One 'Lettter' Stocks Offer Opportunity Several companies with single-letter ticker symbols currently offer potential for value investors, says George Putnam. The editor of The Turnaround Letter stock publication highlights a number of single-letter stocks that have been "beaten down pretty badly and now look particularly appealing." They include Agilent ('A'), Citigroup ('C'), Ford Motor ('F'), Kellogg ('K'), Macy's ('M'), NetSuite ('N'), Qwest ('Q'), Spring Nextel ('S') and AT&T ('T'). 'Singular' values: A, C, F, K, M, N, Q, S, T - BloggingStocks
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"One group of stocks that has always intrigued us are those whose symbols have one letter," notes George Putnam. The editor of The Turnaround Letter explains, "Odd as this idea may at first seem, it actually makes some sense for a deep value investor. These are often old-line companies with well-known brand names. In some cases the single letter symbols were awarded many decades ago."
After reviewing the 19 stocks with single letter symbols (7 are currently unused), Putnam offers six that he says, have been "beaten down pretty badly and now look particularly appealing."'
"Agilent Technologies (NYSE: A), which makes electronic and bio-analytic measuring devices, was spun out of Hewlett-Packard in 1999. Revenues surged in 2000 as did the stock price, reaching a lofty 162.
"But the company subsequently suffered along with its customers in the communications and technology sectors. However, the financials are sound, including strong cash flow that is supporting a $2 billion share buyback, and management has been restructuring and realigning operations for long-term growth.
Agilent Technologies (NYSE: A) provides electronic measurement and bio-analytical solutions to the communications, electronics, life sciences and chemical analysis industries. Its Electronic Measurement segment offers such instruments as data generators, multimeters, and oscilloscopes. The Bio-Analytical Measurement unit sells instruments, software, consumables and services for quantifying the physical and biological properties of substances. Customers include Cisco Systems (NASDAQ: CSCO) and Merck (NYSE: MRK). The firm was a 1999 spin-off of Hewlett-Packard (NYSE: HPQ).
Agilent pleased investors last week, when it announced fiscal Q2 EPS of 51 cents and revenues of $1.46 billion. Analysts had been looking for 48 cents and $1.43 billion. Management also guided Q3 EPS to 52-56 cents (55 cent consensus), Q3 revenues to $1.44-$1.49 billion ($1.46B consensus), FY08 EPS to $2.07-$2.15 ($2.08 consensus) and FY08 revenues to $5.82-$5.93 billion ($5.83B consensus). Needham subsequently reiterated its "buy" recommendation and boosted its price target to $42. Standard & Poor's raised its Agilent outlook from "stable" to "positive".
AMETEK Inc. (NYSE: AME) manufactures and markets electronic instruments and electromechanical devices in North America, Europe, Asia and South America. The firm's Electronic Instruments Group makes testing, monitoring and calibration instruments for the aerospace, transportation, research, industrial and power markets. Its Electromechanical Group produces motors, blowers, fans, heat exchangers and connectors for appliance, defense, medical and computer applications. This group also makes industrial specialty metals. General Electric (NYSE: GE) and Agilent Technologies (NYSE: A) are major competitors.
The firm pleased investors earlier in the week, when it reported Q1 EPS of 62 cents and revenues of $611.2 million. Analysts had been looking for 58 cents and $585.7 million. Management also predicted Q2 EPS of 61-63 cents (62 cent consensus) and FY08 EPS of $2.47-$2.52 ($2.45 consensus). The CEO cited the company's global customer base, its exposure to long-cycle aerospace and power markets, and the full-year impact of recent acquisitions in support of the favorable guidance.
EXFO Electro-Optical Engineering (NASDAQ: EXFO) specializes in the design and manufacture of equipment used by telecommunications carriers, cable television companies and public utilities operators to test and monitor their networks. It also provides light-based systems used in medical device and opto-electronics assemblies, as well as fluorescence microscopy and electrophysiology instruments used in the life sciences sector. Customers include AT&T (NYSE: T) and Nortel Networks (NYSE: NT). Agilent Technologies (NYSE: A) is a major competitor.
The company pleased investors last week, when it reported fiscal Q2 EPS of six cents and revenues of $43.3 million. Analysts had been expecting two cents and $42.3 million. Management also guided Q3 EPS to between four and seven cents (five cent consensus) and Q3 revenues to between $45 million and $48 million ($46.93 million consensus). Further, the firm announced a deal to acquire Internet Protocol applications tester Brix Networks for $28.5 million in cash. RBC Capital Markets and Roth Capital subsequently reiterated "buy" ratings on the stock and declared price targets in the $7-$8 range
Dionex Corporation (NASDAQ: DNEX) manufactures chromatography systems for chemical analysis. The company's devices are used to identify contaminants and impurities in a range of materials from foods and beverages to industrial chemicals. They are also used by life science investigators to separate and identify biological molecules such as amino acids, carbohydrates and proteins. The Dionex sales force is active throughout North America, Europe and Asia. Agilent Technologies (NYSE: A) is a major competitor.
The firm pleased the Street last week, when it reported Q2 EPS of 77 cents and revenues of $98 million. Those figures topped analyst expectations of 72 cents and $91.4 million. The CEO cited solid demand in the chemical/petrochemical and food/beverage markets for the strong quarter. U.S. sales were said to have shown marked improvement. Management also guided Q3 EPS to 66-70 cents (68 cent consensus), Q3 revenues to $92-$96 million ($90.52M consensus), FY08 EPS to $2.62-$2.69 ($2.61 consensus) and FY08 revenues to $363-$370 million ($358.17M consensus). Wedbush Morgan subsequently upgraded the stock from "hold" to "buy".
AMETEK Inc. (NYSE: AME) manufactures and markets electronic instruments and electromechanical devices in North America, Europe, Asia and South America. The firm's Electronic Instruments Group makes testing, monitoring and calibration instruments for the aerospace, transportation, research, industrial and power markets. Its Electromechanical Group produces motors, blowers, fans, heat exchangers and connectors for appliance, defense, medical and computer applications. The group also makes industrial specialty metals. General Electric (NYSE: GE) and Agilent Technologies (NYSE: A) are major competitors.
The firm pleased investors last week, when it reported fiscal Q4 EPS of 57 cents and revenues of $583.3 million. Analysts had been looking for 53 cents and $553 million. Management also predicted FY08 EPS of $2.40-$2.45, versus Street consensus of $2.43. Friedman Billings subsequently boosted its rating on the shares to "outperform".
Xilinx (NASDAQ: XLNX) develops and markets integrated circuits that users program themselves to perform specific functions. The firm also offers a broad range of design software helpful in customizing its chips. Clients are primarily original equipment manufacturers in the telecommunications, computer, aerospace, industrial control and networking markets. Agilent (NYSE: A), Cisco Systems (NASDAQ: CSCO) and IBM (NYSE: IBM) are among the firms using Xilinx devices.
The company had good news for investors last week, when it reported fiscal Q3 EPS of 35 cents and revenues of $474.8 million. Analysts had been looking for 32 cents and $463.6 million. Management attributed the solid numbers to strong sales of new products. The company also issued Q4 revenue guidance of about $470-$489 million ($480.64M consensus). XLNX shares popped on the news and then moved into a bullish "flag" consolidation pattern. Prices frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.
Verigy Ltd (NASDAQ: VRGY) is a leading manufacturer of advanced test systems for the flash memory, high speed memory and system-on-a-chip segments of the semiconductor industry. Verigy's scalable systems are used by chip makers in the design validation, characterization and high volume testing of their products. An Agilent Technologies (NYSE: A) spin-off in 2006, the firm traces its roots back to Hewlett-Packard (NYSE: HPQ).
The company surprised the Street earlier in the week, when it reported fiscal Q4 EPS of 58 cents and revenues of $209 million. Analysts had been expecting 50 cents and $200 million. Management also guided Q1 EPS to 49-54 cents (38 cent consensus) and Q1 revenues to $195-205 million ($180.27M consensus). Stifel Nicolaus subsequently boosted its recommendation to "buy" and declared a $32 price target.
Agilent Technologies Inc. (NYSE: A) shares are trading higher today after the company posted a higher quarterly profit yesterday after the close. Net profit rose to $180 million, or 46 cents per share, from $149 million, or 36 cents a share, a year earlier. Revenue rose to $1.45 billion from $1.33 billion a year earlier and ahead of the average Wall Street forecast for $1.41 billion. If you think that the company won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on A.
Agilent hit a one-year low of $30.26 in March, and made its one-year high of $40.42 in July. A opened this morning at $34.99. So far today the stock has hit a low of $34.93 and a high of $36.80. As of 11:00, A is trading at $36.80, up $3.10 (9.2%). The chart for A looks bearish and steady, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.
For a bullish hedged play on this stock, I would consider a January bull-put credit spread below the $32.50 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 10.4% return in just 9 weeks as long as A is above $32.50 at January expiration. Agilent would have to fall by more than 11% before we would start to lose money. Learn more about this type of trade here.
A hasn't been below $32.50 by more than a few cents since March and has shown support around $33 recently. This trade could be risky if the stock's earnings aren't quite as rosy as they seem at first glance, but even if that happens, this position could be protected by support the stock formed between $32.50 and $35 over the past four months. Brent Archer is an options analyst and writer at Investors Observer.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in A.
Tech stocks seem to be the ones to watch. Among companies reporting earnings next week are Applied Materials Inc. (NASDAQ: AMAT) and Agilent Technologies Inc. (NYSE: A), and here are quickie earnings previews for them.
Applied Materials' five-year earnings per share growth of 45.7 percent is better than the semiconductors industry average and the S&P 500. Applied Materials beat earnings expectations in the first three quarters of 2007. When it reported third quarter results back in August, earnings were 35 cents per share, three cents better than the consensus estimate of analysts surveyed by Thomson Financial, as well as the actual EPS in the same period of the previous year. For the fourth quarter, analysts expect only 29 cents per share, or $1.25 for the full year.
The analysts' consensus recommendation has been to buy Applied Materials for the past six months, but a closer look shows that most analysts are split between buy and hold. The share price has been slipping since reaching a 52-week high of $23.00 in August, almost falling during the week's Nasdaq volatility back to its 52-week low of $17.33 from a year ago.
For news about tech stocks that could influence Applied Materials' results, check out BloggingStocks' Applied Materials coverage.
Once generally restricted to university research laboratories, big-ticket instruments like mass spectrometers are now commonly found in a variety of business-oriented environments. One of the leading manufacturers of higher-end instrumentation is headquartered in Milford, Massachusetts.
Waters Corporation (NYSE: WAT) manufacturers scientific instruments used to chemically and physically characterize chemical substances. Its liquid chromatography devices and mass spectrometers separate and identify chemical species. Its thermal analyzers and rheometry instruments determine the physical characteristics of polymers and viscous liquids. Researchers use these systems to develop new drugs, identify the nutritional content of foods, and test the quality of air and water samples. Agilent Technologies (NYSE: A) is a major competitor.
Waters pleased investors last week, when it reported Q3 EPS of 62 cents and revenues of $353 million. Analysts had been expecting 60 cents and $344.5 million. The CEO attributed the solid results to "the ongoing success of our major programs and a generally favorable spending environment." The share price popped on the news and then moved into a bullish pennant consolidation pattern. Stocks frequently exit pennants moving in the same direction they were traveling on entry. In this case, that would be to the upside.
MOST NOTEWORTHY: Viacom, Agilent, AudioCodes and Microsoft were today's noteworthy upgrades:
JP Morgan upgraded shares of Viacom (NYSE: VIA) to Overweight from Neutral as they believe contractual rate increases and distribution of the company's newer networks will drive higher earnings growth in 2008. The firm does not believe this growth is priced into shares.
JP Morgan also upgraded Agilent Technologies (NYSE: A) to Overweight from Neutral and added shares to its Focus List. Shares were upgraded based on its sum-of-the-parts valuation and sees further upside given that strategic buyers are back in the marketplace.
AudioCodes (NASDAQ: AUDC) was raised to Buy from Accumulate at Think Equities, as they expect the company to benefit from the newly acquired CTI squared business, the security gateway business, and traction in the SBC business, with Microsoft's OCS launch of a new driver today.
Goldman added Microsoft Corporation (NASDAQ: MSFT) to its Conviction Buy List, citing valuation and overwhelmingly negative sentiment, and expects shares to trade higher on a better Q1 report.
OTHER UPGRADES:
RBC Capital Markets upgraded Citrix Systems (NASDAQ: CTXS) to Outperform from Sector Perform.
Eaton Corporation (NYSE: ETN) was upgraded to Outperform from Market Perform at Friedman Billings.
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Analysts had been looking for 32 cents and $463.6 million. Management attributed the solid numbers to strong sales of new products. The company also issued Q4 revenue guidance of about $470-$489 million ($480.64M consensus). XLNX shares popped on the news and then moved into a bullish "flag" consolidation pattern. Prices frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.
Verigy Ltd
Waters pleased investors last week, when it reported Q3 EPS of 62 cents and revenues of $353 million. Analysts had been expecting 60 cents and $344.5 million. The CEO attributed the solid results to "the ongoing success of our major programs and a generally favorable spending environment." The share price popped on the news and then moved into a bullish pennant consolidation pattern. Stocks frequently exit pennants moving in the same direction they were traveling on entry. In this case, that would be to the upside..gif){kind=logo}