at this hour, with Italy and Spain in the 1% decline range. U.S. futures are negative at the moment. There are no economic releases due out today.
Upgrade/downgrade action has been very limited on my stocks recently. While I may have missed something, the only action I have noticed was that United Parcel (UPS) was initiated at OutPerform at Oppenheimer 0n 3/6/2013. While it is early, I have not seen any analyst actions affecting my stocks this morning.
A few of my stocks reported earnings while I was away:
Hospitality Properties Trust (HPT) reported on 3/1/2013 that Q4 FFO was $0.76, missing by a penny. Revenue was $322.2M, beating by $5.13M.
Triangle Capital (TCAP) reported on 3/6/2013 that Q4 EPS was $0.57, beating by two cents.
Consolidated Communications (CNSL) reported on 3/7/2013 that Q4 EPS was $0.20, in-line. Revenue was $160.1M, up 1.8% Y/Y, beating by $2.1M.
NGP Capital Resources (NGP) reported on 3/7/2013 that Q4 EPS was $0.13, missing by four cents.
The only stock I track scheduled to report this week is TICC Capital (TICC), before the open on 3/12/2013.
Several stocks I follow went ex-dividend while I was away. For the record, by date, the stocks are:
Kimberly Clark (KMB), yield 3.44%.
Public Service Enterprise Group (PEG), yield 4.41%.
Eaton (ETN), yield 2.65%.
Scana (SCG), yield 4.14%.
Westar Energy (WR), yield 4.29%.
Waste Management (WM), yield 3.95%.
CenturyLink (CTL) yield 6.28%, for this payment. As noted in postings before my outage, CTL will have a reduced dividend after this quarter.
Now, as per my usual practice on Monday, I will list all of my stocks, by date, which will be going ex-dividend in the week ahead:
Triangle Capital (TCAP), yield 7.21%.
Mercury General (MCY), yield 6.67%.
Medical Properties Trust (MPW), yield 5.32%.
CocaCola (KO), yield 2.86%.
Merck (MRK), yield 4.00%.
Altria (MO), yield 5.18%.
Dr Pepper Snapple (DPR), yield 3.45%.
Digital Realty Trust (DLR), yield4.55%.
Total S A ADR (TOT), yield 5.94%. Note that the yield is before foreign tax withholding.
Ares Capital (ARCC), yield 8.29%.
Fifth Street Finance (FSC), yield 10.48%. FSC pays monthly.
Gladstone Investment (GAIN) yield 7.93%. GAIN also pays monthly.
It will feel good to be back on station this week, although if every week away could be like last week, I would probably need to take time off more often.