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business newsMonster Worldwide Posts Scarily Strong Performance
By
Justin Sharon
Apr 12, 2011 4:45 pm
On a down day for the markets, shares in the online employment site ended in the green to the tune of 2.85%.
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"Today’s the day" all right. On an otherwise frightening session in equities, Monster Worldwide (MWW) was appropriately enough the top S&P 500 stock for much of today. Shares in the online employment site ended in the green to the tune of 2.85%. This after its European index surged 26% in March from a year ago, the biggest jump in Internet job advertisements there since the end of the Great Recession. Stellar showings out of Germany (up 45%), Sweden (22%), and France (21%) more than made up for continental governments cutting payrolls in an era of austerity. Alan Townsend, the firm’s European chief, called manufacturing and exports a continuing “key driver of recruitment.”
Investors tempted to write call options on the company whose motto is “your calling is calling” can indeed point to several catalysts. (Even if, statistically, you need the patience of Job to ever actually snare an opening by employing the web; time tested methods of pressing flesh and pounding pavements are still far more effective.) The US unemployment rate of 8.8%, while still stubbornly high by historic standards, has recently fallen farther faster than in any comparable period since 1984. Amid this more favorable macro backdrop, analysts are expecting a Monster 27% rise in revenues for 2011. Top line margins should also be boosted by the increased traffic accruing from its August 2010 all-cash acquisition of Yahoo‘s (YHOO) HotJobs for $225 million. And current valuation, especially in light of above-average peer growth, is far from stretched. Risks include being left out by LinkedIn as a new generation of job seekers embraces social media as never before, still fitful restructuring efforts, and the sort of inherent industry cyclicality which saw Monster record negative return on invested capital even in last year’s improving economy. So advice for that EMT who is contemplating changing careers? You may want to stick in the sector, especially since today’s second best S&P 500 performer was… hospital operator Tenet Healthcare (THC).
Please see How iPad Apps Are Transforming Job Search and Recruitment.
Gildan Activewear
One day after tribute plans were unveiled for the composer of Goldfinger, Gildan Activewear Inc. (GIL) gained 6.06% by buying Gold Toe. Gilden, a 27-year old Canadian company which sells T-shirts, tank tops, underwear and the like to wholesale screen printers, embroiderers, and retailers, is paying $350 million to purchase the sock supplier. Demonstrating a talent for puns, Gilden CEO Glenn J. Chamandy hailed the deal as “an important and exciting step in [our] ongoing strategic development.” Investors certainly don’t think they are being fleeced by the transaction, which appears prudently priced at only 1.25 times calendar 2010 sales and 7.2 times adjusted EBITDA. It is slated to be wrapped up “imminently” and should add almost 20% to the company’s consolidated top line. Some $10 million to $15 million in annualized cost synergies are also seen accruing from the acquisition over the next two years. Gilden has thus far kept costs relatively low by outsouring some of its sewing operations to third party contractors in Haiti, the country where so many erroneous Super Bowl winning T-shirts go to die of course. This deal has undeniably knocked shareholder socks off but higher cotton prices could quickly put a sock in any unseemly bragging.
Also check out Washington State Trims Budget Gap by Shortening Prisoners’ Socks and Could Cotton Cause a Crisis?
Chipotle Mexican Grill
The year, though still young, has already brought us both a BB gunfight at the OK Corral over burritos and lawsuits over the mystery meat used by a national chain in its tacos. Thus it’s nice to know on a day most shares went south Chipotle Mexican Grill, Inc. (CMG) gained 2.19%. The Denver-based fast food firm rose a mile high after saying it would open an Asian restaurant in the summer. Its first foray into such cuisine, to be called ShopHouse Southeast Asian Kitchen, will be in Washington D.C. and feature the same sort of sustainable ingredients that have proved so popular elsewhere at Chipotle, which was once part of McDonald's (MCD). The stock is up more than 120% in the past year, its average bill of around $10 proving popular amid hoi polloi and Gwyneth Paltrow alike. Montezuma’s revenge could still strike on a stock currently trading in the stratosphere however, especially amid higher commodity prices, labor costs, and immigration audits.
International Game Technology
The first fully electromechanical slot machine, introduced in Vegas’ Rat Pack heydey of 1963, was called the Money Honey but it’s highly unlikely Maria Bartiromo would approve of today's 3.21% tumble in shares of International Game Technology (IGT), the world’s biggest maker of such products. They were dragged down by smaller rival WMS Industries Inc (WMS), which itself slid 17.15% after reporting a profit shortfall last night. No high fives then for one-armed bandits, today’s tumble coming only a few days after Money Honey inventor Bally Technologies (BYI) cut its 2011 outlook on soft sales in a still sluggish Sin City spending environment. IGT, which paid out the biggest ever slot machine jackpot during March Madness in 2003, owns popular games like Wheel of Fortune, but has failed to keep up with competitors in recent years. The removal of charitable bingo machines in Alabama contributed to a 10% decline in consolidated revenue for its most recent quarter. Those who like a gamble may want to take a chance by buying on a dip -- but it’s no safe bet.
Lasting through April 15, 100% of the donations made to The Ruby Peck Foundation for Children's Education will be channeled to the children of Japan as they attempt to find their footing following this natural disaster; and to kick off this drive, we'll pledge $5000 to get it started. Please do what you can, as it will add up, and thanks.
No positions in stocks mentioned.
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