Tuesday, August 18, 2009

Daily Wrapup For August 18th

Yesterday's spill was not repeated today. From the get-go, the three major averages were all up. After a slight reaction about twenty minutes after trading started, the averages kept climbing for the rest of the day. News reports like the one following attributed the rise to better-than-expected retail results, but an earlier recovery in the Asian markets had an influence too. A last-minute decline whittled down the averages' gains somewhat: the Dow ended up by 0.90%, the S&P 500 gained 1.01%, and the NASDAQ ended regular trading with a gain of 1.30%. Light sweet crude perked up, rising $1.44 per barrel to close at $69.19. This quote is for the September contract, which is due to expire in two days.

The lowest-quintile P/E cut-off also rose, although only slightly. Today's cut-off was 11.41 as compared with yesterday's 11.39. The dividend yield of the S&P, which forms the yield cut-off, dropped a good four basis points to 2.68%. After also eliminating ETFs and stocks with market caps of less than 500M, as well as ones with yields greater than 10%, the Low P/E Bin was left with one hundred stocks for a gain of five from yesterday. Here are the changes in the Low P/E Bin, as dash-listed below:

- CVB Financial Corp.
- H&R Block, Inc.
- Holly Corporation
- Magyar Telekom Plc.
- Merck & Co., Inc.
- Permian Basin Royalty Trust
- PriceSmart, Inc.

- Financial Federal Corporation
- Plains All American Pipeline, LP

All of the Arrivals are companies that were in the Bin earlier; three of them returned because of drops in their stock. CVB Financial, a holding company for the Citizens Business Bank in California, saw its stock drop 0.13% today to bring its P/E below the cut-off. H&R Block stock dropped by a more substantial amount, but got back in for the same reason as CVB. Holly, a petroleum-products refiner, rose a fair bit. Its yield, though, didn't drop enough to put it below the lowered yield cut-off. Magyar, Hungary's main communications services company, rose even more today: 5.17%. This leap puts its yield back below the 10% cut-off. Merck, a major pharmaceutical company, dropped 0.55%; this loss put its P/E back below the cut-off. Permian Basin, an express trust holding interests in several Texas oil and gas properties, is another gainer in the Arrival list. Its 2.67% rise put its market cap above the 500M cut-off. PriceSmart, an operator of discount warehouse-shopping clubs, also gained today. However, its P/E didn't rise enough to keep it out of the Bin.

The two Departures were gainers that both got out through P/E expansion. Financial Federal, a collateralized lending, financing and leasing company for the construction industry, gained 2.33% and saw its P/E rise well above the Bin's cut-off. A similar fate befell Plains All American, an owner-operator of several oil and natural gas pipelines plus LNG facilities. Its stock rose 1.63%, and its P/E rose enough to push it out of the Bin.

Telefonos de Mexico, Mexico's main communication-services company, saw its stock plummet close to 5% in after-hours trading last night - at about the time when it announced good corporate news. Specifically, it announced an early repayment of a loan tranche due this year, which has cleared its decks of any repayment commitments for the rest of this year. As it turns out, Telmex stock didn't drop at all today: for the entire trading day, it was riding a gain with respect to yesterday's pre-after-hours close. So, that reversed after-hours plummet has to be chalked up to an after-hours trading vagary. Perhaps there was a rumour that the coming news was bad news, which proved to be the opposite of the truth.

That's all for today's Wrapup. Thanks for reading, and I hope any rumour-driven bobbles affecting you are duly disregarded.

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