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Three Stocks To Watch: Fluor, MBIA and Wal-Mart


From construction to consumer electronics.


The market had been doing pretty well but it almost feels like Hilary Clinton winning Ohio, Texas and Pennsylvania: The die was already cast and the general perception on the eventual outcome hasn't changed.

Just as Hilary's slim victory in Indiana was seen by most election mavens as a loss, many stock market watchers believe the market is still going lower. The source of this belief centers around the assumption that there's still much more damage to come in the financial space. Considering the proverbial dark skies and large vultures who continue to circle above, it's easy to see why many are fearful.

Throughout the history of mankind, when levels of bad omens and outright fear have gotten this intens, people tend to turn to mythology and any number of gods in hopes of finding solace.

Folks on Wall Street won't be praying to Zeus or Odin, of course, but they will be looking for superhuman intervention. Obviously and unfortunately, Ben Bernanke, Chairman of the Federal Reserve, has proven to be only flesh and blood, and he may have run out of lighting bolts anyway.

Congress, in my opinion, is too busy playing one-upmanship and the populism game to offer any real hope and the president, once as mighty as a centaur, looks and acts more like Pan these days.

Wall Street could go the route of numerous civilizations throughout history and make offerings in the form of sacrifices. Yet it doesn't have anything to barter in that realm, either. We witness Citigroup (C), the largest (for now) bank in the United States make its offerings in hopes that a ray of light would breakthrough and bless its share prices.

I don't think it was enough as there continue to be questions and that means more dark clouds and those bothersome buzzards.

Citigroup Changes Under Consideration Over Next Three Years

  • Revenue growth 9%
  • Up to $400 billion in sales of slow revenue assets
  • Up to $100 billion in sales of non-core assets
  • Focus on servicing wealthy clients around the world
  • Lower risks in mortgages
  • Sell some consumer banking assets
  • Revamp its slogan

While Citigroup is trying to appease everyone, it remains unclear how many job cuts there will be and there's a lack of general certainty. The game plan put out there last Friday simply wasn't enough to calm the nerves of investing mankind.

In the meantime, reports out of Europe say HSBC will increase its loan loss provisions to $4.0 billion because of exposure to U.S. mortgages and other areas like credit cards.


Get ready to hear the "I" word a lot this week beginning on Tuesday, with April Retail Sales, on Wednesday with the CPI update and finally on Friday with the latest reading on sentiment. Last week same store sales were largely superb, particularly with discount retailers.

Three Key Stocks to Watch This Week:

  • Contrary to the opinions of folks that are looking at the share price and PE ratio, I feel MBIA (MBI) is an expensive stock as it is, changing hands with a PEG ratio of 2.37. In the December quarter the company posted a loss of $3.30 when the Street was looking for $2.98. There's a large short position that is equal to 18% of the share float. The quarterly earnings report out today will validate the business model and determine the fate of company CEO, Jay Brown, who has gone out on a thin limb to say there will be no need to raise money.

  • Fluor (FLR) has been one of my favorite investments over the last three years. The company is expected to post earnings of $1.27 on strong global construction business, especially its exposure to the oil and gas industry. Last time out the company beat the consensus by $0.24. For many this could be a better proxy for the global economy than the warning from FedEx (FDX).

  • Wal-Mart (WMT) released same stores sales up 3.3%, or 50% more than expected, on strong sales across the board, including flat panel televisions, video game systems and video games. This was a $42.00 stock last November and it's moved on virtually non-stop since then. I feel the company has been doing everything right, even on the public relations front. The stock doesn't have coattails, in part because some consider it to be a countercyclical indicator, but at this point it's very important that the stock best expectations.
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No positions in stocks mentioned.
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