Wednesday, December 22, 2010

Markets edge higher on positive economic data

In light trading, Dow was up 26, advancers over decliners 3-2 & NAZ sideways gained 3 due to Apple (AAPL) making up to a new record high.  Bank stocks remain market leaders taking the Financial Index to a new high since last May.


Value215.27One-Year Chart for S&P 500 FINANCIALS INDEX (S5FINL:IND)
Change  2.35  (1.1%)

The MLP Index was up 2½ to the 357s & the REIT index rose 1+ to the 221s.  Junk bond funds were a little higher.  Treasuries also did little, the yield on the 10 year Treasury was flattish at 3.35%

Treasury yields:

U.S. 3-month
U.S. 2-year
U.S. 10-year

Alerian MLP Index   ---   YTD

Dow Jones REIT Index   ---   YTD

10-Year Treasury Yield Index   ---   YTD

Oil rose over $90 on shrinking oil inventories, a new high in more than 2 years.  Gold is digesting its gains during the year & this decade.

CLG11.NYM...Crude Oil Feb 11...90.54.....Up 0.72  (0.8%)

GCZ10.CMX...Gold Dec 10......1,386.20 ...Down 2.00  (0.1%)

$$ Gold Super Cycle $$  

Walgreens (WAG), a Dividend Aristocrat, announced record earnings & sales for Q1 in fiscal 2011. EPS for Q1 ended Nov 30 increased 26% to 62¢, ahead of 49¢ (per diluted share) last year. Last year’s results include the impact of 3¢ per diluted share in restructuring & restructuring-related costs. “We’re very pleased to report strong earnings growth this quarter,” said WAG CEO Greg Wasson. “Our performance was driven by our continued focus on gross profit margins, cost control and the strategic slowing of our new store openings. As a result of improved merchandising, including promotions and pricing, we saw significant increases in gross profit margins in the front end. We also generated $1.2 billion in cash flow from operations, reflecting our overall strong drugstore performance.”  During Q1, the company bought back $510M in stock as part of its share repurchase programs.  Q1 sales increased 6.0% from the prior-year quarter to $17.3B. Total sales in comparable stores (open at least a year) increased 0.8% in Q1, while front-end comparable store sales increased 0.4%. (Duane Reade stores are not included in any comparable store sales results.)  Prescription sales, accounting for 66% of sales, climbed 5.3%, & prescription sales in comparable stores increased 0.9%. The company filled 202M prescriptions, an increase of 4.6% over last year’s Q1 including 0.8% point due to more patients filling 90-day prescriptions.  WAG increased its retail prescription market share 40 basis points from a year ago to 19.7%.  “We continue to make solid progress on our key initiatives,” said Wasson. “Our performance during the fiscal second quarter is typically driven by Christmas sales and the cold/flu season, which are difficult to predict. In addition, persistent high unemployment makes this a challenging retail environment during the holiday season. December sales once again will be largely influenced by the final days, which makes this an important week. With the convenience of our 7,600 stores open Christmas Eve and Christmas Day, we’re an ideal destination for last-minute shopping needs.”  Duane Reade, a major chain in NYC, acquired in Aug, was included in the financial results.  This is what they a call a blow out qtr, the stock rose 2.02. 

Walgreen Co. Reports 26.5 Percent Increase in Diluted Earnings Per Share to a Record 62 Cents for the First Quarter 2011Business Wire

Walgreen   ---   2 yars

Below are 3 of the higher yielding S&P 500 Dividend Aristocrats.  Pitney Bowes (PBI) has one of the highest yields on the NYSE because many are worried its mail business will go away over time.  But they're expanding overseas & should benefit if corp budgets loosen in an improving economy.  With the recent advance in stock price, the yield has fallen to 5.9%.  Leggett & Plattt (LEG) has recovered from the recession nicely & offers a 4.7% yield.  Kimberley-Clark (KMB) is a major paper company with popular consumer products like Kleenex & Huggies which offers a 4.2% yield.  The S&P 500 Dividend Aristocrat list was reviewed was last week.  3 were added & 3 were dropped for not raising dividends.  These remain in the elite group. 

Pitney Bowes  ---   2 years

Leggett Platt   ---   2 years

Kimberley-Clark   ---   2 years

Today's low volume came in lower than yesterday's at under 0.8B on the NYSE floor.  There is very little going on, many want to hold off making decisions until the new year starts.  This has been nothing short of an outstanding year for gold, MLPs & high yield bonds, a very strange combination.  Others, especially Dividend Aristocrats, have not seen a lot of buying interest.  Maybe that will change next year.

Dow Jones Industrials   ---   YTD

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