Mid-Day Market Update: FMC Slips On Weak Outlook; Integrys Energy Shares Surge

Related AKS Mid-Afternoon Market Update: FMC Slips On Weak Outlook; Integrys Energy Shares Surge AK Steel Unveils Q2 Outlook - Analyst Blog

Midway through trading Monday, the Dow traded down 0.19 percent to 16,915.55 while the NASDAQ declined 0.01 percent to 4,367.74. The S&P also fell, dropping 0.08 percent to 1,961.27.

Leading and Lagging Sectors

Monday morning, the basic materials sector proved to be a source of strength for the market. Leading the sector was strength from AK Steel Holding (NYSE: AKS) and Thompson Creek Metals Company (NYSE: TC).

Telecommunications services shares fell around 0.65 percent in trading on Monday. Top losers in the sector included NQ Mobile (NYSE: NQ), down 4 percent, and ORBCOMM (NASDAQ: ORBC), off 5 percent.

Top Headline

Oracle (NYSE: ORCL) announced its plans to buy Micros Systems (NASDAQ: MCRS) in a $5.3 billion deal.

The offer price of $68 per share represents a 3.4% premium over Micros' closing price on Friday.

Equities Trading UP

Integrys Energy Group (NYSE: TEG) shares shot up 12.90 percent to $68.81 after Wisconsin Energy (NYSE: WEC) announced its plans to acquire Integrys Energy Group in a deal valued at $9.1 billion.

Shares of Central Garden & Pet Company (NASDAQ: CENT) got a boost, shooting up 9.22 percent to $9.83 after Harbinger Group offered to buy Central Garden & Pet Co for $10 per share.

MICROS Systems (NASDAQ: MCRS) shares were also up, gaining 3.36 percent to $67.98 after Oracle (NYSE: ORCL) announced its plans to buy MICROS for $68 per share.

Equities Trading DOWN

Shares of Meritor (NYSE: MTOR) were 12.47 percent to $12.77 after the company reached a $500 million settlement with Eaton (NYSE: ETN) related to an anti-trust suit filed in 2006. The company’s board also authorized a repurchase of up to $210 million.

Ixia (NASDAQ: XXIA) shares tumbled 1.68 percent to $11.67 after the company reported its Q4 earnings of $0.15 per share on revenue of $120.60 million. Ixia now expected Q1 sales of $109.0 million to $113.0 million.

FMC (NYSE: FMC) was down, falling 3.65 percent to $72.02 after the company lowered its FY14 earnings forecast and issued a weak Q2 outlook.

Commodities

In commodity news, oil traded down 0.77 percent to $106.01, while gold traded up 0.02 percent to $1,316.90.

Silver traded down 0.26 percent Monday to $20.94, while copper rose 0.90 percent to $3.14.

Eurozone

European shares were lower today.

The eurozone’s STOXX 600 declined 0.51 percent, the Spanish Ibex Index dropped 0.33 percent, while Italy’s FTSE MIB Index fell 1.33 percent.

Meanwhile, the German DAX declined 0.66 percent and the French CAC 40 dropped 0.57 percent while UK shares slipped 0.36 percent.

Economics

The Chicago Fed National Activity Index rose to 0.21 in May, versus economists’ expectations for a reading of 0.20.

The flash reading of Markit PMI manufacturing index rose to a reading of 57.5 in June versus a reading of 56.4 in May. However, economists were expecting a reading of 56.0.

Sales of existing homes rose 4.9% to an annual rate of 4.89 million in May. However, economists were estimating a sales rate of 4.74 million.

Posted-In: Earnings News Eurozone Futures Commodities Economics Intraday Update Markets

© 2014 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

  Most Popular Micron Technology Earnings Preview: Can Momentum Continue? Earnings Expectations For The Week Of June 23: Nike, Walgreen And More Stocks To Watch For June 23, 2014 Morgan Stanley Reiterates On General Electric Following Alstom Board Recommendation #PreMarket Primer: Monday, June 23: BNP Expected To Pay $9 Billion For Sanctions Violations Barron's Recap: 50 Best Annuities Related Articles (CENT + AKS) Mid-Afternoon Market Update: FMC Slips On Weak Outlook; Integrys Energy Shares Surge 'Merger Monday' Deals, Offers And Rejections Mid-Day Market Update: FMC Slips On Weak Outlook; Integrys Energy Shares Surge Mid-Morning Market Update: Markets Edge Lower; Oracle To Acquire Micros For $68/Share Stocks Hitting 52-Week Highs Morning Market Movers

Yellen: Economy will grow faster in 2014

Federal Reserve Chair Janet Yellen told Congress Wednesday that she expects economic growth to accelerate this year despite the anemic first quarter but the recent housing market slowdown "could prove more protracted than currently expected."

She also repeatedly refused to provide even a broad time frame for the Fed's first increase in its benchmark short-term interest rate after her comments in March roiled financial markets.

The economy barely grew at all in the first quarter, expanding at a 0.1% annual rate, but Yellen at least partly blamed bad weather.

"Although real GDP growth is currently estimated to have paused in the first quarter of this year, I see that pause as mostly reflecting transitory factors, including the effects of the unusually cold and snowy winter weather," Yellen told the Joint Economic Committee.

Still, Yellen said: "Looking ahead, I expect that economic activity will expand at a somewhat faster pace this year than it did last year." The economy grew 2.6% in 2013.

But Yellen said housing activity has "remained disappointing so far this year and will bear watching." She added, "The recent flattening out in housing activity could prove more protracted than currently expected rather than resuming its earlier pace of recovery."

Her somewhat ominous cautionary note on the housing market could be significant because the sector's recovery was expected to strengthen this year and help fuel a more rapid economic recovery. Instead, housing sales and new home construction have slowed dramatically and economists say weather is only partly to blame. They cite rising prices and mortgage rates that have made homes less affordable, still-tight lending standards and low housing inventories.

Yellen identified housing as one of the two main risks to the Fed's generally positive outlook, along with "adverse developments abroad, such as geopolitical tensions or an intensification of financial stresses in emerging market economies." Such developments, she sai! d, "could undermine confidence in the global economic recovery."

Yellen declined to be specific about when the Fed will begin to raise its benchmark short-term interest rate, now near zero, despite being pressed repeatedly by JEC Chairman Kevin Brady, R-Texas.

"There is no mechanical function or timetable for when that will occur," she said. "There is no specific timetable for doing that."

Most Fed policymakers project the Fed's first rate hike will occur sometime next year. Stocks dove after Yellen suggested at a March news conference that the first rate increase could come in early 2015, and she appeared determined Wednesday to avoid hemming herself in to even a broad time frame. She said Fed policymakers project that the Fed will begin to raise the rate in 2015 or 2016.

A frustrated Brady assailed Yellen for refusing to be specific, recalling that Fed officials incorrectly assured lawmakers in the mid-2000s that the housing market was not poised for collapse and interest rates were at proper levels. "It just strikes me that this don't-worry-be-happy monetary policy is not working," he said.

Yellen also noted that the Fed is gradually reducing its government bond-buying as the economy and labor market have strengthened. The monthly bond purchases, aimed at lowering long-term interest rates and stimulating the economy, have been pared to $45 billion from $85 billion in December. Yellen said the purchases will likely be halted sometime in the fall, barring a "notable" change in the economic outlook.

Some Fed policymakers have voiced concerns that the benefits of the program have diminished since it began in September 2012, while the risks, such as creating bubbles that could burst in some markets, have grown. The purchases have driven many investors to high-risk assets, such as junk bonds and certain real estate investments.

Yellen said: "Some reach-for-yield behavior may be evident, for example, in the lower-rated corporate debt markets," suggesting that Fed of! ficials a! re carefully monitoring the developments. She added that leveraged loans and high-yield bonds have "expanded briskly, spreads have continued to narrow, and underwriting standards have loosened further."

Yellen said the increased risk investors are taking "appear modest to date — particularly at the largest banks and life insurers."

She added: "More generally, valuations for the equity market as a whole and other broad categories of assets, such as residential real estate, remain within historical norms."

Yellen also addressed concerns that several rounds of Fed bond-buying since the 2008 financial crisis have infused more than $3 trillion into the economy, possibly stoking eventual inflation that the Fed will be hard-pressed to tame.

"I do believe that we have the tools, as well as the the willingness and determination, to remove monetary accommodation at the appropriate time to avoid overshooting our (annual 2%) inflation objective," she said.

Yellen cited long-term unemployment as a lingering burden on the economy despite the rapid fall in the overall jobless rate to 6.3% from 8.1% in August 2012. About 35% of the unemployed have been out of work at least six months. While some economists fear many of those Americans will never work full-time again, Yellen said most should get jobs as the economy improves.

"I have no doubt that if growth in the economy picks up … then long-term unemployment will come down too," she said.

6 Things That New Mothers and Infants Can Live Without

Getty Images When our son was born healthy but early, I wasn't prepared. So my cousin Karen, mother of two, welcomed us home from the hospital with three huge bags of bottles, diapers, wipes and a rainbow of terrycloth onesies, which were Ben's fashion trademark during his first three months on earth. Within a few weeks, however, my house became crowded with baby stuff -– bottle warmers, bouncies, jungle gym mats and baby swings that crowded our already crowded house. I figure the shelf life for each item was two to three months before Ben outgrew the need or desire to use it. Some, I used twice before deciding they weren't worth the space they took up. Consider these unnecessary items: Wipe warmer ($20-$25): A wipe warmer is a heated, plastic container that keeps diaper wipes toasty. It appeals to our desire to give baby every comfort but really is an over-the-top luxury that no one needs. Some wipes tear when you pull them through the dispensing hole. And if your baby gets used to a warm wipe on his bottom at home, good luck changing a diaper when you're away from the house and he has to endure the horror of a room-temp wipe. Baby detergent: You don't need an expensive baby detergent (77 cents per fluid ounce) to protect baby's delicate skin. Instead, buy any brand-name detergent marked "free and clear," (23 cents per ounce) meaning it lacks perfumes and dyes that can irritate new skin. Bassinet ($35 to $300): It's a frilly and a pretty place to keep a newborn when showing him off to relatives or keeping him near you at night during his first month. But, a bassinet won't hold a growing baby for long. So, don't shell out big bucks on this short-time sleeping solution. Instead, invest in a great crib, which will be your baby's sleeping place for years. Baby food processor ($100 to $150): You can prepare baby food in any blender or mini-processor on your counter. Some baby food processors contain a heating mechanism that steams or warms baby food, which you can easily do on your range or in your microwave, so long as you check the temp before feeding it to junior. Expensive bedding ($79 to $250): Don't waste money on fancy crib bedding for a newborn. Bumpers and quilts are hazards to newborns who can easily get tangled or trapped in them. Whatever bedding you chose will likely become soiled with spit up and other bodily excretions that come from infants. The only thing you need is a fitted sheet and snug, terrycloth sleepers that keep baby warm and safe at night. Baby bathtub ($20 to $50): You're washing and wiping your baby all day long, so you don't need to bathe your baby every day. In fact, most experts say washing baby more than three times a week can dry out their sensitive skin. Sponge baths are recommended until the umbilical cord falls off. After that, you can bathe baby in a sink just as well as a baby tub. Warning: Never leave baby alone -– even for a second -– during bath time. More from Lisa Kaplan Gordon
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How to Lower Your Property Tax Bill

By Hal M. Bundrick

NEW YORK (MainStreet) The U.S. real estate market may be enjoying a bit of a recovery, but the fact remains that a lot of homeowners still have quite a bit of ground to cover before regaining their home's value lost during the recession.

And that may mean you're paying too much in property taxes. Your annual property tax bill may not truly reflect current and perhaps lower local home values.

Ilyce Glink, a personal finance expert and managing editor of the Equifax finance blog, says homeowners should be proactive and make a compelling case to their tax assessor's office if they believe, and have proof, that their property taxes should be lower. "If your home has lost value during the last six or seven years, you should be able to get your property taxes reduced," says Glink. "You can do this by creating a market analysis of other homes in the neighborhood that are in the same tax category as yours." Most homeowners receive their local property tax bills just after the New Year and have a short window of only 30 to 45 days in which to file an appeal after receiving the notice. Glink says that with limited time, you will have to get right to work, researching the recent sale prices for similar homes in your area and comparing each home's tax bill with yours. Taking an exterior snapshot of each "comp" can help you make your case to the tax assessor's office. "Each real estate parcel is given a PIN, and this PIN is used when levying property taxes," adds Glink. "You'll need your PIN to assess the value of your home. You can look it up online or through your local tax assessor's office. You should also obtain the PINs of homes in the area that are comparable to yours." She says you will also want to check with the local assessor's office to determine your county's specific property tax appeal rules before pitching the reassessment. "It only takes one foreclosure in a neighborhood to drop property prices by 20%, 30%, or even 50%," says Glink. "If you have distressed homes in your area, it's certainly possible that your own home's value has also gone down and that your tax bill should be lower." --Written by Hal M. Bundrick for MainStreet

Top Performing Industries For September 17, 2013

At 10:15 am, the Dow surged 0.32% to 15,544.88, the broader Standard & Poor's 500 index moved up 0.36% to 1,703.68 and the NASDAQ composite index gained 0.44% to 3,734.21.

The industries that are driving the market today are:

Medical Practitioners: This industry jumped 2.82% by 10:15 am. The top performer in this industry was LCA-Vision (NASDAQ: LCAV), which rose 2.9%. LCA-Vision's trailing-twelve-month revenue is $91.12 million.

Computer Peripherals: This industry rose 2.21% by 10:15 am ET. The top performer in this industry was Key Tronic (NASDAQ: KTCC), which gained 0.3%. Key Tronic's trailing-twelve-month ROE is 14.57%.

Electronics Stores: This industry moved up 1.16% by 10:15 am. The top performer in this industry was Conns (NASDAQ: CONN), which gained 1.3%. Conns' PEG ratio is 0.87.

Catalog & Mail Order Houses: The industry gained 1.13% by 10:15 am. The top performer in this industry was Mojo Organics (OTC: MOJO), which gained 6.6%. Mojo Organics shares have jumped 361.54% over the past 52 weeks, while the S&P 500 index has gained 16.18% in the same period.

5 Stocks Set to Soar on Bullish Earnings

DELAFIELD, Wis. (Stockpickr) -- Short-sellers hate being caught short a stock that reports a blowout quarter. When this happens, we often see a tradable short squeeze develop as the bears rush to cover their positions to avoid big losses. Even the best short-sellers know that it's never a great idea to stay short once a bullish earnings report sparks a big short-covering rally.

>>5 Stocks Poised for Breakouts

This is why I scan the market for heavily shorted stocks that are about to report earnings. You only need to find a few of these stocks in a year to help enhance your portfolio returns -- the gains become so outsized in such a short time frame that your profits add up quickly.

That said, let's not forget that stocks are heavily shorted for a reason, so you have to use trading discipline and sound money management when playing earnings short-squeeze candidates. It's important that you don't go betting the farm on these plays and that you manage your risk accordingly. Sometimes the best play is to wait for the stock to break out following the report before you jump in to profit off a short squeeze. This way, you're letting the trend emerge after the market has digested all of the news.

Of course, sometimes the stock is going to be in such high demand that you risk missing a lot of the move by waiting. That's why it can be worth betting prior to the report -- but only if the stock is acting technically very bullish and you have a very strong conviction that it is going to rip higher. Just remember that even when you have that conviction and have done your due diligence, the stock can still get hammered if The Street doesn't like the numbers or guidance.

>>5 Rocket Stocks Ready for Blastoff

If you do decide to bet ahead of a quarter, then you might want to use options to limit your capital exposure. Heavily shorted stocks are usually the names that make the biggest post-earnings moves and have the most volatility. I personally prefer to wait until all the earnings-related news is out for a heavily shorted stock and then jump in and trade the prevailing trend.

With that in mind, here's a look at several stocks that could experience big short squeezes when they report earnings this week.

Lindsay

My first earnings short-squeeze trade idea is water management and road infrastructure products and services provider Lindsay (LNN), which is set to release numbers on Thursday before the market open. Wall Street analysts, on average, expect Lindsay to report revenue of $155.68 million on earnings of 91 cents per share.

The current short interest as a percentage of the float Lindsay is extremely high at 21.3%. That means that out of the 12.56 million shares in the tradable float, 2.67 million shares are sold short by the bears. This is a huge short interest on a stock with a low tradable float. Any bullish earnings news could easily set off a monster short-squeeze for shares of LNN post-earnings.

>>5 Stocks Spiking on Big Volume

From a technical perspective, LNN is currently trending above its 50-day moving average and just below its 200-day moving average, which is neutral trendwise. This stock has been downtrending badly for the last month, with shares plunging lower from its high of $90 to its recent low of $78.75 a share. During that move, shares of LNN have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of LNN have started to bounce off that $78.75 low and it's starting to move within range of triggering a near-term breakout trade post-earnings.

If you're bullish on LNN, then I would wait until after its report and look for long-biased trades if this stock manages to break out above its 200-day moving average at $81.71 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 133,886 shares. If that breakout hits, then LNN will set up to re-test or possibly take out is next major overhead resistance levels at $84 to $87 a share. Any high-volume move above $87 will then give LNN a chance to tag $90 a share.

I would simply avoid LNN or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below its 50-day at $78.89 a share and below some near-term support at $78.75 a share with high volume. If we get that move, then LNN will set up to re-test or possibly take out its next major support levels at $73 to $70 a share.

Safeway

Another potential earnings short-squeeze play is food and drug retailer Safeway (SWY), which is set to release its numbers on Thursday before the market open. Wall Street analysts, on average, expect Safeway to report revenue of $8.52 billion on earnings of 16 cents per share.

Just recently, Jefferies initiated shares of Safeway with a hold rating and a price target of $32 per share.

>>3 Huge Stocks on Traders' Radars

The current short interest as a percentage of the float for Safeway is very high at 19.8%. That means that out of the 236.01 million shares in the tradable float, 47.13 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 2.8%, or by about 1.27 million shares. If the bears are caught pressing their bets into a bullish quarter, then shares of SWY could soar sharply higher post-earnings as the bears rush to cover some of their bets.

From a technical perspective, SWY is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong for the last three months, with shares pushing higher from its low of $22.19 to its recent high of $32.72 a share. During that move, shares of SWY have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of SWY within range of triggering a near-term breakout trade post-earnings.

If you're in the bull camp on SWY, then I would wait until after its report and look for long-biased trades if this stock manages to break out above some near-term overhead resistance at $32 a share and then once it takes out its 52-week high at $32.72 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 5.11 million shares. If that breakout triggers, then SWY will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that move are $40 to $42 a share.

I would simply avoid SWY or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops back below some key near-term support at $30 a share with high volume. If we get that move, then SWY will set up to re-fill some or its entire previous gap up zone from September that started at $28 a share. If that gap gets filled to the downside, then SWY could easily tag its 50-day at $27.75 a share.

Bank of the Ozarks

One potential earnings short-squeeze candidate is banking player Bank of the Ozarks (OZRK), which is set to release numbers on Thursday after the market close. Wall Street analysts, on average, expect Bank of the Ozarks to report revenue of $69.57 million on earnings of 60 cents per share.

>>5 Cash-Hoarders to Triple Your Gains

The current short interest as a percentage of the float for Bank of the Ozarks is pretty high at 9.7%. That means that out of the 31.18 million shares in the tradable float, 3.16 million shares are sold short by the bears. This is a decent short interest on a stock with a relatively low float. Any bullish earnings news could easily spark a sharp short-covering rally for shares of OZRK post-earnings.

From a technical perspective, OZRK is currently trending above its 200-day moving average and just below its 50-day moving average, which is neutral trendwise. This stock has been trending sideways for the last two months, with shares moving between $45.05 on the downside and $48.94 on the upside. Any high-volume move above the upper-end of that range could trigger a solid breakout trade for shares of OZRK post-earnings.

If you're bullish on OZRK, then I would wait until after its report and look for long-biased trades if this stock manages to break out above its 50-day moving average of $47.38 a share and then once it takes out its 52-week high at $48.94 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 125,254 shares. If that breakout triggers, then OZRK will set up enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $55 to $60 a share.

I would avoid OZRK or look for short-biased trades if after earnings it fails to trigger that move and then drops back below some key near-term support levels at $46 to $45.05 a share with high volume. If we get that move, then OZRK will set up to re-test or possibly take out its next major support levels at $43 to its 200-day at $42.44 a share.

Micron Technology

Another earnings short-squeeze prospect is global manufacturer and marketer of semiconductor devices Micron Technology (MU), which is set to release numbers on Thursday after the market close. Wall Street analysts, on average, expect Micron Technology to report revenue of $2.70 billion on earnings of 24 cents per share.

Just recently, Citigroup raised its price target on shares of Micron to $30 per share from $19 per share, citing higher DRAM price assumptions, and reiterated its buy rating on the stock.

>>4 Tech Stocks Rising on Unusual Volume

The current short interest as a percentage of the float for Micron Technology is pretty high at 10.9%. That means that out of the 1.03 billion shares in the tradable float, 111.99 million shares are sold short by the bears. The bears have also been increasing their bets from the last reporting period by 4.5%, or by about 4.86 million shares. If the bears are caught pressing their bets into a strong quarter, then shares of MU could explode higher post-earnings as the bears jump to cover some of their short positions.

From a technical perspective, MU is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong for the last six months, with shares moving higher from its low of $9.07 to its recent high of $18.85 a share. During that uptrend, shares of MU have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of MU within range of triggering a near-term breakout trade post-earnings.

If you're bullish on MU, then I would wait until after its report and look for long-biased trades if this stock manages to break out above its 52-week high at $18.85 a share with high volume. Look for volume on that move that hits near or above its three-month average action of 43.01 million shares. If that breakout triggers, then MU will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that move are $23 to $25 a share.

I would simply avoid MU or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below some key near-term support at $17 a share with high volume. If we get that move, then MU will set up to re-test or possibly take out its next major support levels at its 50-day moving average of $15.36 a share to $13 a share.

E2open

My final earnings short-squeeze idea is cloud-based, on-demand software solutions provider E2open (EOPN), which is set to release numbers on Thursday after the market close. Wall Street analysts, on average, expect E2open to report revenue of $17.23 million on a loss of 15 cents per share.

>>4 Tech Stocks Under $10 to Watch

The current short interest as a percentage of the float for E2open is very high at 14.6%. That means that out of the 10.50 million shares in the tradable float, 1.91 million shares are sold short by the bears. This is a large short interest on a stock with a very low tradable float. If the bulls get the earnings news they're looking for, then shares of EOPN could skyrocket higher post-earnings as the bears rush to cover some of their short positions.

From a technical perspective, EOPN is currently trending above both its 50-day and 200-day moving averages, which is bullish. This stock has been uptrending strong for the last five months, with shares moving higher from its low of $12.27 to its recent high of $25.86 a share. During that move, shares of EOPN have been making mostly higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of EOPN within range of triggering a near-term breakout trade post-earnings.

If you're in the bull camp on EOPN, then I would wait until after its report and look for long-biased trades if this stock manages to break out above some near-term overhead resistance at $22.62 a share with high volume. Look for volume on that move that hits near or above its three-month average volume of 112,043 shares. If that breakout triggers, then EOPN will set up to re-test or possibly take out its all-time high at $25.86 a share. If that level gets taken out with volume, then EOPN could hit $30 or higher post-earnings.

I would avoid EOPN or look for short-biased trades if after earnings it fails to trigger that breakout and then drops back below some key near-term support at $21.17 a share with high volume. If we get that move, then EOPN will set up to re-test or possibly take out its next major support levels at $19 to its 200-day at $18.43 a share. Any high-volume move below its 200-day could then out $17 to $16 into range for shares of EOPN.

To see more potential earnings short squeeze plays, check out the Earnings Short Squeeze Plays portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.

RELATED LINKS:

>>5 Stocks Under $10 Set to Soar

>>4 Hot Stocks to Trade (or Not)

>>5 Big Trades to Take Now

Follow Stockpickr on Twitter and become a fan on Facebook.

At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including

CNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.

Is Nuance Communications Dead Money?

Nuance Communications (NASDAQ: NUAN  ) just can't catch a break.

After running up in anticipation that Carl Icahn's investment stake will improve the company's prospects, shares made an about-face following its fiscal second quarter earnings results. To make matters worse, the speech recognition company lowered guidance for the upcoming quarter, pushing shares below pre-Icahn levels. Naturally, these developments haven't eased investor concerns that there could be structural issues with Nuance's business model.

Breaking down the disappointment
For the quarter, Nuance reported non-GAAP revenue of $484 million, which represented an increase of 15.9% year over year, but was sharply below expectations. Analysts were expecting Nuance's revenue would come in around $516 million. Here's how Nuance's business breaks down:

Segment

Revenue

YOY Change

QOQ Change

Percent of Total

Health care	$229.3	53%	5%	47%
Mobile/consumer	$116.2	1%	(12%)	24%
Enterprise	$74.5	(19%)	(11%)	15%
Imaging	$64	5%	7%	13%

Source: Nuance FQ2 Results. Dollars are in millions. YOY = year-over-over. QOQ = quarter-over-quarter.

Nuance blamed poor sales execution and the challenging macro environment in Europe for why the company didn't meet expectations. Still, it wasn't enough to deter the company from announcing a $500 million share repurchase program, which, as the CEO put it, "underscores our confidence in the business and our focus on shareholder value as we expect growth to accelerate in fiscal 2014."

Between all of its business segments, Nuance estimates its total addressable market to be somewhere in the neighborhood of $48 billion. Surprisingly, Nuance's enterprise segment remains its biggest long-term opportunity, which it pegs as a $26 billion opportunity.

Something's not adding up
For a company that's only expected to tap only about 4% of its $48 billion addressable market this year, there seems to be a disconnect between reality and potential. Investors could argue that the company is only getting started and market share will increase in the coming years. This is entirely possible, but some of the numbers to support this belief suggest otherwise.

In the first quarter, which was the same time frame as Nuance's fiscal second quarter, IDC reported a 42% increase in worldwide smartphone shipments year over year. However, Nuance's mobile and consumer business segment, largely driven by smartphone and automotive adoption, only realized a 1% increase in revenue. Nuance CEO Paul Ricci even highlighted that automotive performed quite well. What gives?

Although Nuance has admitted that Apple (NASDAQ: AAPL  ) is a customer, it won't talk specifics about the nature of their agreement. However, it's widely believed that Nuance helps power Siri, Apple's voice-activated personal assistant. During the quarter, Apple sold 37.4 million iPhones, the majority of which support Apple Siri. Samsung, which is also pegged as a Nuance customer, experienced a 61% growth in shipments and shipped over 70 million smartphones. Combined, over 100 million devices were sold during the quarter -- and yet Nuance didn't materially benefit.

The million-dollar answer
During the conference call, Nuance acknowledged that the company is continuing to experience a negative shift in the way that it's compensated. Customers are changing their billing agreements toward usage-based terms, pressuring revenue across the board, indicating that its products are not in as high demand as once believed. The company claims this revenue shift will ultimately build stronger, more predicable revenue streams over the long term, but I beg to differ.

This new approach assumes that end users will want to increase their usage of speech recognition technology. The fact that Nuance could only squeeze out 1% growth on 42% smartphone growth isn't convincing me that this will be the case. After all, taking a horse to water is one thing, but getting it to drink is entirely different. In hindsight, I probably shouldn't have purchased Nuance in the first place.

Nuance's growth story doesn't come without risks, too. The Motley Fool recently published a premium research report to break down what investors interested in Nuance absolutely have to understand before investing. Click here now to grab your copy today.

'Mad Money' Lightning Round: You Have a Winner With Lithia Motors

Search Jim Cramer's "Mad Money" trading recommendations using our exclusive "Mad Money" Stock Screener.

NEW YORK (TheStreet) -- Here's what Jim Cramer had to say about some of the stocks callers offered up during the Mad Money Lightning Round Friday evening:

Exxon Mobil (XOM) : "I'd sell half on Monday and let the rest run."

KeyCorp (KEY) : "I thought the last quarter was just OK. The bank stocks are going up but they didn't have the best quarter." Atlas Pipeline Partners (APL) : "The yield is too high. If you get a bounce next week, trim your position. I like Kinder Morgan (KMI) ." Lithia Motors (LAD) : "This is the best-performing stock in this group. I think you have a winner there." Diebold (DBD) : "They have a lot of good technology in the pipeline, I'd be a buyer." PriceSmart (PSMT) : "I'd rather be in Costco (COST) ." Henry Schein (HSIC) : "That stock is going higher." To read a full recap of "Mad Money" on CNBC, click here. To watch replays of Cramer's video segments, visit the Mad Money page on CNBC. To sign up for Jim Cramer's free Booyah! newsletter with all of his latest articles and videos please click here. -- Written by Scott Rutt in Washington, D.C. To email Scott about this article, click here: Scott Rutt Follow Scott on Twitter @ScottRutt or get updates on Facebook, ScottRuttDC

The Dow Does it Again: A New Record Close as Stocks Inch Higher

The Dow Industrials can thank Wal-Mart Stores (WMT) for helping it reach its 25th record close this year. The index rose more than 40 points or 0.2% to end the day at 17,652.79.

The S&P 500, meanwhile, climbed one point, or 0.05% to end at 2,039.33 and the Nasdaq climbed 5 points, or 0.11% to close at 4,680.14.

Energy stocks suffered a sharp decline, despite a last minute surge by Halliburton (HAL) and Baker Hughes (BHI) amid merger chatter. Oil prices continue to fall, dropping below $75 a barrel today, pressuring the sector.

The yield on the 10-year Treasury note inched down to 2.342% from 2.359% on Wednesday. Yields fall as prices rise. Gold futures added 0.14% to $1,160.70 an ounce.

In corporate news, lower gasoline prices helped Wal-Mart report its first sales increase since 2012. But the retailer gave a less optimistic outlook for the year. Still, Wal-Mart shares rose 4.7% to close at $82.94.

J.C. Penney (JCP) fell 8.5% after it reported a narrower third-quarter loss.

Berkshire Hathaway (BRK.A) rose 0.55% after it agreed to acquire the Duracell battery business from Procter & Gamble (PG). P&G fell almost 1%.

And finally, reports of deal talks between Hasbro (HAS) and DreamWorks Animation (DWA) sent the movie studio soaring more than 14% to close at $25.52. Hasbro fell 4.3%.

MarketAxess Holdings Inc.: Wall Street Has Fourth-Quarter Results Wrong

MarketAxess (NASDAQ: MKTX  ) published its third-quarter results (link opens a PDF) this morning, and as the following table shows, the numbers were disappointing -- by Wall Street's standards. The fixed-income trading platform missed on both revenues and earnings per share. Those misses have short-term investors spooked today, and shares are down around 5.5%. Long-term investors, on the other hand, ought to be a little more sanguine. I don't see any signs that the business franchise is impaired, and, although investors will need to continue monitoring potential competitors and, particularly, structural developments in the bond markets, the latest set of results are well within the bounds of normal business fluctuations.

 

Actual Results and Year-on-Year % Growth

Analysts' Consensus Estimate

Revenues	$64.2 million 5%	$64.9 million
Adjusted EPS	$0.46 7%	$0.47

Source: Company documents, Thomson Reuters I/B/E/S

Putting the revenue slowdown in perspective
Yes, year-over-year revenue growth decelerated in the third quarter, to 5.1%, but that's to be expected in light of what CEO Rick McVey referred to as a "summer seasonal slowdown... and heavy new issue calendar" (MarketAxess facilitates secondary market trading, rather than new issues). Keep in mind the context: Transaction fees in U.S. High Grade bonds -- MarketAxess' largest segment -- were down 11.2% year over year in the third quarter on lower volume and unit fees (crucially, market share was relatively stable at 14.6% versus 14.9%.) However, "Other Credit" (junk bonds, emerging markets, and eurobonds, etc) made up the shortfall, with transaction fees surging 32.6%, which contributed to record commission revenues of $54.5 million (up 5.1%).

Note that over the nine-month period ending on Sept. 30, revenues rose 8%, which is consistent with the 8.5% long-term growth assumption that Hidden Gems co-advisor Andy Cross made when he re-recommended MarketAxess last July.

Below revenues, costs were broadly in line with the company's long-term goals, yielding a very healthy operating profit margin of 44%, up from 43.2% (adjusted) in the prior year period. Even though MarketAxess is a growth company, it has the profitability and the financial flexibility (no debt!) to return some of those profits to its shareholders, repurchasing over 200,000 shares in the quarter at an average price of approximately $55.35 (not to mention the $0.16 per share quarterly dividend).

Don't overreact to volatility
While investors aren't reacting well to these results, it looks to me like they're overreacting to the natural course of a business that contains some inherent volatility -- volatility that can swing to produce positive effects, too. As McVey mentioned on the conference call Wednesday morning: "The first few weeks [of the fourth quarter] represent a meaningful pickup in secondary [trading] activity... This is another environment in which we're getting greater volatility and greater interest in electronic trading." He also went to note that "based on the trends we're seeing so far this month, we would expect a modest increase in market share over the third quarter average."

I see no reason for long-term investors to alter their stance on MarketAxess -- it's a solid franchise, led by competent managers that are focused on opportunities for long-term growth.

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Should You Stay Away From Avon?

In this article, let's take a look at Avon Products Inc. (AVP), a $5.47 billion market cap company, which is the world's leading direct marketer of cosmetics, toiletries, fashion jewelry and fragrances, with about 6 million sales representatives worldwide.

New Management

The company failed to turnaround the business and had regulatory problems, including some allegations of bribery in China. As a result, it had replaced the principal executives of the firm. Then, it planned a $400 million cost savings program in order to become profitable. The plan includes personal reductions exiting some markets such as South Korea and Vietnam, cutting losses in regions and businesses in order to achieve highest returns. Apart from exiting South Korea and Vietnam, the firm is cutting ties with Silpada, which we think is the right decision. Silpada was acquired for $650 million in 2010, so the company will have written off about 90% of the purchase price.

Amid all the efforts made, some things are still needed, like investments in technology, infrastructure, while developing its portfolio. We say this because the firm had underinvested in technology for years. As a matter of fact, the management plans to spend $150-200 million over three years.

Talented People

The company hired a top manager from the outside to lead operations. Pablo Munoz, who had a vast experience in Tupperware's domestic operations, should contribute to revert the situation.

Return Reduction

Avon didn´t generate consistent improvement, so returns on invested capital were reduced. For example, between 2005 and 2012, returns declined 24% on average. The part most important is that we believe this can continue in the next decade.

Revenues, Margins and Profitability

Looking at profitability, revenues decreased by 12.77% and earnings per share decreased in the most recent quarter compared to the same quarter a year ago ($0.04 vs $0.19). The net income has decreased by 41.2% year over year, falling from $32.3 million to $19 million. 

Finally, let´s compare the best measure of performance for a firm's management: the return on equity. The ROE is useful for comparing the profitability of a company to that of other firms in the same industry.

Ticker	Company	ROE (%)
AVP	Avon Products	-21.54
USNA	Usana Health Sciences Inc	29.22
IPAR	Inter Parfums Inc	4.54
RDEN	Elizabeth Arden Inc	-29.49
MED	Medifast Inc.	21.91
	Industry Median	8.35

The company has a current ROE of -21.54% which is lower than the industry median and the one exhibited by Inter Parfums Inc. (IPAR). In general, analysts consider ROE ratios in the 15-20% range as representing attractive levels for investment. So for investors looking those levels or more, Usana Health Sciences (USNA) and Medifast (MED) could be options. It is very important to understand this metric before investing and it is important to look at the trend in ROE over time.

Relative Valuation

In terms of valuation, the stock sells at a price-to-book ratio of 5.76x, indicating a premium versus the industry average of 1.93x while the price-to-sales ratio of 0.58x is below the industry average of 1.09x.

Final Comment

Despite its weaknesses, we think the company has a well-known brand, a global geographic reach and an attractive business model.

Investors would be making a short-sighted error not viewing Avon for what it is, which has a bright long-term future.

Hedge fund gurus like Ray Dalio (Trades, Portfolio), Ken Fisher (Trades, Portfolio) and Murray Stahl (Trades, Portfolio) sold out this stock in the second quarter of 2014, while Joel Greenblatt (Trades, Portfolio), Jeff Auxier (Trades, Portfolio) and Jim Simons (Trades, Portfolio) have reduced their positions.

Disclosure: Omar Venerio holds no position in any stocks mentioned

Also check out: Jeff Auxier Undervalued Stocks Jeff Auxier Top Growth Companies Jeff Auxier High Yield stocks, and Stocks that Jeff Auxier keeps buying Jim Simons Undervalued Stocks Jim Simons Top Growth Companies Jim Simons High Yield stocks, and Stocks that Jim Simons keeps buyingAbout the author:Omar VenerioWe provide independent fundamental research and hedge fund and insider trading focused investigation.

Currently 3.00/51 Saturday, December 20, 2014 Ho-Hum, Another Boring Day of Little Volume in the Markets NEW YORK (TheStreet) -- Another boring trading day in the stock market on Thursday. The S&P 500 Trust Series ETF (SPY) volume did not even trade 60 million shares. The volume came in at 56 million shares. After being up for most of the day, the DJIA closed lower by 2.83 points at 17083.80 and the Standard & Poor's 500 was up 0.97 at 1987.98. The Nasdaq was lower by 1.59 points at 4472.11 and the Russell 2000 was down 1.85 at 1156.26. All in all, a nothing day. Read More: Cramer: Every Which Way But Short Gold, which is up 7% for the year to date, had its fifth consecutive down day. On a down open Friday it will be in oversold territory within a "Trend Bullish" condition. So do not get to excited that Wall Street pundits are starting to become bearish on Gold. It is only a correction. Gold is within a day or two of a move higher. The Select Sector Utilities ETF (XLU) continues its bullish performance, up 12.5% YTD. Again, it continues to signal a growth slowing economy, along with the Barclays 7-10 Year Treasury Bond Fund (IEF), which is up 4.3% YTD. An interesting sector that has been bullish in 2014, the semiconductor sector, may be signaling something negative on the horizon. Broadcom (BRCM), Intel (INTC)  and Maxim Integrated Products (MXIM) have not been able to hold their post earnings gains. MXIM is getting clobbered in after-hours trading Thursday. As we continue to navigate this stock market in the second half of 2014, traders must continue to be cautious. This volatile market is not for anyone who does not have a risk management process. The lack of liquidity will eventually become a major problem for the markets. At this moment in time, the hedge funds are comfortable with shorting at the lows and covering at the highs. That will change. My S&P 500 daily trading range on Thursday was Buy Trade-1962 and Sell Trade-1994. The S&P high for the day was 1991.39. So we are at the top end of the trading range. Traders should not buy up here. That's how the process works. Buy low and sell high.      Read More: Pandora Will Be a Penny Stock Someday Soon as Spotify, iTunes Thrive On Thursday, we sold our long position in Arcos Dorados Holdings (ARCO) for nearly a 2% gain and covered our Microsoft (MSFT) short for a nice gain. We continue to hold Inovio Pharmaceuticals (INO) long. We started a short position in Glu Mobile (GLUU) on an inside upper channel break to the downside and started Under Armour (UA) long on an upper channel break to the upside.  These positions can be found at www.strategicstocktrade.com.   At the time of publication the author was long INO and UA and short GLUU. This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff. Thursday, December 18, 2014 Disney: Anything But Frozen? Morgan Stanley’s Benjamin Swinburne and team lowered their 3rd quarter earnings estimate on Walt Disney (DIS)–despite the big boost provided by Frozen’s continued success: Yoshikazu Tsuno/Agence France-Presse/Getty Images While F3Q14 faces tough theatrical comps vs. last year (Iron Man 3, Monsters University), robust box to date aided by Captain America and Maleficent should help minimize downside. Frozen will likely be a source of continued upside to Home Video, as well as a key driver of sustained Consumer Products strength. At CP, we forecast double-digit growth to continue for both licensing and retail revs in F3Q, particularly as supply constraints further ease on Frozen merchandise… On a consolidated basis, we raise our Studio, CP and Interactive estimates, partly offset by a reduction in ESPN and ABC ad sales. However, lower deferred revenue recognition at ESPN results in our F3Q14 EPS estimate of $1.13 ($1.16 prior). We bump up our PT to $85 (mid-CY15), or 17x forward EPS. Shares of Walt Disney have gained 0.4% to $83.09 at 2:12 p.m. today. Subscribe to: Posts (Atom) Blog Archive ►  2019 (33) ►  March (14) ►  February (19) ►  2018 (16) ►  August (2) ►  July (8) ►  June (3) ►  May (3) ►  2015 (90) ►  July (2) ►  June (10) ►  May (11) ►  April (4) ►  March (15) ►  February (15) ►  January (33) ▼  2014 (225) ▼  December (13) Mid-Day Market Update: FMC Slips On Weak Outlook; ... Yellen: Economy will grow faster in 2014 6 Things That New Mothers and Infants Can Live Wit... How to Lower Your Property Tax Bill Top Performing Industries For September 17, 2013 5 Stocks Set to Soar on Bullish Earnings Is Nuance Communications Dead Money? 'Mad Money' Lightning Round: You Have a Winner Wit... The Dow Does it Again: A New Record Close as Stock... MarketAxess Holdings Inc.: Wall Street Has Fourth-... Should You Stay Away From Avon? Ho-Hum, Another Boring Day of Little Volume in the... Disney: Anything But Frozen? ►  November (5) ►  October (10) ►  September (14) ►  August (6) ►  July (15) ►  June (48) ►  May (33) ►  April (28) ►  March (22) ►  February (10) ►  January (21) ►  2013 (159) ►  December (24) ►  November (24) ►  October (26) ►  September (22) ►  August (21) ►  July (42) ►  2012 (1) ►  May (1) About Me Maryii View my complete profile Simple theme. Powered by Blogger.