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Ticker Shock: Red Hat Tips Its Hat; Bailout for CIT?


Tuesday's top stories and stocks with potential to move.


I love this time of year. People seem nicer. Wherever you go, the atmosphere seems a little more relaxed. The only thing (besides me putting up holiday lights) that's not fun about the holidays is the traffic here in the Northeast. It took me more than an hour to get out of Gotham last night. Folks, can you clear the way around 5:30 to 6 p.m. tonight?

The Hang Seng was off almost 3% as we slept. The Nikkei was actually closed on holiday. Meanwhile European stocks were showing me some green. And here in the US we are currently trading higher.

Here's what I'm looking at on this fine Tuesday morning…

Red Hat (RHT)
Yesterday after the close, the North Carolina-based Linux software company turned in its third-quarter results. I saw some good, and some not so good.

First, excluding items it put up 24 cents a share, which was good news because it was $0.06 north of estimates. That certainly caught my eye after an otherwise lackluster session on Monday. However, on the flip side, the company's revenue line came in at about $165.3 million. That was shy of the $166.4 million estimate.

Then again (see where I'm going with this) in its fourth quarter the company is reportedly looking for adjusted EPS of 19 to 20 cents. And that seems pretty good to me because the estimate I'm seeing is for 19 cents.

Long story short, I think it'll be viewed as good news. (The shares were up in after hour's action.) However, while I think the stock could close in positive territory today, I'm not a taker. I don't know, but after looking at the positives and negative I just don't have the conviction or the motivation to climb aboard.

CIT Group (CIT)
After the bell on Monday there was some good news regarding the New York based financial services company. Per Reuters: "The Fed said in a statement that it allowed CIT's industrial loan company, CIT Bank, to convert to a state bank in Utah, making CIT a bank holding company."

In short, this looks like it could give the company an opening to get its hands on some bailout money. Perhaps not surprisingly the shares rose in after-hours trading. And I think it could get a goose in today's session as well. But from an investment standpoint am I a bull? The answer is no. In spite of the apparently good news there just seems like too many uncertainties or balls in the air at this point for me to bottom-fish right here.

Sorry, CIT bulls - but I'm taking a pass.

Finally, I should add that, according to a Reuters article this morning, CIT "won preliminary approval to receive $2.33 billion under the government's $700 billion financial bailout program, sending its shares up almost 14% in premarket trading."
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No positions in stocks mentioned.

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