Jim Cramer Blog

Stocks plunged after the Federal Reserve cut a key interest rate by -25 basis points, leaving many on Wall Street wanting more. The Dow closed off -294 points on the day to end at 13,433. Meanwhile, the Nasdaq was down -67 points to close at 2,652, and the S&P was off -38 points to end the day at 1,478. Light, sweet crude prices traded higher with oil settling at $89.80 per barrel. Treasury prices climbed higher, while gold also gained to end at $817.10 an ounce. The dollar fell sharply versus the yen, but rose against the euro.
In economic news, the Federal Reserve voted to cut the Fed funds rate by -25 basis points to 4.25%. It is the third time the central bank has cut interest rate since September in an effort to protect the economy from a possible recession. The Fed also reduced its discount rate by -25 basis points to 4.75%.
On the earnings front, shares of FuelCell Energy (Nasdaq: FCEL - News) were up 16.2% in trading after it posted a narrowed fourth-quarter loss that beat Wall Street estimates. For the quarter, the company reported a loss of -$16.8 million, or -25 cents per share, versus a loss of -$25.1 million, or -47 cents per share, last year. Revenue for the quarter rose to $16.5 million, up 81% from $9.1 million in 2006. On average, analysts were predicting a loss of -27 cents per share on $13.1 million in revenue.
In a preliminary earnings report, H&R Block (NYSE: HRB - News) said it expects to post a huge second-quarter loss, with sizeable losses stemming from its beleaguered mortgage branch. For the period, the company said it expects to post a net loss of -$502.3 million, or -$1.55 per share, versus a loss of -$156.5 million, or -49 cents per share, in the prior year. The nation's largest tax preparer said it expects to post a loss from continuing operations of -$136.1 million, or -42 cents per share. Quarterly revenue rose to $434.6 million, up 10% from $396.1 million. Analysts were looking for a loss from continuing operations of -35 cents per share. The company is scheduled to post earnings late Monday. H&R Block's stock was off -3.3% in trading.
In corporate news, shares of Washington Mutual (NYSE: WM - News) tumbled -12.4% after the bank said it would slash its dividend and lay off more than 3,000 employees, as mortgage and credit concerns loom. The nation's largest savings and loan also said it is setting aside up to $1.6 billion for loan losses in the fourth quarter and would look to raise capital through a $2.5 billion convertible preferred stock offering.
Also today, Freddie Mac's (NYSE: FRE - News) Chief Executive Officer Richard Syron said the mortgage finance company expects to lose an additional -$5.5 to -$7.5 billion over the next few years, as the housing market continues to struggle. The company has already posted about -$4.5 billion in estimated losses through the first nine months of 2007. Shares of Freddie Mac were down -10.6% for the session.
Elsewhere, General Electric (NYSE: GE - News) reaffirmed its earnings-per-share guidance for the fourth quarter and fiscal year 2007. The company said it expects Q4 earnings per share to grow between 14-18% to 67-69 cents per share. For the full year, GE said it expects earnings growth of 18-19% to $2.19-$2.21 a share. GE also announced it would raise its quarterly dividend by 11% to 31 cents per share, up from 28 cents per share. GE's stock was off -1.0% at the bell.
By the BullMarket.com Staff

Labels: FCEL, FRE, Freddie Mac, GE, HRB, WM

Here are 7 stocks for traders for Monday from TradingMarkets.com:
On Friday, Cascade (NYSE:CAE - News) fell 17% after announcing it may revise safety information for its biggest product, anemia drug Aransep. CAE's PowerRating (for Traders) is 4.
Imperial Sugar (NasdaqGM:IPSU - News) should report $0.34 EPS on Monday before the market opens. IPSU's PowerRating (for Traders) is 3.
Traders are watching for Vail Resorts (NYSE:MTN - News) to report -$0.79 EPS before the stock market opens on Monday. MTN's PowerRating (for Traders) is 4.
FuelCell Energy (NasdaqGM:FCEL - News) announces quarterly results on Monday afternoon, with analysts watching for -$0.27 EPS. FCEL's PowerRating (for Traders) is 4.
When H&R Block (NYSE:HRB - News) releases quarterly numbers on Monday after the bell, be looking for -$0.35 EPS. HRB's PowerRating (for Traders) is 4.
NCI Building Systems (NYSE:NCS - News) is looking to report $1.59 EPS on Monday after the market closes. NCS's PowerRating (for Traders) is 3.
Watch for SAIC (NYSE:SAI - News) to report $0.23 EPS on Monday afternoon. SAI's PowerRating (for Traders) is 5.

Labels: CAE, FCEL, Hot Stocks, HRB, IPSU, MTN, NCS, SAI

Monday: Earnings After: HRB ; Economic News: Pending Home Sales ; Other News: TXN Mid-Q Update

Tuesday: Earnings Before: KR ; Economic News: FED DECISION*** ; Other News: HPQ ANALYST MEETING, AT&T ANALYST MEETING, GENERAL ELECTRIC OUTLOOK

Wednesday: Earnings After: CKE ; Economic News: Budget, Import Prices

Thursday: Earnings Before: COST, LEH, JOSB ; Economic News: Retail Sales, PPI ; Other News: AMD Analyst day, HON Outlook

Friday: Economic News: CPI

Labels: COST, CPI, GE, HPQ, HRB, Import Prices, JOSB, KR, LEH, Pending Home Sales, PPI, TXN

Here are 7 options to watch for today.
Most Under-Priced Calls: These are the most under priced calls of all stocks in our database. This stock comes from today's list and is among the most under-priced individual calls.
Research in Motion Nov 145 Calls (NasdaqGS:RIMM - News). RIMM's PowerRating (for Traders) is 4.
Most Under-Priced Puts: These are the most under priced puts of all stocks in our database. This stock comes from today's list and is among the most under-priced individual puts.
United Therapeutics Nov 95 Puts (NYSE:UTHR - News). UTHR's PowerRating (for Traders) is 2.
Most Overpriced Calls: These are the most overpriced calls of all stocks in our database. This stock comes from today's list and is among the most overpriced individual calls.
Merrill Lynch Nov 60 Calls (NYSE:MER - News). MER's PowerRating (for Traders) is 6.
Most Overpriced Puts: These are the most overpriced puts of all stocks in our database. This stock comes from today's list and is among the most overpriced individual puts.
Goldman Sachs Dec 200 Puts (NYSE:GS - News). GS's PowerRating (for Traders) is 6.
Stocks with Abnormal Call Volume: These are stocks which showed unusual call option volume not easily explained by arbitrage operations. The appearance of a stock on the Call Volume Alerts list suggests a possible takeover, extraordinarily good earnings report, or other news which may favorably affect the stock.
Brocade Communications Systems (NasdaqGS:BRCD - News). BRCD's PowerRating (for Traders) is 5.
Stocks with Abnormal Put Volume: These are stocks which showed unusual put option volume not easily explained by arbitrage operations. The appearance of a stock on the Put Volume Alerts list suggests an extraordinarily negative earnings report, or other news which may negatively affect the stock.
H&R Block (NYSE:HRB - News). HRB's PowerRating (for Traders) is 5.
Abnormal Put/Call $ Volume: These stocks have the highest dollar put volume in relation to their call volume. These high ratios are indicative of extreme bearish sentiment in the underlying stock.
Lennar (NYSE:LEN - News). LEN's PowerRating (for Traders) is 5.
Published By TradingMarkets.com

Labels: BRCD, GS, HRB, LEN, MER, RIMM, stock options, UTHR

Bulls were in a buying mood today after investors picked up stocks in anticipation of more deals coming to Wall Street. At the end of trading, all three major averages gained more than 1%. Leading the advance was the tech-laden Nasdaq, which gained 1.3%. Over in the energy sector, oil continued to sell off, ending the session at $69.26, down -31 cents.
The nation's four largest money center banks, Citigroup (NYSE: C - News), JP Morgan Chase (NYSE: JPM - News), Bank of America (NYSE: BAC - News), and Wachovia (NYSE: WB - News) all reported today that they borrowed $500 million each from the Federal Reserve's discount window on behalf of clients. The move was aimed at showing confidence amid a spreading credit crunch. The borrowing event comes after the Fed cut the discount rate by 50 basis points last Friday.
Staying on the topic of the recent credit crunch, shares of tax services company H&R Block (NYSE: HRB - News) fell -1.8% after it had to draw down bank credit lines when its Block Financial Unit was locked out of the commercial paper market. The company said it took down a net of $650 million in working capital lines.
On the news front, pharmaceutical giant Pfizer (NYSE: PFE - News) said it hired Frank D'Amelio to serve as its chief financial officer (CFO) replacing Alan Levin, who announced his resignation in May. D'Amelio recently served as SVP and chief administrative officer of Paris-based Alcatel-Lucent (NYSE: ALU - News).
Shares of energy exchange NYMEX Holdings (NYSE: NMX - News) rose 6.1% after the company officially announced that it is in talks with potential parties regarding a business combination. It also said it could cut 150 jobs and sell its Manhattan headquarters, which it thinks could fetch north of $500 million. Meanwhile, rumors swirled that Ameritade (Nasdaq: AMTD - News) and E*Trade (Nasdaq: ETFC - News) could merge following a report in The Wall Street Journal that the two sides were in talks.
Lastly, on the earnings front, medical device maker Medtronic (NYSE: MDT - News) said net income rose 13% to $675 million, or 59 cents a share, up from $599 million, or 51 cents a share, last year. Sales increased 8% to $3.13 billion. Excluding one-time items, it reported earnings of $711 million, or 62 cents a share, in line with what analysts had expected. Shares fell -0.4%.
By the BullMarket.com Staff

Labels: ALU, AMTD, BAC, C, ETFC, HRB, JPM, MDT, NMX, pfe, WB

Wells Fargo (NYSE: WFC - News), Countrywide Financial's (NYSE: CFC - News), Washington Mutual (NYSE: WM - News), Bank of America (NYSE: BAC - News), Wachovia (NYSE: WB - News)
Thursday's dash for financials may indicate the sector will be one of the "long-term beneficiaries" of Bernanke's position, but Cramer does not think they are safe. He tacked a double sell on WM but thought BAC and WB could survive. However, he reserved the lion's share of his praise for WFC, and said, "It is the great speculative play that should prosper." He believes WFC will "own the mortgage market" and will win with investors because it offers a great dividend. Cramer would wait for WFC to drop to the $32 - $34 range.
Sell Block: VMware (NYSE: VMW - News), H&R Block (NYSE: HRB - News), Capital One Financial (NYSE: COF - News), Friedman Billings Ramsey Group (NYSE: FBR - News) Lamson & Sessions (NYSE: LMS - News), Six Flags (NYSE: SIX - News)
Cramer urged investors to "stay the course" and added "no one ever made a dime panicking." However, he added it isn't too late to sell minerals and he feels tigher consumer spending will put pressure on retail. Cramer would sell VMW after its highly successful IPO, and would stay away from HRB, COF and FBR. He would also sell LMS as well as SIX because of low attendance due to the weather. He concluded it is better to invest in long-term stocks rather than quick trades in the current environment.
KKR Financial (NYSE: KFN - News), Thornburg Mortgage (NYSE: TMA - News) and Reynolds American (NYSE: RAI - News)
Not all high dividends are good dividends, Cramer declared and used KFN and TMA as examples. He added high-dividend names KFN and TMA aren't worth the investment because as their stocks fall so will the yields. Cramer likes RAI which has a dividend of 5.5% and is a "smart play" in this environment because "nothing is more defensive than cigarettes."
Mad Mail: Bear Stearns (NYSE: BSC - News), Jones Soda (NasdaqCM: JSDA) and Google (NasdaqGS: GOOG - News)
Cramer would avoid BSC and JSDA whose climb was "how to make a million" in the market. He adds GOOG is safe and likes the tech sector for its pristine balance sheets and great products.
Published by SeekingAlpha

Labels: BAC, BSC, CFC, COF, FBR, GOOG, HRB, Jim Cramer, KFN, LMS, Mad Money, RAI, SIX, TMA, VMW, WB, WFC, WM

Here are 7 stocks for traders for Friday from TradingMarkets.com:
Jabil Circuit (NYSE:JBL) beat earnings expectations on Thursday afternoon, announcing $0.23 EPS over an expected $0.20 EPS. JBL's PowerRating is 3.
Cognos (NasdaqGS:COGN) matched earnings expectations on Thursday with $0.32 EPS. COGN's PowerRating is 4.
General Electric (NYSE:GE) and Pearson (NYSE:PSO) each issued a separate statement, announcing intentions to drop their respective bids for Dow Jones (NYSE:DJ). GE's PowerRating is 5, PSO does not have a PowerRating due to volume constraints and DJ's PowerRating is 4.
Nvidia (NasdaqGS:NVDA) announced on Wednesday a new type of chip named "Tesla," designed for computation-intensive fields such as engineering and medicine. NVDA's PowerRating is 2.
H&R Block (NYSE:HRB) announced on Thursday that the company recorded a net loss of $85.6 billion last quarter, or 26 cents a share. Subprime mortgage worries continue to affect all areas of the financial services market. HRB's PowerRating is 5.
PowerRatings (for Traders) are courtesy of TradingMarkets.com

Labels: COGN, DJ, GE, Hot Stocks, HRB, JBL, NVDA, PSO

Here are 7 stocks for traders for Thursday from TradingMarkets.com:
A.G. Edwards (NYSE:AGE) announces earnings on Thursday before the bell, with analysts looking for $1.12 EPS. AGE's PowerRating is 6.
AES Corporation (NYSE:AES) is expected to report $0.30 EPS on Thursday before the market opens. AES's PowerRating is 5.
When American Greetings (NYSE:AM) reports earnings on Thursday morning, look for $0.34 EPS. AM's PowerRating is 5.
H&R Block (NYSE:HRB) should announce $1.88 EPS tomorrow morning. HRB's PowerRating is 6.
J.M. Smucker (NYSE:SJM) reports quarterly earnings Thursday before the bell; watch for $0.64 EPS. SJM's PowerRating is 5.
Analysts are watching for Pier 1 Imports (NYSE:PIR) to report -$0.33 EPS tomorrow morning. PIR's PowerRating is 7.
Jabil Circuit (NYSE:JBL) reports earnings Thursday after the close, so watch for heightened price action and volatility ahead of the bell. JBL's PowerRating is 4.
PowerRatings (for Traders) are courtesy of TradingMarkets.com

Labels: AES, AGE, AM, Hot Stocks, HRB, JBL, PIR, SJM

Strong earnings reports from bellwether companies like Google (Nasdaq: GOOG - News) helped propel a broad advance to close out the week, with the Blue Chip Dow Jones Industrial Average surpassing the 12,900 point mark for the first time in its history. Advancing stocks led decliners by roughly a 3-to-1 margin on the NYSE and 2-to-1 on Nasdaq on above-average volume. Crude oil futures also jumped to close above $63 a barrel, while the 10-year Treasury note eased fractionally.
The Dow's gain was fueled by American Express (NYSE: AXP - News), up 3.5% on the day after posting a 21% increase in Q1 profit to a record $1.06 billion. Subscribers can read a detailed analysis of Amex's results in today's issue. Also contributing strongly was Caterpillar (NYSE: CAT - News), which closed 4.7% higher. The heavy equipment maker said its Q1 profit fell to $816 million from $840 million a year earlier, though net income rose on a per-share basis to $1.23 compared with $1.20 per share as a result of share repurchases. The housing slump in North America continues to hamper Caterpillar's results, but expectations for continued strong growth outside of the U.S. encouraged the company to raise its full-year forecast to between $5.30 and $5.80 a share, from between $5.20 and $5.70 a share in its previous forecast.
Other Dow components reporting results today included McDonald's (NYSE: MCD - News) and Pfizer (NYSE: PFE - News). McDonald's said its Q1 earnings rose 22% to $762 million, or 62 cents a share, while Pfizer reported a -17% drop in earnings due to the impact of restructuring charges. Pfizer also cut its full-year forecast to reflect the loss of exclusivity of its blood-pressure medication Norvasc last month. The company had originally thought it would retain market exclusivity through September, but it lost a court challenge on the matter. Subscribers can read a detailed analysis of the results from McDonald's and Pfizer in today's issue.
Google once again blew by its own forecast, and its shares added 2.3% after it announced results last night. The Internet company's ubiquitous search engine continues to be its engine for growth as net income jumped a healthy 69% to $1 billion, or $3.18 a share, from $592 million or $1.95 a share a year earlier. Another top technology name, Advanced Micro Devices (NYSE: AMD - News), slipped -0.8% after reporting that it had swung to a wider-than-expected loss in the most-recent quarter. Elsewhere, oilfield services provider Schlumberger (NYSE: SLB - News) added 1.2% after the company reported a 63% jump in profits as a result of strong oil and natural gas activity by firms worldwide. The company's net income rose to $1.2 billion, or 96 cents a share, from $722.5 million, or 59 cents a share, a year ago.
In other company news, Circuit City (NYSE: CC - News) and Napster (Nasdaq: NAPS - News) announced that they had teamed up to launch their own music download service. Subscribers will be able to download songs to their computers or music players for either a monthly fee of $14.95 or for 99-cents a song. Circuit City's shares rose 2.9%, but Napster traded essentially unchanged. Shares of H&R Block (NYSE: HRB) closed up 3.3% after the company succeeded in finding a buyer for its troubled subprime lending unit, Option One Mortgage. A newly formed subsidiary of the private equity firm Cerberus Capital Management will buy the mortgage firm for the value of its net assets minus $300 million. The final price will be determined when the deal closes later this year.
By the BullMarket.com Staff

Labels: AMD, AXP, CAT, CC, GOOG, HRB, MCD, NAPS, pfe, SLB

Here are 7 trading ideas for today. These lists come directly from the TradingMarkets Stock Indicators page and are based upon our latest quantitative research.
Bullish
5+ Consecutive Down Days: These are stocks that have closed down for five or more consecutive days and are trading above their 200-day moving average. Our research shows that stocks trading above their 200-day moving average that close down for five or more days have shown positive returns, on average, 1-day, 2-days and 1-week later. Historically, these stocks have provided traders with a significant edge.
Simulations Plus (NYSE:SLP - News). SLP's PowerRating is 9.
5+ Consecutive Lower Lows: These are stocks that have made a lower low for five or more consecutive days and are trading above their 200-day moving average. Our research shows that stocks trading above their 200-day moving average that make lower lows for five or more days have shown positive returns, on average, 1-day, 2-days and 1-week later. Historically, these stocks have provided traders with a significant edge.
Urban Outfitters (NasdaqGS:URBN - News). URBN's PowerRating is 7.
2-Period RSI Below 2: These are stocks that have a 2-period RSI reading below 2 and are trading above their 200-day moving average. Our research shows that stocks trading above their 200-day moving with a 2-period RSI reading below 2 have shown positive returns, on average, 1-day, 2-days and 1-week later. Historically, these stocks have provided traders with a significant edge.
New York & Company (NYSE:NWY) & Resmed (NYSE:RMD). NWY's PowerRating is 9, and RMD's PowerRating is 6.
Bearish
5+ Consecutive Up Days: These are stocks that have closed up for five or more consecutive days and are trading below their 200-day moving average. Our research shows that stocks trading below their 200-day moving average that close up for five or more days have shown negative returns, on average, 1-week later. Historically, these stocks have provided traders with a significant edge. Historically, these stocks have provided traders with a significant edge.
Jackson Hewitt (NYSE:JTX). JTX's PowerRating is 2.
5+ Consecutive Higher Highs: These are stocks that have made a higher high for five or more consecutive days and are trading below their 200-day moving average. Our research shows that stocks trading below their 200-day moving average that make higher highs for five or more days have shown negative returns, on average, 1-day, 2-days and 1-week later. Historically, these stocks have provided traders with a significant edge.
Meritage Homes (NYSE:MTH). MTH's PowerRating is 3.
2-Period RSI Above 98: These are stocks that have a 2-period RSI reading above 98 and are trading below their 200-day moving average. Our research shows that stocks trading below their 200-day moving with a 2-period RSI reading above 98 have shown negative returns, on average, 1-day and 1-week later. Historically, these stocks have provided traders with a significant edge.
H&R Block (NYSE:HRB). HRB's PowerRating is 4.

Labels: Hot Stocks, HRB, JTX, MTH, NWY, RMD

Here are 7 options to watch for today. This list comes directly from the TradingMarkets Options Indicators page. The list is created using OptionVue options analysis software.
Most Under Priced Calls: These are the most under priced calls of all stocks in our database. While the Equities Explosion List finds groups of calls for individual equities that are under priced, this list finds the most under priced individual calls. Thus, the options listed here will tend to be more severely under priced.
iShares MSCI Emerging Markets Index Apr 120 Calls (AMEX:EEM - News). EEM's PowerRating is 6.
Most Under Priced Puts: These are the most under priced puts of all stocks in our database. While the Equities Explosion List finds groups of puts for individual equities that are under priced, this list finds the most under priced individual puts. Thus, the options listed here will tend to be more severely under priced.
Whole Foods Market Inc. Apr 45 Puts (NasdaqGS:WFMI - News). WFMI's PowerRating is 6.
Most Overpriced Calls: These are the most overpriced calls of all stocks in our database. While the Equities Implosion List finds groups of calls for individual equities that are overpriced, this list finds the most overpriced individual calls. Thus, the options listed here will tend to be more severely overpriced.
MGIC Investment Corp. Apr 55 Calls (NYSE:MTG - News). MTG's PowerRating is 5.
Most Overpriced Puts: These are the most overpriced puts of all stocks in our database. While the Equities Implosion List finds groups of puts for individual equities that are overpriced, this list finds the most overpriced individual puts. Thus, the options listed here will tend to be more severely overpriced.
Chicago Mercantile Exchange Apr 500 Puts (NYSE:CME - News) CME's PowerRating is 6. Bear Sterns Apr 130 Puts (NYSE:BSC - News). BSC's PowerRating is 5.
Stocks with Abnormal Call Volume: These are stocks which showed unusual call option volume not easily explained by arbitrage operations. The appearance of a stock on the Call Volume Alerts list suggests a possible takeover, extraordinarily good earnings report, or other news which may favorably affect the stock.
None today.
Stocks with Abnormal Put Volume: These are stocks which showed unusual put option volume not easily explained by arbitrage operations. The appearance of a stock on the Put Volume Alerts list suggests an extraordinarily negative earnings report, or other news which may negatively affect the stock.
Citigroup NYSE:C. C's PowerRating is 5.
Abnormal Put/Call $ Volume: These stocks have the highest dollar put volume in relation to their call volume. These high ratios are indicative of extreme bearish sentiment in the underlying stock.
H&R Block, Inc. (NYSE:HRB - News). HRB's PowerRating is 5.
PowerRatings are courtesy of TradingMarkets.com

Labels: BSC, CME, EEM, HRB, MTG, stock options, WFMI

New Investments and AdditionsAs of Sept. 30--Berkshire's most recent filings with the SEC--the conglomerate didn't add any new positions compared to its June 30 report, but it did receive shares in Western Union (NYSE:WU - News) which was spun off from longtime holding First Data (NYSE:FDC - News). Berkshire also increased its stake in five of its existing holdings: Iron Mountain (NYSE:IRM - News), Lowe's (NYSE:LOW - News), Nike (NYSE:NKE - News), and USG (NYSE:USG - News).
I think the most intriguing of these is Western Union, which dominates the lucrative money transfer market. My colleague Mark Weber has long held Western Union to be the most undervalued part of First Data's overall business, and believes that the spin-off now allows potential investors to participate in the economics of this outstanding franchise at a very attractive price. In fact, Weber estimates Western Union's fair value to be $32 per share, about a 45% upside to the firm's current share price.
It should also be noted that Berkshire boosted its stake in USG, a manufacturer of gypsum wallboards, which emerged from asbestos related bankruptcy last June. Berkshire has owned USG since 2001, and more recently backed a rights offering from the company in mid-2006. Given Buffett's experience with asbestos liabilities via Berkshire's insurance operations, as well as his acquisition of the formerly asbestos burdened John Mansfield, I'm cautiously optimistic about Berkshire's stake in USG as well. I will note, however, that as of this writing Morningstar does not have a rating on USG shares.
Eliminations and ReductionsEven though Berkshire is typically a buy and hold investor--especially when it comes to making wholly owned acquisitions--it does from time to time trim or outright sell some of the positions in its equity portfolio. In the quarter that ended Sept. 30, Berkshire modestly trimmed its position in beer maker Anheuser Busch (NYSE:BUD - News), sold some of its holdings in tax adviser H&R Block (NYSE:HRB - News), continued to divest its stake in financial services distributor Ameriprise Financial (NYSE:AMP - News), and appears to have sold a significant chunk of its shares in mass-market retailer Target (NYSE:TGT - News).
The apparent decision to jettison shares in Target is surprising, given that Berkshire had recently released that it built a position of 5.5 million shares of the retailer through June 30. Berkshire's Sept. 30 filing indicates that the conglomerate now only owns 745,000 shares. An analysis of Target's stock price history indicates that if Berkshire did in fact reduce its position in Target, it would likely have done so at a price at least equal to, if not below, the price at which it had accumulated the position. Given that Berkshire still has sizable positions in relatively similar retailers like Wal-Mart (NYSE:WMT - News) and Home Depot (NYSE:HD - News), it seems odd that Berkshire would do an about face on Target. It should be noted, though, that the SEC allows Berkshire to delay filing its holdings on some stocks while it is still accumulating a position. For example, this is how the conglomerate has disclosed its growing stake in Johnson & Johnson (NYSE:JNJ - News). Thus, it's still possible that Berkshire has maintained a position in Target, with the disclosure being somewhat delayed. Giving further credence to this hypothesis is my colleague Joseph Beaulieu's $65 per share fair value estimate for the retailer, which indicates that at Morningstar we still believe that the shares are moderately undervalued.
Less surprising than Target, however, was the continued liquidation of the Ameriprise shares, which Berkshire had acquired when longtime holding American Express (NYSE:AXP - News) spun off the unit in mid-2005. My colleague Dafina Dunmore believes that it will be difficult for Ameriprise to generate above-average returns on capital due to a difficult regulatory climate and intensifying competition. Given this outlook and the fact that Dunmore believes the shares are fairly valued right now, I suspect that Berkshire will continue to divest itself of Ameriprise over time.
5-Star StocksAs of Jan. 8, only four of Berkshire's stocks boasted 5-star Morningstar Ratings for stocks, which itself is an interesting commentary on overall stock market valuations. That said, our analysts still believe that the shares of United Parcel Service (NYSE:UPS - News), Wal-Mart, the aforementioned Western Union, and White Mountains Insurance (NYSE:WTM - News) are currently offering investors the potential to earn attractive long-term returns.
More interesting still is that even with the recent runup in the share price, Berkshire's stock still has a 5-star rating, with a fair value estimate of $4,550 per class B share. In my view, an investment in Berkshire would have a dual benefit--it gives investors exposure to all of the companies in Berkshire's equity portfolio as well as to the conglomerate's substantial private holdings.
The Complete HoldingsHere's the complete list of Berkshire's equity portfolio, ranked from the largest position to the smallest. I continue to note that despite having 39 names in the portfolio, Berkshire's holdings are very concentrated. The top 10 stocks account for more than 80% of the portfolio: American Express, Anheuser-Busch, Coca-Cola (NYSE:KO - News), Conoco Phillips (NYSE:COP - News), Johnson & Johnson, Moody's (NYSE:MCO - News), Procter & Gamble (NYSE:PG - News), Washington Post (NYSE:WPO - News), Wells Fargo (NYSE:WFC - News), and Wesco (AMEX:WSC - News).
Source: Justin Fuller, CFA

Labels: AMP, AXP, BUD, COP, FDC, HD, HRB, IRM, JNJ, KO, LOW, NKE, PG, TGT, UPS, USG, WMT, WTM, WU

Here are 7 stocks for traders for Friday from TradingMarkets.com:
Cheesecake Factory (NASDAQ:CAKE - News) reported after the close Thursday beating with $0.30 EPS vs. an expected $0.28.
McData (NASDAQ:MCDTA - News) missed earnings posting a loss of -$0.03 EPS vs. an expected -$0.02.
H&R Block (NYSE:HRB - News) missed earnings after the bell Thursday, announcing $-0.49 EPS vs. an expected -$0.32 by analysts.
General Growth Properties Inc. (NYSE:GGP - News) target raised to $59 from $52 by A.G. Edwards.
Continue to watch General Motors (NYSE:GM - News) as Kirk Kerkorian's Tracinda Corp. continues to unload shares.
Kellwood (NYSE:KWD - News) reports earnings early Friday before the bell; look for $0.63 EPS.
Warner Music Group (NYSE:WMG - News) announces quarterly earnings Friday morning, with analysts expecting the co to break even ($0).
PowerRatings are courtesy of PowerRatings.net

Labels: CAKE, GGP, GM, HRB, KWD, MCDTA, WMG