The Red Bull's-Eye on Palm's Back
The company is expected to lose this year and earn very little next year.
Here's what I'm seeing this fine Wednesday morning:
The shares got a nice little goose in Tuesday's session, in part because of speculation that the company could have a red bull's-eye painted on its back and be taken out.
1. I can't say with any degree of certainty whether or not it might ultimately get gobbled up, but I can say that I wouldn't be bellying up right now.
2. It hasn't exactly been blowing the doors off of earnings estimates. And it's expected to produce a ton of red ink, losing $0.76 this year and earning only $0.04 next year. Not too impressive.
3. That insider-buying in the mid-teens raises my eyebrows. But then again, insiders aren't always known for their perfect timing.
4. I'd rather sidle up to Research in Motion (RIMM) on its recent dip.
Justin Sharon points out this morning that it was added to the Conviction Buy List over at Goldman.
I've been a big fan of the company for quite a while, and nothing's changed. With a big foothold in tasty coffees, a slew of revamped restaurants, and the ever-popular "dollar menu," I think the company is incredibly well-positioned in this environment. It's my top pick in fast-food, and I think the shares deserve to head higher on the news.
UBS upped the company to a Buy rating, per Justin Sharon.
With all the hand-wringing and endless speculation over whether the company would consume Cadbury (CBY) now out of the way, the stock could really have some legs and crank through the annual high. Remember, besides having some huge product names in its offerings, it also has excellent growth prospects in numerous markets around the world, and has been thumping Street EPS estimates. What's not to like? I think the $30s may be just around the corner. In my opinion, the Pershing Square involvement is icing on this cake.
JDS Uniphase (JDSU):
Open mouth, insert foot?
I haven't exactly been the biggest fan of JDS Uniphase, as any regular reader of my column can easily tell, so I'm betting I'm going to get a few emails today.
That's because the company put up $0.12 a share, excluding items, in its second quarter, which isn't terrible because the Street was at $0.09. It also offered up a better-than-expected third-quarter outlook.
But I still think the stock is ahead of itself based upon the estimates that are out there for this year and next. And once the hubbub of the most recent quarter dies down, I'm thinking some air starts to come out of this balloon. (So, no -- I haven't changed my tune at all. Sorry, JDS bulls.)
Have a great day!
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