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VIDEOTicker Shock: Four Reasons Why Family Dollar Could Hit New High
Wednesday's top stories and stocks with potential to move.
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Asian stocks sold off again. The Hang Seng and the Nikkei were down 0.79% and 2.35%, respectively. European stocks, however, were more of a mixed bag earlier this morning. And here in the US, we're currently trading higher.
Here’s what I’m focused on this morning:
Family Dollar (FDO):
The North Carolina-based company turned in a third-quarter profit of $0.62, which was a respectable $0.03 better than expectations. To boot, in the release it said: “The Company expects that earnings per diluted share will be between $0.39 and $0.43 in the fourth quarter of fiscal 2009.” That’s decent in that the Street is at $0.39.
Some thoughts:
1. Some people have tried to impress upon me that discount retailers are passé from an investment standpoint; that now is the time to be bellying up to more of the department stores and high-end chains.
Picking amongst the bigger-name higher-priced stores sounds like a good idea for long-term investors. But overall, I still believe that discount and deep discount is the ballpit to play in. I don’t care how much the Dow has gone up in the last few months, I’d wager dollars to doughnuts that the average consumer is looking to save coin in the near-term.
2. It's beaten expectations in 3 of the last 4 quarters, which is a nice little track record.
3. Although its merchandise may be low-priced, its stock isn’t dirt-cheap: It’s trading at about 13.9 times the current-year estimate.
4. My gut tells me that within the next 6-12 months, the stock could make a new high.
Google (GOOG)/Microsoft (MSFT):
To quote fellow Minyan, Terry Woo's article today : “Google’s thorn in Microsoft’s side just got bigger.” There's really no other way to phrase its foray into a new operating system.
Some thoughts:
1. This computer fad must be for real.
2. This isn't a road Google would travel unless it considered itself ready to take on Mister Softee.
3. At the same time, counting Microsoft out could be a mistake.
4. Does this make the possibility of a Microsoft deal with Yahoo (YHOO): a) more likely; b) less likely; or c) without impact? (Discuss amongst yourselves.)
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