Before The Bell: Applied Materials And The Solars, Starbucks' Reality
Applied Materials beat expectations and Starbucks is set to go after the bell. Wall St. is wary, however; futures are pointing lower.
Morning Perspective: AMAT And The Solar Space
Applied Materials (AMAT) reported results for 4Q last night of $0.32 EPS versus $0.29 consensus. Revenues fell 6.0% year-over-year to $2.37 bln versus expectations of $2.38 bln. Although the company remained confident about the growth of the solar business, AMAT execs warned of risks to future profits, especially in the first half of 2008, due to declining new orders. Professor Adam Katz first mentioned AMAT in his Minyan Mailbag.
From the Bull Pen: Professor Quint Tatro recently mentioned top tier solars including First Solar (FSLR) and SunTech Power (STP); near term sell-stops below $177 and $56.50 respectively.
From the Bear Cave: Professor Depew noted AMAT is essentially a commodities company with limited options for growth. Companies that fit that profile must "buy their way in" to other markets. Given the recent credit market conditions and growing risk aversion, those bearish on AMAT may set stops above $19.67, which represents the 50% retracement level from the mid-October highs.
A Starbucks Reality
Starbucks (SBUX) is set to report today after the bell. Analyst estimates call for the coffee giant to report a quarterly performance of $0.21 EPS on revenues of $2.42 bln. Even with the sense of a Starbucks at every corner, the WSJ reports the company still plans to double its presence in the U.S even with same-store sales hovering in the mid single-digit range. Read Professor Jeff Macke's Yahoo Slipping In Front Of Alibaba for more context on the retail space.
From the Bull Pen: For those seeking exposure in the retail space, Professor Macke noted McDonald's (MCD) was best in breed. Those bullish may set sell-stops below the summer's triple top break-out around $52.50.
From the Bear Cave: Analysts are concerned that SBUX may have grown too much, too fast. Coupled with rising food costs, those bearish may play the downside with buy-stops above $26.28 (which represents a break in the downtrend dating back to November 2006 and the 50-DMA).
Click on Minyanville's Stocks To Watch more company-specific ideas.
Quick Check Around the World
Asian trading closed with the Hang Seng -1.42%, Nikkei -0.67%, Sensex -0.72%, Taiwan -0.42% and Shanghai -0.88%.
A quick check of European bourses finds the CAC -1.14%, DAX -1.10%, FTSE -0.89%, ATX -1.09%, Swiss Mkt. -0.86% and Stockholm -2.05%.
A Look At Commodities
Commodities are lower with crude oil down -0.19 to 93.90. Gold is down -10.50 to 804.20, silver is down -0.25 to 14.81, and copper is lower by -13.35 to 320.30.
As of 8:30 AM EST, S&P futures are lower by -6.30 points and Nasdaq futures are down by -9.5 points.
On the Radar
- CPI: 0.3% vs. 0.3% cons m/m
- Core CPI: 0.2% vs. 0.2% cons m/m
- CPI: 3.5% vs. 3.5% cons y/y
- Core CPI: +2.2% vs. +2.2% y/y
- Initial Claims: 339k vs. 320k cons. Prior revised to 319k from 317k.
- NY Empire State Index: 27.4 vs 18.0 cons.
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