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Spotlight Stocks: Costco, Heinz, Honda, Sears


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


Stocks to watch for Thursday, May 29, 2008:

  • Costco (COST) reported fiscal 3Q net income of $295.1 million, or 67 cents a share, jumping 32% from $224 million, or 49 cents a share a year ago. In the period last year, the company took a charge of $30.3 million. Costco topped expectations on earnings, citing demand for bargains on food and toiletries. Including membership fees, revenue rose to $16.61 billion from $14.66 billion.
  • Dow Chemical (DOW) raised prices yesterday for all of its products by up to 20% due to soaring raw materials costs. Monsanto (MON), Hershey (HSY), General Mills (GIS) and Avery Dennison (AVY) may follow suit, according to data compiled by Bloomberg. These companies, along with seven others in the S&P, increased their so-called LIFO reserve, which captures rising inventory costs, by at least 20% over the past four quarters.
  • H.J. Heinz (HNZ) reported quarterly profit of $194.1 million, or 61 cents a share, up from $181 million, or 55 cents a share a year ago. The company also raised its earnings forecast for the coming year to a range of $2.83 to $2.91 per share. Sales rose to $2.69 billion, helped by consumers' desire to save on eating out as fuel costs climb, home values decline and U.S. job losses mount, reported Bloomberg.
  • Honda (HMC) plans to move production of two of its models, the Pilot and the Ridgeline, from Alliston, Ontario to Lincoln, Alabama. This in turn will allow production of the popular small-car Honda Civic to be ramped in the Canadian plants as demand is growing for fuel-efficient vehicles. According to the Associated Press, Honda will create American jobs when its plant to build Civics opens in Indiana later this year. That plant, Honda's seventh in North America, is expected to add about 2,000 jobs.
  • Sears Holdings (SHLD) reported a fiscal 1Q net loss of $56 million, or 43 cents a share, down from a net income of $223 million, or $1.45 a share a year ago as the retail scene continues to darken. The company said revenue fell 5.8% to $11.07 billion from $11.75 billion, citing "the difficult economic environment and intense competition for consumer business," according to Interim Chief Executive W. Bruce Johnson.
  • Siemens (SI) compliance officers and auditors at KPMG looked the other way as the company used slush funds to pay bribes in order to win orders, reported Reuters citing Heinz Keil von Jagemann, a former Siemens manager. Jagemann admitted to carrying large sums in cash out of the country and said compliance officers had approached those responsible for the slush fund system after Austrian banks became suspicious.

Market Recap

  • Asian trading closed with the Hang Seng +0.55%, Nikkei +3.03%, Sensex -1.27%, Taiwan +0.22% and Shanghai -1.66%.
  • Glancing towards Europe, we see the CAC +0.13%, DAX +0.14%, FTSE +0.42%, ATX +0.46%, Swiss Mkt. +0.82% and Stockholm -0.68%.
  • Commodities are taking a hit this morning with crude oil down -0.73 to 130.30 and gold lower -7.7 to 892.8 this morning.
No positions in stocks mentioned.

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