If a picture is worth a thousand words then...

I have been a stock market observer and participant for almost 13 years now. However, in all those years I have never seen what I saw in yesterday's (Thursday August 28, 2008) market.

Thursday's regular market trading session and after-market action was unprecedented in it's scope and range. What happened is that most large cap stocks that had a higher closing price at the end of the day closed down by exactly the same dollar amount in after-hours trading.

At first I thought it was some sort of quirk or error by the website or quote provider. However, when I typed in random large-cap stock symbols, the answer turned out the same most of the time. Here are the examples that I found on the internet from Google Finance, Yahoo!Finance and CNNMoney:





In all of the visual examples that I have provided, you should be able to find the source, date, closing price, and the after-hours price. Air Products (APD) was the company in the first three examples and General Dynamics (GD) was in the last two. I cross referenced the data with the New York Stock Exchange after hour system (Arca) and the NASDAQ after hour system and arrived at the same prices.
What I have just shown in the above examples could be found in so many stocks that I got tired of chronicling them all. The anomaly can be found in the following (although incomplete) list of stocks:
  • UTX
  • HON
  • PH
  • MU
  • PG
  • CL
  • ECL
  • TGT
  • COST
  • HD
  • LOW
  • NOC
  • GD
  • RTN
  • COL
  • VZ
  • CAG
  • WWY
  • BDK
  • GIS
  • GPC
  • GT
  • PKI
  • ED
  • ABT
  • MKC

Never before have I seen such broad based market activity that glaringly highlights "management" of the stock market. The scale of such an endeavor, if proven to be "managed," would point to an organization(s) with unlimited resources at its disposal. My only conclusion is that something is brewing and it is beyond the scope of most "average" market participants. Touc.


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    • at Friday, August 29, 2008

    SELL Helmerich and Payne at Market Open

    The time has finally come to issue a SELL recommendation for Helmerich and Payne (HP). The stock has performed wonderfully since the Research recommendation was issued on September 29, 2006. While this company and the oil services industry can go higher than the previous peak our funds could be better employed in other areas.




    HP was recommended when it was trading at $23.03. According to the most recently available data from Morningstar.com, as of the close of market on Tuesday 8/5/2008, the stock closed at $53.95. This stock has provide a total return (price appreciation plus dividend income) of 141.50% or approximately 70.75% annually. If we considered this stock without using total return this stock would have returned 134% or approximately 67.12% annually.


    It is always recommended that when selling a stock, one should not place an order after hours or when the market is closed. This leaves the seller in the position of being vulnerable to the whims of the market makers. Instead, place your sell orders only as a market order during market hours. Some would complain that a market order during market hours might leave some profits on the table. However, I would rather leave some money on the table rather than have it taken away from me by the trades that are placed by institutions and market makers. Touc.

    Disclosures: None

    • at Tuesday, August 12, 2008
    2009 Research Recommendations


    2008 Research Recommendations 2006 Research Recommendations
      at Friday, August 08, 2008

      Research: Supervalu Inc. (SVU) at $25.97

      Today's Research recommendation is on Supervalu Inc. (SVU). According to Yahoo!Finance SVU, "operates as a grocery retailer in the United States. The company operates combination stores, food stores, and limited assortment food stores. Its stores offer various grocery products, general merchandise, health and beauty care products, pharmacy products, fuel, and other items and services." According to Mergent's, SVU has increased it's dividend 35 consecutive years in a row.

      The above table illustrates the perspective that I have on Supervalu Inc. (SVU) as compared to the other Dividend Achievers that are ranked by price closest to their 52-week low. As you can see (when you click on the image) SVU is the only company that is within it's 1 year low and selling below book value. Click on the following link to get a reasonable breakdown by message board poster GOOFERB who does a great job with an industry peer review on SVU.

      The most alarming matter for SVU is the issue of the amount of long-term debt held by this company. Just to reiterate, from the Yahoo!Finance message board post by GOOFERB, the debt situation is as follows:


      "The debt load: SVU’s long term debt is bloated due to its Albertsons acquisition. The company has pared its debt, but with long term debt topping out at about $8.8 billion, it’s significantly higher than KR’s $7.7 billion and SWY’s $6 billion. All three company's have about $250 million in cash. It's apparent that SVU's debt service is eating into the bottom line and it’s the probable reasoning behind Wall Street’s relatively low valuation of its share price."


      With the debt situation in mind, I have to say that when reviewing Valueline Investment Survey's report on SVU over the last 20 years I find that the company has consistently maintained a mean price-to-cashflow of 5 times. According to Valueline, SVU registered a cashflow per share of $7.59 in 2007 which implies a mean price of $37.95.

      According to Valueline, the book value for SVU in 2007 was indicated to be $28.08 in 2007 and is expected to reach $30 and $32 in 2008 and 2009 respectively. Currently, Yahoo!Finance has SVU with a trailing twelve month (ttm) book value of $28.83. This implies a discount of around 9% of book value.

      From a technical perspective, the stock has moved upward from an important support level of $24 back to 1999. If the $24 level holds up this stock will likely trade in a range and/or move higher. SVU must trade above $26.25 and exceed $27.55 in order to give the investor the green light in terms of going back to the $35 level.

      SVU's ability to increase the dividend over the last 35 years along with it's well protected dividend, due to the low payout ratio, suggests that this stock is a great opportunity with limited downside risk. Touc.

      • at Wednesday, August 06, 2008