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Stocks To Watch: Bear Stearns, Caterpillar, GM, Movie Gallery, Thomas & Betts


Today's top stories and some stocks with potential to move...


Stocks to watch for Tuesday, July 3:

  • American Capital Strategies (ACAS) will be added to the S&P 500 on Friday to replace Dollar General (DG) , while Bill Barrett (BBG) will replace Laureate Education (LAUR) in the S&P MidCap 400. Dollar General is being bought by Kohlberg Kravis Roberts & Co. LP, and Laureate is being acquired by an investor group led by its chairman and chief executive.
  • Anaren (ANEN) said its management concluded that its Suzhou, China, unit overstated its pretax income in parts of 2006 and 2007 and that the company may need to restate its second- and third-quarter fiscal 2007 financial reports.
  • Bear Stearns (BSC) officials plan to strengthen the risk controls in its money-management unit and add new risk managers.
  • Caterpillar (CAT) was downgraded to reduce from neutral at UBSW, which also cut the co.'s price target to $70 from $78. "We are downgrading Caterpillar to reflect the combination of decelerating revenues in its core businesses, global capacity additions in construction machinery, Caterpillar's competitive issues in the heavyduty truck engine arena and its current elevated valuation relative to historic norms," the broker said.
  • Datalink (DTLK) said it now expects a second-quarter net loss of 3 cents to 5 cents a share, or a penny to 3 cents a share excluding items, on revenue of $40 million to $41 million. The data storage company had previously forecast second-quarter earnings in a range of breakeven to 5 cents, or 2 cents to 7 cents excluding items, on revenue of $49 million to $54 million.
  • GM (GM) shares have become attractive as a near-term trading play, with optimism growing over a possible deal with the UAW. But investors looking down the road should still proceed with caution.
  • Movie Gallery (MOVI) said that, as a result of "significantly softer-than-expected" second quarter results, it was not able to meet the financial covenants contained in its senior credit facility for the fiscal quarter ended July 1. The video rental company said it is in talks with its lenders over a possible remedy for the defaults. The company also said it will consider a number of alternatives, including a possible sale, as it negotiates with the lenders.
  • SAP (SAP) acknowledged that one of its units made "some inappropriate downloads," responding to a lawsuit filed by rival Oracle.
  • Syms' (SYM) fiscal first-quarter net earnings fell to $674,000, or 5 cent a share, from a year-earlier profit of $5.74 million, or 38 cent a share, when results were buoyed by a pretax gain of $10.4 million on the sale of real estate. The apparel retailer's net sales for the 13 weeks ended June 2 grew to $67.1 million, from $66.2 million a year earlier, while same-store sales increased 5.6%.
  • Thomas & Betts (TNB) signed definitive agreements to acquire the Joslyn Hi-Voltage and Power Solutions businesses from Danaher (DHR) for $280 million, as well as Drilling Technical Supply, a privately held French manufacturer of hazardous lighting and electrical controls, for $20 million. Thomas & Betts, an electrical component maker, expects the two acquisitions will contribute $70 million to revenues in 2007 and have no impact on earnings. For 2008, Thomas & Betts expects the combined acquisitions to boost earnings by 10 cents to 15 cents a share, and contribute revenue of $175 million to $185 million.
  • UAP Holding (UAPH) reported fiscal first-quarter net earnings of $87.7 million, or $1.66 a share, up 50% from $58.3 million, or $1.11 a share, in the year-ago period. The distributor of agricultural and non-crop inputs said revenue in the quarter ended May 27 rose 15% to $1.61 billion from $1.4 billion in the comparable period last year. The company narrowed its fiscal 2008 earnings forecast to a range of $1.60 to $1.75 a share.

Market Update:

  • Asian trading closed with the Hang Seng +1.74%, Nikkei +0.02%, Sensex +0.97%, Taiwan +0.63% and Shanghai +1.65%.
  • A quick check across the pond finds the CAC +0.80%, DAX +1.21%, FTSE +0.61%, ATX +0.01%, Swiss Mkt. +0.70% and Stockholm +0.99%.
  • Crude oil is trading lower -0.14 to 70.95 while gold is also down -0.5 to 658.7 this morning.
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No positions in stocks mentioned.

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