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Colgate-Palmolive Has Reason to Smile


The stock deserves to hit a new high.

Asian stocks rose overnight. The Hang Seng and the Nikkei rose 1.61% and 1.58%, respectively. European stocks were showing me some green earlier this morning, too. And here in the US, we're currently trading lower.

Here's what I'm seeing this morning:

Colgate-Palmolive (CL):
The consumer products giant was out with its fourth-quarter numbers and they deserved a big smile. The company put up $1.21 a share, which was $0.03 north of expectations.

My thoughts:

1. I've been excited about this stock for a while (see Silver Lining: Colgate Promises Advanced Whitening, Higher Stock Prices) and nothing's changed. I think the stock deserves to hit a new high.

2. I view the recent pullback in share price as an opportunity given this beat and the fact that in 2010, it's expected to put $4.80 a share on the scoreboard. Forget tech -- I'd much rather put my chips on this tried and true company, particularly in this environment.

Caterpillar (CAT):
Dig this! The legendary company provided fourth-quarter results. Excluding items, it earned $0.41 a share, which was much better than the $0.28-per-share loss the Street had been looking for.

However, the stock took a thumping; the issue was its guidance for 2010. Apparently it's looking for about $2.50 a share, which isn't too swift given that the Street is at $2.71

Some thoughts:

1. It was a decent quarter, but the disappointing outlook overshadows it. The stock deserved a bit of a whack.

2. Unfortunately, I'm guessing that the sell-side analysts aren't going to be too upbeat in their research reports in coming days. If I'm on the mark, that could drive the stock down a wee bit more.

3. But long term, it really is a stock that's hard not to like, and so perhaps the slap on the wrist it's getting now will create a good entry point. I'd note that $2.50 a share (if it puts that number on the board) wouldn't be the worst thing in the world. And when the economy does come back, it should really be in good shape (which is what has me excited).

Be sure to check out Justin Sharon's article this morning. UBS apparently upgraded it.

Apple (AAPL):
Just one quick thing: With earnings and the iPad tablet news already out there, can the stock still have legs in the near-term? Indications at the crack of dawn are that the stock could open higher in today's session. But if I were long, I'd actually use a higher open to book some profits.

Netflix (NFLX):
Justin Sharon points out in Upgrades & Downgrades: Nothing But Netflix this morning that the renter of videos received a fleet of upgrades.

My two cents:

1. I haven't been the biggest fan because it's been trading at a pretty big multiple of expected earnings. However, it did turn in a heck of a fourth quarter after the bell last night, and with those upgrades and the earnings, I think the stock zooms higher in today's session. I certainly wouldn't want to fight what looks like a strong demand for the stock.

Keep an eye peeled because if it hits a new high, this momentum could continue.

3. As for Blockbuster (BBI), I'd much rather rent its videos than belly up to the stock, even at current levels.

Kraft (KFT):
Bank of America/Merrill slapped a Buy rating on it.

I think a Buy rating is appropriate. Long-term I believe the stock rocks because the company has superb growth opportunities both at home and across the pond. Plus, with all of the speculation about Cadbury (CBY) hopefully behind us, I suspect management will be more focused on running the business. I also believe the company will continue to positively surprise on the bottom line.

Have a great day!
No positions in stocks mentioned.

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