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VIDEOTicker Shock: Four Reasons to Take Progressive for a Test Drive
Friday's top stories and stocks with potential to move.
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Asian stocks rose overnight. The Hang Seng was up 0.52% and the Nikkei was up 1.55%. Meanwhile, European stocks were in negative territory early this morning. And here in the US, we're currently trading lower.
Here’s what I’m focused on this morning (besides my busy weekend plans):
Progressive Corp (PGR):
I think the Ohio-based auto-insurance company deserves a mention. Here’s why I like it:1. According to a release last night, its board of directors “approved a new authorization for the Company to repurchase up to 50 million of its Common Shares commencing on July 1, 2009.” It’s no accident (get it?) I dig this because it wouldn’t have done it unless it thought the company had the financial means to do it or the stock was a good value.
2. It tells me the company thinks the business is in pretty good shape, otherwise it could've used that coin on advertising to bring in new customers.
3. It trades at an attractive 10.4 times the current-year estimate.
4. Over the last 2 months or so, it appears the estimates have ticked up a bit, which grabs my eye. They're not up a tremendous amount, but it's noticeable. For example: It looks like the estimate for this year has risen from $1.39 to $1.50 over the last 60 days, while the estimate for 2010 has gone from $1.37 to $1.45.
I think the stock has the potential to punch through the $20 level within the next year.
National Semiconductor (NSM):
The California-based chipmaker was out with its fourth-quarter numbers. It posted a loss of $0.28, but the company was quick to point out that there were $116 million in pre-tax charges. Meanwhile, its revenue line came in at $280.8 million, which was north of expectations.
But I think the big news was it's outlook. Per the release :
“National anticipates that sales in the first quarter of fiscal 2010 will range from $285 million to $305 million, or an increase of approximately 2% to 9% sequentially.”
That’s good news because the estimate I’m seeing is for just a little better than $282.5 million.
My thoughts on National Semiconductor:
1. Overall, the news seems positive, and I think the shares could get a bit of a lift in the session. That said, I'm not overly enthusiastic about the bigger picture. Sorry, National bulls.
2. It's expected to put up a whopping $0.16 this year and $0.18 next year. That's not a great value for a stock that trades better than $14.
3. Data shows it has a mixed record of meeting earnings estimates over the last year.
4. I’d like to see some insiders pony up in the open market right about now.
Bottom line: I’m not too enthusiastic, and given the better opportunities out there, I'm punting on this one.
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