Ticker Shock: Three Reasons Lowe's Could Move High
Monday's top stories and stocks with potential to move.
Asian stocks took a thumping overnight. The Hang Seng and the Nikkei were off 3.62% and 3.1%, respectively. Meanwhile, European stocks were in the red earlier this morning as well. And here in the US, we're currently trading lower.
Here's what I'm seeing today:
Lowe's Companies (LOW):
Excluding items, the chain I spend a lot of dough on and time in earned $0.54 in the second quarter. That was in line with expectations.
However, it looks like it isn't going to really nail it in the third quarter. According to the release, it's expecting $0.21 to $0.25, which is a smidge of an issue since the Street is at $0.27.
1. Home-improvement retailers like Lowe's and Home Depot (HD) are in better shape overall than they were a few months or a year ago, as consumers have finally loosened their clutch on their wallets a bit. I suspect both companies will really rock over the long run. That said, if the stock were to pull back to the mid- to upper-teens on this news, I might be willing to dip my toe in the water.
2. Lowe's or Home Depot? From an investment standpoint, I think it's a pick-em' at this point. Neither stands out to me.
3. Insiders, thinking about nailing down some stock on the heels of this news in the open market? That would certainly make me feel better
Abercrombie & Fitch (ANF):
"Hot" may be how some people describe the company's models, but the adjective certainly doesn't fit when it comes to the company's second-quarter results, which were reported on Friday.
Its revenue line was off a smidge more than 23% from the comparable period last year. Its gross margins and store comps were down; the latter by 27%. Hollister's comps were down 33%.
Some quick thoughts:
1. Ditching Ruehl (one of its concepts) will be a good thing down the road. But it really needs to hit the gas and get people in its other stores if it wants to impress the investment community (including me) and really drive earnings.
2. At about 40.8 times this year's estimate and 22.7 times next year's estimate, the stock isn't a huge bargain.
3. Insiders are really buying the daylights out of this stock in the open market, aren't they? (Note sarcasm.)
4. What's there to justify the mid-$30s stock price? Unless there's a rabbit prepared to pop out of its hat, the stock could find itself under pressure at some point in the near-term.
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