MARKET TALK: After Latest Rally, Ease Up On Fuel Cells
Edited by Thomas Granahan
Of DOW JONES NEWSWIRES
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1:49 (Dow Jones) Fuel-cell names have been on fire, and are acting well
again Friday, no doubt running up on President Bush's energy proposals. But
Michael Sheldon, chief market strategist at Spencer Clark, says there may be
better opportunities to get into this group a couple of months down the
road. The technology and products of these companies are real, but many
won't have profits for some time, and Bush R&D proposals will take a while
to work through Congress, he says. (TG)
1:40 (Dow Jones) Currently trading at better than 38 times trailing
earnings, Gap Inc. (GPS) is typical of retailer stocks that may have gotten
ahead of themselves lately, says Stephanie Hoff, an analyst at Banc of
America Capital Management. "These valuations seem to be anticipating an
economic recovery by the fourth quarter," Hoff says, and the signs of that
recovery aren't yet definite. Hoff adds that since October, retailer stocks
have jumped higher in anticipation of the Fed's successive rate cuts - a
reversal from their historically reactive behavior. (JMC)
1:30 (Dow Jones) Sung Won Sohn, executive VP and chief economist at Wells
Fargo Banks, says the increasing slope of Tsy yield curve is a "good omen"
for stocks. He says in last 20 years, peaks in the slope have "heralded
sizable gains" in equity prices. Within a year of a peak, Nasdaq rose 21%,
S&P jumped 17%, and DJIA went up 13%, he says. (CMN)
1:22 (Dow Jones) Warrants for shares of Radyne ComStream (RADN), which trade
under the symbol RADNW, were up 28% Friday, as some investors apparently
gambled on the company's common stock moving up in the near future. Investor
relations representative Jennifer Pelczarski said generally the company's
common stock, up 5% Friday, and its warrants move more closely in tandem,
but noted that some investors "see the warrants as a way to get in and see
bigger (returns) should the common stock continue to rise." (AMR)
1:12 (Dow Jones) Declaring there's not a quick fix for cruise industry
supply woes, Bear Stearns analyst Jason Ader says high supply growth of
about 12% a year through 2004 for North American fleets should continue to
pressure yields - the money made on each passenger berth - even if the
current weak economy should recover. Less compelling growth prospects and
lower returns will stop shares of Carnival (CCL) and Royal Caribbean Cruises
(RCL) from trading at the high multiples of about two years ago, he says.
(DDO)
1:08 (Dow Jones) The Merrill Lynch 100 Technology Index is up 44% since
early April, which Merrill tech strategist Steve Milunovich says lends
support to April 4 being a bottom for tech stocks. But he says the surge is
probably a "sucker rally in a bear market." Still, the rally could lift the
Merrill tech index up another 20% in the near-term, he says. Milunovich says
tech stocks anticipate the "trough" in the profit cycle by zero to six
months. (PDL)
12:59 (Dow Jones) Economic Cycle Research Institute's weekly Leading Index
rose for the fifth straight time in the week ended May 11. This is a sign
the economy may be averting an outright recession, contrary to the earlier
readings the index had been flashing. (JM)
12:48 (Dow Jones) The Bush energy policy has already proven to be a catalyst
for many alternative power and power technology stocks. FAC/Equities analyst
Sanjay Shrestha doesn't expect the spotlight to fade soon. The group will
get a further charge from the public's heightened awareness of energy
issues, and from rolling blackouts in California and possibly in other parts
of the country, he said. (CCC)
12:39 (Dow Jones) Lehman's Dan Niles upgrades Marvell Technology (MRVL) to
buy, despite lowering the semiconductor company's fiscal 2002 EPS estimate
by a couple cents. "The decrease in EPS is due to lower gross margin
assumptions. Marvell is beginning to see stabilization from leading Gigabit
customers like Foundry (FDRY) and Extreme (EXTR). We believe that Marvell's
strong communications portfolio continues to see wins and is driving the
company through this inventory correction." (GS)
12:23 (Dow Jones) Fed Gov. Meyer is scheduled to testify next Tuesday before
a Senate Banking Subcommittee on "the stock market and its effect on the
economy." Also testifying will be ex-Fed Gov. Angell and Goldman Sachs'
McKelvey. (JC)
12:11 (Dow Jones) Analysts are aware of forex market's lack of direction and
see struggling worldwide pursuit of economic growth as main factor in
current forex market lethargy and likely future movement. JPY, rather than
EUR, is seen as key to next round of forex moves. (JRH)
12:04 (Dow Jones) Thinly traded Lands' End (LE) is up 5.6% after
BusinessWeek Online, citing sources close to the situation, reports Chairman
Gary Comer might be shopping the company around and last fall talked to
Sears Roebuck (S). Comer, 73, would be looking for an exit strategy,
BusinessWeek says, but as the controlling holder - he owns more than 50% -
he may also want too high a premium to the current share price of $37. A
buyer would get the indisputable e-tailing expertise of Lands' End, but
there are risks, not the least of which, is the profit viability of online
selling. Also, LE had a comeback 1Q, but catalog business remains volatile.
(GC)
11:55 (Dow Jones) For the ninth time in the past 12 months, Robertson
Stephens analyst Harry Curtis increased his EPS estimate for Internationl
Game Technology (IGT). He upped his fiscal 2002 view on the slot machine
maker Friday to $3.24 a share from $3.05, primarily due to its shift toward
100% ownership of progressive-system games. (DDO)
11:43 (Dow Jones) Make no mistake, despite the hype over electronic stock
market Instinet's (INET) IPO, its trading shows investors are still wary
about tech and financial issues and prefer those boring, Old Economy IPOs.
Instinet, which came to market amid much fanfare, is up about 25%, a strong
debut indeed. But contrast that with Global Power Equipment (GEG), a
turbine-equipment maker, which is up 50% on the NYSE. (RJH)
11:38 (Dow Jones) Niagara Mohawk's (NMK) 1,140-MW Nine Mile Point 2 nuclear
unit is expected to reach full power Monday, a source familiar with the
unit's operations said. A utility spokesman wasn't immediately available
Friday to confirm the information. (KAM)
11:32 (Dow Jones) Look for minor correction in stocks Friday, then
resumption of the rally next week, says Hilliard Lyons technician Dick
Dickson. Gains may be limited, though, given overbought condition of market
in intermediate-term (4-6 weeks). Look for DJIA test around 11400, 1350-70
on S&P 500, and 2500-2600 on Nasdaq. (TG)
11:21 (Dow Jones) Nortel Networks (NT) is basically flat, following report
of Alcatel's (ALA) interest in merging with Lucent (LU), indicating
investors don't see Nortel as a takeover target in the near future. With a
market cap of $45 billion, Nortel would be tough to swallow for any company
in good times let alone now. "I don't see anything imminent," says Paul
Sagawa, analyst at Sanford C. Bernstein. Still, if there was time to acquire
Nortel, now could be it, analysts speculated. CEO John Roth is set to retire
in April 2002, and the company hasn't identified a successor. Nortel no
longer has a large shareholder, since BCE (BCE) spun off most of its stake
in Nortel last year. Analysts suggest that Germany's Siemens AG (SI) or
Sweden's Ericsson (ERICY) would likely have the most interest in Nortel.
(BED)
11:16 (Dow Jones) Look for something in the neighborhood of a 1% revised 1Q
GDP, says Bear Stearns. Despite the jump in imports seen in the trade data,
year-over-year import growth fell to a nine-year low at 2.8%. (MSD)
(END) DOW JONES NEWS 05-18-01
01:50 PM
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