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My short hedge in the oil and gas sector is LNG. A fine Company but the stock has gotten way ahead of itself, imho. Liquified natural gas is a great story but the costs of facilities are very high, and profits will likely remain elusive for a long time to come. The stock also has been breaking down technically after a 700% gain in less than a year. Lost .62 per share in 2004, and losses are likely to grow this year.
SSKILLZ1: The housing sector remains very strong with all the major homebuilders reporting record Q1 results and raising guidance for Q2 and the remainder of the year. I remember back in late 2002 many analysts were urging investors to sell stocks like Beazer Homes (BZH) and Ryland Group (RYL), yet they continued to beat estimates and set new records with each passing quarter. These stocks have been the 'graveyard for the shorts'. The naysayers have been proven wrong again and again. Just this morning Standard Pacific (SPF) crushed analyst estimates and significantly raised guidance for the year. Eventually the sector will have to cool down, but predicting when it will happen has long since been proven elusive. Furthermore, the bubble may not burst at all, but simply develop a 'slow leak'.
It reminds me of a colleague at IBM who felt the tech sector was in a bubble back in 1994. He went into cash and missed out on 6 more years of terrific gains. It's very easy to see the bubble, but very difficult to forecast when and how it will end, imho.
SSKILLZ1: IMPL That's great news and means the Company's earnings will get much more visibility when they get announced by 5/15. Institutional and private investors who avoid bulletin board stocks will now certainly take an interest in this great low PE growth stock.
RRainman: Good observation on declining production for the oil and gas giants. I think that's going to be the long term trend for the biggest companies, with few exceptions, and it bodes well for continuing high prices for oil. Royal Dutch Shell even made several major reductions in the estimates for their o&g reserves over the last year, to the shock of analysts.
One can argue that oil at $50 a barrel is still rather cheap. In Europe drivers have long endured high gasoline taxes and they currently pay something like $8 per gallon of gas, yet cars are still very popular over there. I think there's plenty of upside to what US consumer would pay, albeit not without a lot of grumbling.
GFCI now at .19, I'm averaged in at around .61. Oh well, at least I have a nice loss to use for tax purposes. Of course by year end it may be an even bigger loss, at which time I may be dumping my shares for a mere .01 each.
There's still hope that Lentinman can turn things around since his appointment to CFO just a few weeks ago, but possibly he's found a few 'glitches' in their finances. And that massive share buyback announced a month ago seems to be having little effect on the stock price.
MSGI: It's been an ugly market these last few weeks, and the o&g sector has been especially hard hit. However it's important to keep in perspective that YTD, the o&g sector is still up nicely versus a down market. I'm about 95% invested right now, but 5% cash is substantial for me historically. As of yesterday I was only down about 1% YTD on my portfolio, so significantly outperforming the indices at least, and I'm happy with that.
I think there will be bargains to be found in the coming weeks, especially in the o&g sector, but short term I think the group goes lower. As for the Nasdaq, I won't be surprised if it tests the 1750 lows of last summer again this summer. Hopefully that level will hold. What's your market forecast ? You seem to be very bearish. Maybe Bobwins should have a Nasdaq or Russell 2000 guessing contest like we did with oil last year. It would be interesting to hear the predictions of others. Another oil contest could also be worthwhile.
stock_peeker: BWLRF
Unfortunately I'm averaged in at .60, so this is now nearly a 50% loss for me. But I decided to average down a bit today and added a few shares at .33. The 2 year low is around .25, and I'd be very surprised to see that get tested given the strong run ZINC and MOLYBEDIUM have had, so I think the risk/reward profile is pretty good at these prices. But I sure wish I hadn't bought any at .60, just 8 weeks ago ! This drop has been relentless and shocking.
bones1420: CXTI
I own a few shares, but this will have been my last China play. I have lost money on every China stock I ever bought, including AOBO, ETLT, HQSM and AWRCF. And there may be other's. Fortunately they were all small holdings for me, but the percentage losses were high. It seems nobody trusts the numbers, and that may be for good reason. ETLT especially sounds like a scam. If China stocks come back into 'fashion' some of these may have a run, but count me out. I've had it and will avoid from now on !
BWLRF now .30 down from .64
ZINC prices have fallen in the past few weeks, but remain very high by historical standards. Company should be posting some decent results in a few weeks. Huge volume today and yesterday, hopefully the climactic selloff as the stock approaches the 52wk low of .25. This Company had a disappointing Q4, but does it justify a 53% drop in the stock from the high ?
bucfan: TCHC
I've always felt that Management is a bit sleazy and greedy. They've been generous with themselves in terms of stock options, but they have every incentive to push the stock higher and have been successful. If we get a 'normal' hurricane season this year, this stock could trade at $20 or higher, imho. The big Florida homeowners insurance rate hikes are really boosting earnings.
SVLF getting some volume today
A few sizable blocks have traded and the stock is now near its 52wk high of 1.61. EPS of $0.11 for Q4 and $0.35 for the year for a trailing PE of just over 4. Silverleaf Resorts owns and operates 13 timeshare resorts. TBV is over $2.50 per share, but beware of the large amount of debt and leverage in the balance sheet, though common in this type of business …
DXPE reports EPS of .15 vs .12
Stock is trading around $5 ....
HOUSTON--(BUSINESS WIRE)--April 27, 2005--DXP Enterprises, Inc. (Nasdaq:DXPE - News) today announced net income of $854,000 for the first quarter ending March 31, 2005, with diluted earnings per share of $.15 compared to net income of $678,000 and diluted earnings per share of $.12 for the first quarter of 2004. Sales increased 10.2% to $41.8 million from $37.9 million for the first quarter of last year.
David R. Little, Chairman and Chief Executive Officer, said, "The first quarter sales increase was broad based with increased sales of pumps, bearings, safety products and mill supplies to oil field service, oil and gas production, mining, electricity generation and petrochemical processing customers. We are enthusiastic about the current level of business opportunities and our strategic abilities to take market share from the competition."
MVCO: I picked up some more shares this morning at 4.80. Seems very undervalued at these levels. Excluding the $5.2M charge last year for cost overruns on the Gooseberry Dam project, EPS would have been over $1, fully taxed and diluted. That project has only a few weeks of work left to completion and no further losses are expected according to the 10K. They resume work in June, since snow and mud hinder work before then, high in the Wasatch Mountains of Utah.
The RMI IPO is expected in the 2nd quarter and should be a big plus for the balance sheet.
Backlog is up significantly from last year, and the Company should win some of the claims it has outstanding against previous work completed .... sounds like the Company is being very conservative in claims accounting. Potentially an additional $1.86 of pretax EPS .... an excerpt from the 10K ....
The combined total of all outstanding claims as of December 31, 2004 is $18,835,979. MVCI’s portion of the total claims is $10,548,878 and the balance pertaining to a prime contractor or subcontractors’ claims is $8,287,101. Total claim amounts reported by the Company are approximate and are subject to revision as final documentation progresses and as issues are resolved and/or payments made. Claim amounts do not include any prejudgment interest, if applicable. Relative to the aforementioned claims, MVCI has recorded $3,521,080 in cumulative claims receivable to offset a portion of costs incurred to date on the claims.
Although the Company believes its claims receivable represent a reasonably conservative posture, any claims proceeds and payments for previously unpaid quantities, unpaid change orders and pending change orders ultimately paid to the Company less than $3,521,080 will reduce income. Conversely, a payment for those same items in excess of $3,521,080 will increase income.
TCHC reports record quarter
EPS of .89 versus stock price of 14.80 ... a large chunk of their business is Florida homeowners insurance and they are benefiting from huge rate increases after the hurricanes. A great buy if last year was a fluke. They claim it was a 1 in 700 year event to have 4 hurricanes hit Florida ...
LAUDERDALE LAKES, Fla.--(BUSINESS WIRE)--April 27, 2005--21st Century Holding Company (Nasdaq:TCHC - News), today reported results for the quarter ended March 31, 2005 (see attached tables).
For the quarter ended March 31, 2005, the Company reported net income of $5,821,260, or $0.95 per share on 6,152,548 undiluted shares, versus net income of $2,924,008 or $0.52 per share on 5,639,743 undiluted shares in the same three-month period last year. On a diluted share basis, the Company reported earnings of $0.89 per share, based on 6,532,023 average diluted shares outstanding. These record results beat Company guidance of $0.80 to $0.85 per share by $0.10 and $0.04 per share respectfully as income surged by almost 100% from the same three-month period last year.
Net premiums earned increased $6.6 million or 54.0% to $18.8 million for the three months ended March 31, 2005, as compared to $12.2 million for the same three-month period last year.
Total revenues increased $7.2 million or 48.8% to $21.9 million for the three months ended March 31, 2005, as compared to $14.7 million for the same three-month period last year.
Edward J. (Ted) Lawson, President and Chairman of the Board, said, "I am very pleased with our first quarter results and expect our profitability momentum to continue. As a further sign of our improving cash position, we will be using cash to pay our upcoming quarterly principal and interest payment on our subordinated debt issues, as opposed to using stock, as we have in the past. We are receiving substantial cash from our continuing operations and our stock is selling at a very low valuation. Additionally, we feel comfortable with our reserve adequacy for our claims. Consequently, instead of using our stock at a depressed level to repay our note obligation, we anticipate that future payments will continue to be made in cash. "
Knowledge: TMFZ
Insider holdings of TMFZ are substantial, but their selling has been very limited. They have sold no shares since late December, and their sales over the last 6 months amounted to a modest 106k shares, which is less than 1% of their holdings. I would be very surprised if they conducted any open market sales with the stock as depressed as it is now. If anything, they might consider a private placement, but they would best be advised to wait for a fairer valuation of the stock, imho.
As for cash flows, they're in the mortgage business, and have been given greatly increased warehouse lines of credit over the past year. So it's no surprise to see them take on increased debt to finance their rapid growth. They were holding a large block of mortgages for resale as of 12/31.
TMFZ: More good news from the Mortgage Banking sector
Bodes well for TMFZ earnings due out by 5/15. Trailing PE is now under 4 .... CFC's PE is almost 3x higher at near 10 ...
Countrywide Financial Corp. on Tuesday reported a 27% increase in first-quarter net income and raised its outlook for the rest of 2005.
The Calabasas, Calif., mortgage giant said quarterly net income rose to $689 million, or $1.13 a share, up from $543 million, or 90 cents a share, in the same period last year, reflecting contributions from the mortgage, banking and insurance businesses. The company had been expected, on average, to earn $1.02 a share, according to a survey of analysts by Thomson First Call.
Countrywide raised its target for 2005 earnings to a range of $3.60 to $4.60 a share, up from its revised February range of $3.45 to $4.45 a share. It had a 2004 profit of $3.63 a share.
In its core business, the company's pretax mortgaging earnings rose to $772 million from $561 million a year earlier. Revenue climbed 22% to $2.4 billion from $1.97 billion, as total quarterly loan production rose 21% to $92 billion.
"Countrywide opened 2005 with a solid first quarter," said Chairman and CEO Angelo Mozilo, in a statement. The company raised its quarterly dividend by a penny to 15 cents a share.
TMFZ: More good news from the Mortgage Banking sector
Bodes well for TMFZ earnings due out by 5/15. Trailing PE is now under 4 .... CFC's PE is almost 3x higher at near 10 ...
Countrywide Financial Corp. on Tuesday reported a 27% increase in first-quarter net income and raised its outlook for the rest of 2005.
The Calabasas, Calif., mortgage giant said quarterly net income rose to $689 million, or $1.13 a share, up from $543 million, or 90 cents a share, in the same period last year, reflecting contributions from the mortgage, banking and insurance businesses. The company had been expected, on average, to earn $1.02 a share, according to a survey of analysts by Thomson First Call.
Countrywide raised its target for 2005 earnings to a range of $3.60 to $4.60 a share, up from its revised February range of $3.45 to $4.45 a share. It had a 2004 profit of $3.63 a share.
In its core business, the company's pretax mortgaging earnings rose to $772 million from $561 million a year earlier. Revenue climbed 22% to $2.4 billion from $1.97 billion, as total quarterly loan production rose 21% to $92 billion.
"Countrywide opened 2005 with a solid first quarter," said Chairman and CEO Angelo Mozilo, in a statement. The company raised its quarterly dividend by a penny to 15 cents a share.
hweb: PURW
I've considered this stock in the past, and .09 for Q1 was certainly impressive. But what I don't like is the past fluctuations in quarterly results ... they've had plenty of losing quarter sprinkled in, which have kept down annual results. Nonetheless, the stock should have a good run, but I wouldn't want to hold through the next earnings report. Of course, maybe they've really turned the corner this time ....
IMPL: New Home Sales Hit Record High in March
More good news from the new home building sector ....
WASHINGTON - Sales of new homes shot up 12.2 percent in March to the highest level in history as the nation's housing market continued to soar despite rising mortgage rates.
The Commerce Department said Tuesday that new single-family homes were sold at a seasonally adjusted annual rate of 1.43 million units in March, confounding the consensus forecast of a small decline in sales in March, a month when mortgage rates had been inching higher.
Instead, sales climbed to an all-time high, surpassing the old mark of 1.3 million units at an annual rate last October. Sales of both new and existing homes have set new records for four straight years, but analysts are expecting demand to cool off a bit in 2005 as mortgage rates climbed higher.
patentlawmeister: IMPL
HBP reported excellent results in the SouthEast, and now BMHC also reports strong building materials sales, including especially strong results in Florida. It bodes well for IMPL's Q1 earnings. It's also good to hear that they'll be on the NasdaqSC within 10 days.
March existing home sales up 4.9% y/y
NEW YORK, April 25 (Reuters) - Shares of U.S. home builders rose on Monday after a report by the National Association of Realtors showed the inventory of existing homes for sale in March fell, while home sales and prices rose, indicating the housing industry remained strong.
The Dow Jones U.S. Home Construction Index , a wide barometer of home building stock activity, shot up 2.93 percent. In comparison, the Dow Jones industrial average was up 0.91 percent at 10,249.71 at midday.
"We believe this low level of available existing inventory will continue to put upward pressure on both new and existing home prices," Banc of America Securities analyst Daniel Oppenheim said in a research report.
Shares of U.S. home builders MDC Holdings Inc.(MDC.N: Quote, Profile, Research) and Hovnanian Enterprises Inc.(HOV.N: Quote, Profile, Research) rose more than 4 percent, while the stock of Ryland Group Inc. (RYL.N: Quote, Profile, Research) , Lennar Corp. (LEN.N: Quote, Profile, Research) , Centex Corp.(CTX.N: Quote, Profile, Research) and Toll Brothers Inc.(TOL.N: Quote, Profile, Research) were up more than 3 percent. Shares of Beazer Homes USA Inc.(BZH.N: Quote, Profile, Research) were up 3 percent.
Sales of existing homes last month rose 1 percent from February to a seasonally adjusted annualized rate of 6.89 million units -- just 1.9 percent below the record level of 7.02 million units set in June 2004, the National Association of Realtors said in its monthly report.
Compared with March 2004, sales jumped 4.9 percent.
Existing homes include single-family houses, townhomes, condominiums and co-operatives.
The inventory of existing homes for sale slipped 0.2 percent in March to 2.325 million units from February's 2.330 million -- the first decline since December.
The March inventory level represents a four-month supply, well below the six-month level that Realtors say indicates a balanced market and slightly above the record low supply of 3.8 months set in January 2005.
The median sales price last month was $195,000, up 3.2 percent from February, and 11.4 percent above the year-ago March price.
In terms of the number of units sold in different regions, existing home sales rose in the Midwest, the West and the South, while they were flat in the Northeast. Price increases over the past year ranged from 7 percent in the South to 18.9 percent in the West.
hweb: ERS
Aluminum prices have increased significantly over the past year which will boost revenues. Typically gross margins also benefit from higher prices so they should post a strong Q1 with results due out in 2 to 3 weeks. An excellent long term hold, imho.
designer: UNTD
Stock seems to be getting into an attractive range, but EPS of $1.81 includes a tax benefit. Untaxed EPS was $1.28 for a trailing PE of just over 7 ... still cheap. But the tax benefit transferred deferred tax assets to the balance sheet so next few quarters will most likely be reporting taxes, although they still have huge NOL's. Fully taxed EPS is about .77, so it makes a huge difference. Stock has traded mostly between 9 and 12 since August and seems to have good support at 9. Good luck.
Easy come, Easy go
Yesterday's 200pt DOW rally has almost been given back in a single day, now down 150pts. The problem is that most of my stocks did not partake in yesterday's rally, however they are participating fully in the decline. It figures !
RRainman: CHAR
It's good to have an oil specialist like yourself take a position in CHAR. The stock is around 2.10 now on EPS of .17 in the past 6 months. They've got significantly higher production targets for 2005 and with much higher oil prices, they could post some really big numbers. I'm looking forward to Q1 results due out by 5/15. A $3 price target is conservative given the low PE and recent 52wk high of $2.83.
hweb: MVCO
Thanks for the reminder on MVCO. I owned this stock last year, bought in May at 2.45 and sold in November at 2.48. $45 profits less commissions. Got tired of waiting for some decent results, and was disgusted with continuing writeoffs on their Utah construction project. Right after I sold the stock started to zoom, it figures.
It looks attractive now that the Utah writeoffs are likely done. Sound like EPS would have been over $1 last year without those. The planned RMI spinoff is also impressive, asssuming they get the valuation they've filed for. The SEC filing shows the tentative IPO pricing at $12 per share, of which MVCO retains 60% ownership or 1.5M shares. That translates to a value of $18M or about $4.50 per share of MVCO stock. Of course they'll be spinning off a lot of assets too. Nonetheless, it should further boost their stock valuation after the spinoff, imho.
MVCO is very weak again today, so maybe they've got some bad news lurking. I picked up a few shares, but the recent downtrend ahead of earnings is alarming. I hope they haven't found another losing project with cost overruns to replace Utah. But the chart shows strong support at $4, and if there's no bad news coming, it seems like a great bargain today at $4.65.
hweb: It's certainly a huge rally, though many of my microcaps are not participating. It will be interesting to see whether there is any follow-through tomorrow, and whether it spreads out into the smaller stocks.
SSKILLZ1: UAHC
I'm glad I got out after the lawsuit was filed. That made me nervous, but this is much worse. It may have been a 'red flag' that they were running a sleazy operation.
gilead23: EGY
Unfortunately I was a big fan of EGY in the mid 4's and the continuing weakness is a mystery. I'm not buying any more shares until we get the earnings news and a drilling update. But it sure looks oversold assuming there's no bad news lurking.
hweb: HURC
Thanks for your input. I hadn't noticed the analyst coverage and the Q2 estimate is surprisingly low. The tax issue is complicated by all the foreign sales, so hard to tell what rate they'll be paying next quarter. I picked up a few shares, but will mostly watch from the sidelines till their business outlook clarifies.
hweb: TMFZ
I've been accumulating shares ... bought some at 2.02 yesterday and have lower limit orders waiting. The fear here is of higher interest rates slowing the business, but I think it's overblown. AHM, American Home Mortgage, just reported a great 1st quarter and raised annual guidance. Furthermore, many analysts feel there are only a few more Fed rate hikes left to go and then rates will stabilize. Ironically, 30yr mortgage rates are actually LOWER now than a year ago. And TMFZ operates in the niche ALT-A sector which is less interest rate sensitive anyway. They grew much faster than the industry last year and hopefully that will continue. And they trade at a discount to their peers, with the trailing PE now barely over 3 ! How cheap can it get ?
hweb: HURC
What's your opinion on this stock ? Trades at around 11.50 with EPS of .48 in their January quarter. EPS has been steadily rising, but a $3M sequential decline in backlog may suggest some softness in their business, but it's not much relative to quarterly revenue of $30M. Trailing PE of about 8. Tangible book value of over $7. Down from an early March 52wk high of 19.40. Is the selloff overdone on fears of a slowdown in their machine tools business ? They are worldwide and 80% of sales are abroad. A few factors helped their January quarter as per the 10Q excerpts below -
Sales and Service Fees. Sales and service fees for the first quarter of fiscal 2005 were the highest in the company’s 26 year history and totaled $30.2 million, an increase of $7.5 million, or 33%, from the amount reported for the first fiscal quarter of 2004. The increase in sales is attributed to increased unit sales at all geographic regions and the favorable effects of translating foreign sales into U.S. dollars for financial reporting purposes. As noted below, approximately 62% of our sales were derived from the European markets. The weighted average exchange rate between the Euro and the U.S. dollar during the first quarter of fiscal 2005 was $1.32 per €1.00, as compared to $1.22 per €1.00 for the first quarter of fiscal 2004, an increase of 8%. Approximately $1.5 million, or 20%, of the increase in total sales and service fees in the 2005 period was attributable to changes in currency exchange rates.
Sales and service fees in North America benefited from a 53% increase in unit shipments in the first quarter of 2005 compared to the prior year period. The unit shipment increase was partially due to our lathe product line, which was introduced during the first quarter of 2005. Excluding lathes, unit shipments increased 35% during the first quarter of fiscal 2005 and this increase was not significantly different between our entry-level VM line and our higher performing VMX line.
OMI reports another strong quarter
EPS of .85 versus analyst estimates of .78. Stock is around 18 with a trailing PE of 6. Company is locking in high charter rates for several years into the future ....
OMI (OMM: news, chart, profile) reported after the bell first-quarter net earnings of $75.8 million, or 88 cents a share, up from $56.4 million, or 70 cents, a year ago. It was also OIM's best first-quarter results since it opened for business in 1998.
Income for the quarter slips 2 cents to 85 cents a share when excluding a $2.9 million gain from the sale of the company's last two single-hull vessels, part of its efforts to modernize its fleet.
Revenue for the quarter ended March 31 totaled $171 million, up 34% from $128 million a year ago, bolstered by continued strong global demand for crude oil and refined petroleum products.
Analysts surveyed by Thomson First Call had expected the Stamford, Conn.-based shipping company to hand in results of 78 cents a share.
OMI said it secured during the quarter new time charters for eight of its tankers worth about $251 million. The charters extend as far out as 2012.
OMI chairman and chief executive Craig Stevenson pinned the gains on continued strength of rates this year for its expanded Suezmax class tankers, the biggest ships allowed to use the Suez Canal, and spot refined petroleum product carriers.
"Furthermore, the fundamentals of the product tanker market have continued to improve, and oil majors have moved into the time charter market in a substantial manner. We are benefiting from this with new time charters and extensions," Stevenson said.
At the same time, the company said operating costs during the quarter were up 29% from a year ago, mainly due to rising ship supplies and crew.
patentlawmeister: HURC
Thanks for the reminder on HURC. I just started a small position at 11.50. It looks very cheap with EPS of .48 last quarter, albeit their backlog was down a bit sequentially. The chart is alarming but I think it's oversold. Will buy more on any further weakness.
Guy: CHAR
This stock is definitely volatile, but I just use the dips to accumulate. Q4 was mildly disappointing due to production issues, but that's temporary and production should surge this year and EPS growth should be even stronger given the rising price of oil. Still the stock is up 22% ytd, which is about average for the microcap o&g issues. EGY is the one that is troubling me the most, DOWN 11% ytd. That's a mystery !
CHAR may also be down in sympathy with PKZ since both are in Kazakhstan. PKZ is in an escallating dispute with joint venture partner Lukoil, the Russian giant. Fortunately CHAR does not have any ties to Lukoil or PKZ and hopefully a strong Q1 earnings report will rally the stock.
IMPL: Should benefit from robust contruction in the Southeast
HBP, Huttig Building Products reported strong Q1 results with EPS of .20, well ahead of analyst estimates of .15. They reported especially strong y/y sales in the Southeast, up a very strong 24%. That bodes very well for IMPL Q1 results. Trailing PE for IMPL is now below 7, with a Nasdaq listing hopefully just 2 weeks away ! Here's an excerpt from the HBP earnings PR ....
Same branch sales increased 7% year over year, with one less selling day compared to last year's first quarter. On a sales per day basis, same branch sales increased 10%. Southeast sales increased 24% (excluding Dallas) as demand rebounded after last year's hurricanes, more than offsetting a 4% decline in the Northeast associated with a temporary reduction of demand due to a restricted winter shipping schedule during February and March. Sales in the West increased nearly 11%, despite heavy rains, while sales in the Midwest were flat versus the prior year. Sales to national accounts, a strategically important customer segment, increased 11.8%, to $70.9 million.
RSGC hit .20 yesterday, now at .40
Congrats to those who managed a 24hr double. Yesterday I just held onto my shares and watched from the sidelines, though I was tempted to add shares in the low .20's. This morning there's a PR on the takeover, but the suitor has dubious financial strength. Nonetheless, I hoping for the best ....
TORONTO, Ontario--(BUSINESS WIRE)--April 20, 2005--Strategy International Insurance Group, Inc. (OTCBB: SGYI - News), a provider of specialty lines of insurance, reinsurance and structured risk underwriting focusing on credit risk and credit enhancement, provides an update concerning its plan to acquire RS Group of Companies (OTCBB: RSGC - News).
As previously announced by the company on December 17, 2004, Strategy International intends to enter into an agreement that will result in RS Group becoming a wholly-owned subsidiary of Strategy International. The proposed acquisition is part of Strategy International's ongoing plan to deliver value to its risk-management customers across multiple distribution channels.
Strategy International anticipates to receive the independent valuation of RS Group in the near future and to finalize the deal structure of the acquisition shortly thereafter.
Stephen Stonhill, CEO and President of Strategy International Insurance Group, Inc. stated, "We are taking the necessary steps to ensure the planned acquisition of RS Group moves forward and we expect to complete the merger in a timely manner. We believe the combined strength of underwriting expertise and product knowledge of the two companies will allow management to fulfill its operational objectives."
China Q1 growth ahead of expectations
BEIJING - China's economy grew by an unexpectedly rapid 9.5 percent in the first three months of this year, the government said Wednesday, warning that it needs to tighten controls on surging investment in new factories and real estate.
The increase exceeded the expectations of analysts who had expected efforts by Beijing over the past year to slow growth would have a bigger impact. The government has cautioned repeatedly that surging growth could ignite inflation and harm China's fragile banks.
The economy also grew by 9.5 percent in the fourth quarter of 2004. The government's official target for growth is 8 percent a year.
Leading the first-quarter surge was a 22.8 percent jump in investment in factories, construction and other "fixed assets," to 1.1 trillion yuan ($133 billion), the government said.
"Investment in fixed assets is still overheated," said Zheng Jingping, spokesman for the National Bureau of Statistics, at a news conference.
Zheng said the government needs to tighten controls on land use and loans for new construction, warning that too much investment pushes up prices for raw materials such as crude oil and iron ore.
Speculation in real estate also needs to be constrained, Zheng said. He said China should learn from developed countries which levy property taxes and transaction fees.
While investment growth was far slower than the 43 percent jump recorded in the first quarter of last year, it was still "at a very level," he said.
Manufacturing and consumer spending also registered double-digit growth. Industrial output was up 16.2 percent at 1.4 trillion yuan ($169 billion). Retail sales rose 13.7 percent to 1.5 trillion yuan ($182 billion).
Inflation was moderate, with the consumer price index up 2.8 percent from the same period last year, the bureau said.
Tech sector should be strong today
Intel significantly exceeded analyst estimates for EPS, posting .34 versus estimates of .31. YHOO also exceeded estimates. Both are up in premarket, Nasdaq futures are up 12.
hweb: USOO
USOO may be getting dragged down by overall weakness in the trucking sector. I own some shares, and hopefully their niche market won't be affected. And maybe they can win a reduction in that lawsuit award on appeal. I found several articles on the subject, including this one ....
NEW YORK, April 8 (Reuters) - Investors hit the brakes on trucking shares Friday after a warning from USF Corp. (USFC.O: Quote, Profile, Research) that its quarterly earnings would be more than 50 percent below Wall Street estimates added to recent concerns that freight demand may be slowing.
USF shares fell 5 percent, and the warning also dragged down shares of Yellow Roadway Corp. (YELL.O: Quote, Profile, Research) , which in February agreed to buy USF for $1.37 billion, by nearly 6 percent.
The company's shared-loads, or less-than-truckload, carrier rivals also posted steep declines, with CNF Inc. (CNF.N: Quote, Profile, Research) shares down nearly 9 percent and Old Dominion Freight Line (ODFL.O: Quote, Profile, Research) sliding 7 percent.
Late Thursday, USF warned it expects first-quarter earnings before items to be about 12 cents to 16 cents a share, down from 32 cents a share a year earlier and compared with analysts' consensus estimate of 38 cents. It blamed the slowdown in the auto sector, slow growth in the Northeast and competition in the Southeast for its lowered outlook.
But rival Overnite Corp. (OVNT.O: Quote, Profile, Research) on Friday said its first-quarter earnings would be at or above the high end of its outlook of 32 cents to 38 cents a share. The shared-loads carrier said it sees continued improvement in customer mix and a stable pricing environment during the quarter.
That muted some of the declines in the trucking sector. Yellow Roadway also reiterated that USF's warning did not change the logic for its acquisition.
"Given their first-quarter revenue growth and tonnage increase, we believe the business fundamentals remain sound," said Yellow chief executive, chairman and president Bill Zollars.
Recent profit warnings from long-haul, truckload carriers raised worries about slowing freight demand could be an early indication that economic growth is slowing as oil prices rise.
The jury was still out on whether the issue is company-specific or signs of a broader trend that will also impact the shorter-haul LTL carriers, but some analysts were wary and trucking stocks took a beating, with the Dow Jones Trucking index sliding 4.6 percent at 254.95, its lowest point since late November.
"USFC's shortfall demonstrates that the pricing environment is weakening, possibly even faster than our cautious view," said Morgan Stanley analyst James Valentine in a research note, recommending investors avoid less-than-truckload stocks.
Although "it appears that the sky is falling on the truck sector," Merrill Lynch analyst Ken Hoexter said in a research note that USF's issues may be specific to it rather than the entire LTL sector.
"While we do not dismiss that there was some deceleration in volume growth in the first quarter, which was somewhat expected after the robust performance early last year, some LTL carriers noted that they had taken share from USF and that the market was not drying up," Hoexter said in the note.
S&P Transportation analyst Andrew West added overall trends still seemed healthy, but investors may not get the upside earnings surprises of last year as the rate of change slows.
Last year's robust freight demand, spurred by U.S. economic expansion and global trade, and tight capacity exacerbated by a driver shortage that enabled truckers to raise prices. That drew momentum investors who may now be exiting, West said.
"With rising rates and tougher comparisons and higher valuations, moving further into the economic cycle, investors might start turning to other industries," West said.
Yellow shares fell $4.67 to $54.47 and USF shares fell $2.84 to $45.66 in afternoon trading while Overnite's shares lost 74 cents to $30.90.