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business newsTicker Shock: Everyone's Wrong on Microsoft
Wednesday's top stories and stocks with potential to move.
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In other news, it looks like Bernie Madoff is going to plead guilty. I have a question: Anybody out there hope his cellmate is a gentleman by the name of Bubba who likes to snuggle on cold winter nights?
Asian markets rose sharply overnight. The Hang Seng was up more than 2%, and the Nikkei closed more than 4% higher. However, Europe was a bit of a mixed bag, and here in the US, we're currently trading slightly lower.
Here’s what has my attention this morning:
Microsoft (MSFT)
I’m thinking big picture here, folks. While many big-name companies are trading at a fraction of their former price -- heck, for the price of a Happy Meal, I can buy 3 shares of Citigroup -- Mister Softee is a huge bargain, by any measure. The company is trading at about half of its 52-week high - which is a steal, since I believe in my heart that the company will continue to dominate.
Seriously, these guys have become a part of our lives, and they aren’t going away anytime soon. Even in these tough times, the company is expected to put up $1.75 a share this year. And yet it trades at just 9.4 times expectations, for Pete’s sake! Microsoft with a PE under $10!
Oh and the company sports a dividend. The yield, by my math, is north of 3%.
I just want to get up on my desk, pull out what little hair I have left, and scream at the top of my lungs: What’s wrong with you people?
Okay, that’s my rant for today.
J. Crew Group (JCG)
There were a number of not-so-good things in the apparel company’s fourth-quarter results.For one, its gross margin came in at 27.6%, which was a big drop from the 41.3% the company put up in the comparable period last year. Its comp sales were also off 13%, and the company isn’t going to be offering up annual guidance.
Nevertheless, J. Crew did post a loss of $0.22, (or $0.20, excluding charges), and I suppose management has the right to yell “Scoreboard!” (just like we did when we were kids on the kickball field). After all, the Street had been expecting the company to post a loss of $0.27. Its revenue number came in at just over $388 million, which was also better than Street estimates.
Finally, as icing on the old sundae, it’s looking for $0.07 to $0.12 a share in the first quarter. That’s in the ballpark of the dime a share analysts are looking for.
My take: I think the results could very well be viewed as a positive by investors. But at the same time, I just see no reason for me to get involved (despite the First Lady's affection for the brand). The bottom line: It trades at about 18.3 times the earnings estimate for the year (of $0.53), and I feel there are better opportunities out there.
Again, I don’t like the idea of not having full-year guidance. A range -- even a large one -- would have been nice.
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