Thursday, August 20, 2009

Daily Wrapup For August 20th

Yesterday's action carried through to today's. After opening only slightly up, the three major averages climbed to over 0.50% gains for each. After sinking back a little in late morning (ET) trading, they crept up through most of the afternoon. A late-day rally kicked in about 3 PM ET, which pushed the averages up to their close for the day. The Dow was up 0.76% at the end, the S&P was up 1.09%, and the NASDAQ gained 1.01%. Of some note was the S&P's rise back above the 1000 level. The NASDAQ has yet to follow through for its "millenium" number, but it's less than eleven points below 2000. On the day of the September contract expiry, light sweet crude closed at $71.85 for a drop of 57 cents, dashing earlier-day hopes that yesterday's jump would be continued.

The lowest-quintile cut-off also rose, from yesterday's 11.62 to today's 11.71. Inversely with the S&P index, the yield dropped three basis points to 2.64%. After ETFs and stocks with less than 500M market cap were eliminated, along with ones that yield greater than 10%, the Low P/E Bin was left with one hundred and two stocks for a gain of two from yesterday. Here are the changes in the Bin, as dash-listed below:

- Biovail Corporation
- Merck & Co., Inc.
- SCANA Corporation

- CVB Financial Corp.

The first Arrival is new to the Bin. Biovail, a Canadian maker of drug-delivery technologies, got in because the S&P has outpaced it enough to make its yield sit above the yield cut-off. The stock was up 0.22% today, even if after-hours trading reversed that slight gain. Merck dropped a little today, bringing its P/E back below the lowest-quintile cut-off. The stock of South Carolina electric utility SCANA rose a little, but not enough to keep its P/E above the cut-off. The only Departure, CVB Financial, got out because a 2.68% rise in its stock put its P/E above the respective cut-off.

The oil-tanker transportation industry has been ridden with recent losses because of the recession-induced drop in global oil demand. Ship Finance International has not been one of these companies, at least for the second quarter of this year. It reported earnings of 72 cents per share for 2Q '09, as compared with 98 cents for 2Q '08. It also declared a full 30 cent per share quarterly dividend. Both of these items took some cloud off the stock today, pushing it up 4.36%. Ship Finance was a company that had a lot of doubt thrown on it: it fell out of the Bin last month becuse a declining stock price pushed its yield well above 10%. Even after its gain today, it still yields 9.46%. Since the stock isn't an income trust, the current yield suggests that there's still some doubt about how long the 30-cent dividend will be maintained.

That's all for today's Daily Wrapup. Thanks for reading, and enjoy the dwindling days of August while they last.

Disclosure: I'm holding Ship Finance in the actively-managed Marketocracy mock fund I run.

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