Wednesday, February 26, 2014

Higher markets on new home sales

Dow climbed 70, advancers over decliners 5-2 & NAZ gained 24.  The MLP index slid a fraction to the 457s & the REIT index inched up a fraction in the 283s.  Junk bond funds did little & Treasuries rose.  Oil rebounded while gold declined.

AMJ (Alerian MLP Index tracking fund)

Treasury yields:

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U.S. 2-year


U.S. 10-year


CLJ14.NYM.....Crude Oil Apr 14102.24 Up 0.41 (0.4%)

GCH14.CMX....Gold Mar 14....1,334.10 Down ...8.70  (0.7%)

Purchases of new homes in the US unexpectedly climbed in Jan to the highest level in more than 5 years, showing underlying strength in the industry even in the midst of harsh weather.  Sales increased 9.6% to a 468K annualized pace, exceeding the highest estimate & the most since Jul 2008, according to the Commerce Dept.  Demand improved in 3 of 4 regions.  The forecast called for 400K.  Dec sales were revised up to 427K from an originally reported 414K pace.  For all of 2013, demand jumped 16.3% to 428K, the most in 5 years.  The median sales price rose 3.4% last month from Jan 2013 to $260K.  The months’ supply of homes declined to 4.7, the fewest since Jun, from 5.2 in Dec.  There were 184K new houses on the market at the end of Jan, the same as in Dec.  Housing starts fell 16% last month to an 880K annualized rate following a revised 1.05M in Dec, the biggest decrease since Feb 2011   Permits for future projects showed a smaller drop, a sign activity may stabilize as the weather improves.

Sales of New Homes in U.S. Unexpectedly Climb to Five-Year High

Cars Sit Parked Outside a Lowe's Cos. Store in Louisville
Photo:   Bloomberg

Lowe's posted a 6.3% profit gain as the housing rebound spurred renovation spending.  The company also announced a plan to buy back $5B in shares.  Q4 EPS rose to 29¢ from 26¢ a year earlier.  Excluding some items, EPS was 31¢, matching the estimate. CEO Robert Novak added workers at the busiest times to take advantage of a surge in home renovations, fueled by rising property values.  Sales at locations open at least a year rose 4.8% for the year & 3.9% in Q4.  Q4 revenue climbed 5.6% to $11.7B, matching the estimate.  EPS this year will be about $2.60 & analysts are projecting $2.64.  The company also announced a $5B share repurchase, in addition to the $1.3B remaining on its current authorization.  LOW growth strategy has shifted to boosting sales at current stores rather than opening new locations.  The one recent exception came last year, when it bought the majority of Orchard Supply Hardware Stores assets, including 72 locations, out of bankruptcy for about $205M.  LOW plans to add about 15 home-improvement & five hardware stores this year.  The stock jumped 2.59.  If you would like to learn more about LOW, click on this link:

Lowe’s Profit Rises 6.3% on Housing Rebound

Lowe's (LOW)

Abercrombie & Fitch posted Q4 profit that topped estimates & said it would buy back $150M in shares in Q1.  EPS excluding restructuring & asset-impairment charges was $1.34 versus the $1.04 estimate.  The company also announced the accelerated share-repurchase program that will be executed in Q1 as part of its existing authorization to buy back 16.3M shares.  The stock surged 6.56 (7%).  If you would like to learn more about ANF, click on this link:

Abercrombie Shares Rise on Profit, Accelerated Buyback

Abercrombie & Fitch

Earnings are coming in favorable, sending stocks higher.  The Ukraine is still a mess.  While it is small in comparison with many countries, a default could have a large impact in the global markets (not to mention political unrest).  More earnings reports will be reported from retailers in the next few days, which should keep stock buyers happy.  Even though the S&P 500 is flirting with a new record, Dow remains down 340 YTD.

Dow Jones Industrials


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