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Clear Skies for AMR After Fourth-Quarter Results?


Company doled out a lot of red ink in the period.

I went for a crack-of-dawn bike ride this morning (with a hat, winter gloves, big puffy jacket, and a scarf wrapped around my face so that only my eyes were exposed). I looked like a mummy on wheels. At least nobody called the police.

Asian stocks were a mixed bag overnight. The Hang Seng was off nearly 2%, but the Nikkei finished up 1.22%. European stocks were mixed early this morning, as well. And here in the US, we're currently trading higher.

Here's what I'm seeing this morning:

AMR Corporation (AMR):
Are clear skies in the cards on the heels of AMR's fourth-quarter results?

1. Well, in addition to snacks and in-flight magazines, the company doled out a lot of red ink in the period, as it managed to lose $415 million excluding items. So all and all, I'm not too enthusiastic.

2. Its nothing personal against AMR, I just don't like the airlines. As I've said in the past, all of the regulation scares me, and I'd much rather play what could be a very strong future demand for air travel by bellying up to Boeing (BA). Boeing offers an exposure to defense too, which I like.

Bank of America (BAC):
The Charlotte-based bank was out with its fourth-quarter numbers yesterday. It lost $0.60 a share, which was apparently a tad steeper than the Street had been expecting. But the feel was that credit issues were starting to stabilize and that's what likely buoyed the stock. The shares actually closed up on Wednesday in what was otherwise a pretty lousy session.

Some other thoughts:

1. Considering everything, I'd still rather dabble in Bank of America than Citigroup (C) right now. I see more upside potential here in the next couple of years. I'm also thinking that the Oppenheimer upgrade it landed (to Outperform) could end up drawing some attention and be a positive for the stock as well.

2. But would I chase it? I would not. I think the shares are pretty fairly valued given the 2010 estimate that's out there now (the Street is at $0.81). I'm also not seeing too many catalysts on the horizon and I'm concerned about the near-term direction of this market.

Justin Sharon points out in Upgrades & Downgrades: Split Decision on Starbucks that Deutsche goosed its rating on the coffee chain to a Buy.

I remain gung-ho on the company and the stock's chances in the year to come. (Check out my most recent article on the company, Seven Reasons Starbucks Is Hot.) I also want to point out that it turned in a heck of a quarter (much better than I'd expected), and that the shares could have some legs today as a result.

Panera Bread (PNRA):
Raymond James upgraded the chain to a Strong Buy.

1. It deserves some props, no doubt. It's been pummeling estimates, and if you missed it, it upped its fourth-quarter outlook, which is a big positive.

2. But I'm not sliding up a chair at this point. At right around 21.3 times the 2010 estimate, it looks a bit rich for my diet. I'd rather hope and wait for a pullback before dabbling.

Have a great day!
No positions in stocks mentioned.

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