Sallie Mae In Wild Upside Ride

SLM Corp.

Cringe-worthy though those words may still be, I guess Sally was right after all in saying “you really like me!” all those years ago. Shares of student lender Sallie Mae -- known to more educated investors as SLM Corporation (SLM) -- undoubtedly had a Field day this afternoon, ending up about 13% to post the second strongest showing on both the S&P 500 Index and entire NYSE. This after the Virginia firm founded in 1972 announced $300 million in share buybacks and declared a dividend for the first time since 2007, back when the class of 2011 were both a lot less intelligent and indebted than they will be next month. The quarterly payout of a dime per share will go out on June 17 to June 3 shareholders of record. Analysts are also applauding a 12% increase in private education loans, up to $940 million over the most recent three month period. Credit Suisse is only Neutral on the name -- most Street peers are considerably more bullish -- but this morning still took up its 12-month price target by $2 to $16, a level it subsequently reached in matter of hours.

CEO Albert Lord sounded an optimistic note on a company whose shares could be had for under $4 during the Great Recession. “The trends we see across the franchise are improving: private loan demand, ABS market tone, and asset quality together with a better Department of Education loan servicing scorecard. Reinstitution of the dividend and share repurchase program reflects the strength of our capital, liquidity, and cash flow,” he said. Offering additional encouragement, loan loss provision fell 16% to $303 million while charge-offs also improved. All of which enabled per share earnings ex-items to come in at $0.48, an impressive $0.08 ahead of consensus.

This week began, although it already seems an eternity ago, with Standard & Poor’s fretting over the size of our nation’s budget deficit. But it is the remorseless tick tock of America’s academic debt clock that is truly staggering. It represents the biggest red ink of all, having outpaced credit cards for the first time in 2010, and is seen topping a trillion dollars this year. Sallie, the country’s largest such lender which handles over $200 billion in federal student loans, is a prime beneficiary. Issues remain however, as evidenced by a 27% tumble in Q1 profit. Last year’s phasing out of the Federal Family Education Loan Program (FFELP) was a setback that shows Uncle Sam’s longstanding guaranteed loan gravy train is likely ending. And regulatory red tape remains a constant risk.

Please see How To Handle Student Loans and 9 Ideas for Fannie and Freddie’s Future.

Calgon Carbon Corp.

If Monday’s scary stock market action had you screaming “Calgon, take me away!” at least Calgon Carbon Corporation (CCC) is doing everything it can to sooth investor nerves at the end of the week. Shares finished roughly 4.32% higher after being boosted to Buy from Neutral at Janney Capital this morning. The firm was founded in 1942, the first full year of America’s involvement in World War Two. Calgon’s web site informs us that at the time “coconut shells were the raw material used to produce granular activated carbon, the filtering agent in military gas masks.” The military asked the company to find a more efficient way, and since then it has become a powerhouse in pollution and treatment controls. Its products are used to purify water, air, food, and beverages, and have a myriad of industrial applications.

Calgon reported solid Q4 results last month, profit of $12.5 million or $0.22 on an EPS basis handily beating Street projections of $0.17. Meanwhile sales, up 18.8% year-over-year to $131.5 million, bested consensus calling for $124 million. Insiders have also been active purchasers of the stock, an encouraging sign. But beware; you could have had shares for only $11 and change in August, so it is now not cheap on most metrics. In the market it is often the case that immediately after the bubble comes the bath.

Hain Celestial Group

Assuming a soothing bubble bath isn’t your thing, how about sipping some hot calming Chamomile tea to relax? On second thoughts, looking at today’s price action in The Hain Celestial Group, Inc. (HAIN), perhaps that will only add to your stress. On an up day, shares of the company arguably best known for Celestial Seasonings ended down over 1% on account of a lukewarm Market Perform initiation by BMO Capital. (Amid the gloom it should be noted that at least the beverage still has a longer shelf life than the Mafia in Manhattan.) The 18-year old upstate New York food and beverage outfit also offers an array of low-sodium, gluten-free, and organic edibles and its Terra chips are of course much beloved by JetBlue (JBLU), whose own shares are also no great shakes today. Even after this afternoon’s decline, the stock is still up more than 70% in the past 52-weeks and earnings, out on May 3, are expected to be strong. The organic category is booming and takeover talk, with Unilever (UL) and Nestle the usual suspects mentioned, has also helped Hain stock. But increased competition and, especially, heightened food inflation loom large as headwinds in light of such a rich valuation. So what to do if today’s share price drop has left tea lovers penniless? Well, Starbucks (SBUX) is offering free coffee this Friday.

Turn to The Top-Performing Alternative Investments: Truffles and Tea and The Future of Food Prices for more.

PetSmart

While out west states are going to the dogs, in New York today discussion centers on whether to name a state dog. Americans spent $50 billion on their furry friends last year, and such lavish outlays prompted Goldman Sachs to raise their rating on PetSmart, Inc. (PETM) to Buy from Neutral. (When not “doing God’s work”, the bank is quite a St. Francis of Assisi when it comes to its love of all living creatures; Matt Taibbi assures me they even have a soft spot for squids.)

In taking its price objective up to $49 from $46 on the specialty retailer for Fluffy and Fido, it cites better gross margins ahead. Accordingly, Goldman is also raising its estimates out through 2014 on this Phoenix firm founded a quarter of a century ago. They operate approximately 1,100 stores, not to mention about 162 pet hotels and 740 animal hospitals. (This is after all country that doesn’t blink about buying a $25 bird bra.) With most animal expenditures remaining relatively recession resistant, PetSmart shares have been strong performers over the past year, up in the region of 30% after today's gain of almost 3%. What could cause some dog days? Premium private-label offerings from mass merchants are arguably the number one risk.