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Four Reasons to Tune In to Dish Network


The shares could get a nice bump up in early trading.

The weekend just goes too fast doesn't it?

Asian stocks rose overnight. The Hang Seng and the Nikkei were up 2.17% and 0.45%, respectively. European stocks advanced this morning as well. And here in the US, we're currently trading higher.

Here's what I'm focused on this first day of March.

Dish Network
The Colorado-based company was out with its fourth-quarter numbers -- did you happen to tune in? It earned $0.40, which was a hefty $0.07 better than the estimate I'm seeing. It beat on the top line, too.

Some thoughts:

1. Clearly it was a good quarter on the top and bottom line, and it was nice to see the subscriber numbers get a goose, too. I think the shares get a nice bump up in early trading along with the broader market.

2. Back in May I said the stock would be more fairly valued at $20, which is essentially where we are right now. (See Ticker Shock: Three Reasons Why Dish Network's Stock Could Get Good Reception.) So has my view changed you ask? Frankly, I'm not as excited as I was when the shares were in the mid-teens, but I do like the shares at this level and think that the stock could still head into the mid-$20s.

3. We could see the sell-side ratcheting up their estimates on the days ahead, too. If I'm correct, that could give the shares another goose.

4. Insiders have been kind of quiet lately. I think a little activity here on the buy side of the ledger in the New Year could do a lot for investor morale.

Abercrombie & Fitch (ANF):
Justin Sharon reports this morning in Upgrades & Downgrades: Split Decision on Abercrombie, that Brean Murray lopped its rating to Sell.

My two cents:

1. If you read my articles on a daily basis then you know I've been a bear on the retailer for quite a while now -- and nothing's changed.

2. Although Justin Sharon also points out that Cowen upped the chain to Neutral, I think the downgrade is what traders will be focused on, and that the shares will take a hit as a result.

3. What would it take to get Abercrombie back in my good graces? Based upon the earnings outlook, I'd like to see the company continue to thump estimates, and frankly, a stock price in the mid-$20s wouldn't hurt. It's just way too pricey right now.

Whole Foods (WFMI):
UBS upped its rating to Neutral.

I realize with the economy coming back that healthy eaters are going to be more willing to drop heavy coin at Whole Foods and similar stores. But at 28.6 times this year's estimate the stock is hardly a good deal, and I'm not prepared to toss it down my gullet. I'd be much more interested on a pullback to the lower $20s, but all things considered I'd much rather have a bite of Walmart (WMT), or even Kroger (KR). Both chains carry their share of healthy foods, and both seem like they'd be more attractive (and perhaps convenient) to frugal consumers in this still-queasy economic environment.

Pepsi Co. (PEP):
The world-famous cola company came out and reiterated its 2010 guidance. Specifically, in the release it said: "PepsiCo reiterated previous guidance that it expects to achieve 11 percent to 13 percent core constant currency EPS growth in 2010. It also said it expects to achieve low-double-digit core constant currency EPS growth in 2011 and 2012."

That would be an impressive growth rate for a company of this size and maturity. I also sense this is something the investment community wanted to hear after the bottler acquisitions. But even beyond that, with families of all socioeconomic standings starting to eat out more, I think it will play right into Pepsi's sticky little hands. Keep in mind that it not only sells soft drinks, but Fritos and a number of other products that are likely to get gobbled up in volume as folks dine out more in the months to come.

Have a great day!
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