This weekend’s edition of The Unusual Suspects includes mostly non-earnings events that will be on deck this coming week and/or some of the carry-over issues from last week. Our list of Unusual Suspects to watch for the week ahead includes Apple Inc. (NASDAQ: AAPL), BP plc (NYSE: BP), CROCS Inc. (NASDAQ: CROX), General Electric Co. (NYSE: GE), Google Inc. (NASDAQ: GOOG), Orexigen Therapeutics, Inc. (NASDAQ: OREX), Safeway Inc. (NYSE: SWY), SandRidge Energy, Inc. (NYSE: SD), VIVUS, Inc. (NASDAQ: VVUS), VocalTec Communications Ltd. (NASDAQ: VOCL) (NASDAQ: CALL), and Vonage Holdings Corporation (NYSE: VG). We have offered some detail on each company mentioned here, along with trading ranges, expected reactions, and additional trading color where applicable. We have also listed the select earnings previews for the week ahead if you choose to see those in a separate piece.
Apple Inc. (NASDAQ: AAPL) is not just one to watch with earnings due on Tuesday after the closing bell. The Steve Jobs iPhone4 press conference felt a lot like the LeBron James conference, and the “success” of that conference is still up for debate. The notion that Apple was down only 0.6% on a Friday when the NASDAQ closed down 70 points and the DJIA closed down 261 points may lean toward more of a win than a loss. We are rethinking our earnings strategy for the Apple release, and we have some options data as well.
BP plc (NYSE: BP) is of course one to watch. So far, the cap on the well is holding. There are also still reports that the company is approaching investors over a possible break-up. We’d note that the company just did a biofuels purchase this last week and so far no huge investment has been made into it and calls for anything more ominous have gone unanswered. We put Tony Hayward as one of our CEOs to go this year. Shares rose more than $10.00 per ADR off of the lows in just 10 or 11 trading sessions and now the ADRs are at $37.10.
CROCS Inc. (NASDAQ: CROX) is a standout stock, but not for events. The stock closed up 2.4% at $10.50 on an awful market day with a 52-week range of $2.91 to $12.28. A stealth analyst call for raised estimates for 2010 and 2011 from Piper Jaffray may have it back on the map with a move away from wholesale dependence and a move away from just the original products. The fad-clothing and shoe-maker has actually beaten earnings estimates in the last three quarters and the stock is up 80% so far this year; But… This did not really participate so much in the latest rally and the stock was just above $12.00 as recently as June 21. CROCS is not on our consumer shopping list, but the stock is on the radar now.
General Electric Co. (NYSE: GE) is back to a push-and-pull level after earnings. Had the market been up on Friday, the vote would have been that earnings were pretty good rather than a 4.6% drop to $14.55. The stock could retest $14.00 or a tad lower as it did in June and there is some overhang with the 50-day moving average at $15.81 and the 200-day moving average at $16.22. What GE has going for it is a new higher earnings base, a more stable financial unit, a dividend that is going to be raised soon, and an implied $20.00 price target for 2011 based on 15X earnings. That alone won’t make a huge rally, but this should act to buffer against endless downside from what we have already seen. At $14.55, the 52-week range is $11.25 to $19.70.
Google Inc. (NASDAQ: GOOG) fell after earnings and with the market on Friday. Much of the bias has gone negative now (even from Jim Cramer) as Google has adopted so many wars on so many fronts. Monday may be a change for it though. Guess who snagged the cover-story for Barron’s this weekend? Google… Barron’s noted, “Many investors think Google’s amazing run is over. It’s not. The stock is undervalued by 35% or more.” We’d note that the article is not signaling much different from what the average analyst price targets are, but this is still a win for Google holders.
Orexigen Therapeutics, Inc. (NASDAQ: OREX) now has a different FDA bias after the VIVUS implosion Friday. This will put Orexigen in a negative light. Shares closed down 9.4% at $4.53, and the 52-week trading range is $3.81 to $10.83. This stock almost hit $6.00 ahead of the VIVUS FDA debacle, so it lost almost 30% and is still going to be on many trader watch lists for both buys and sells ahead of its own FDA event scheduled late this year.
Safeway Inc. (NYSE: SWY) may finally be worth a look according to a Barron’s feature. The article noted that California is improving and the company is well-positioned for a recovery. This may be good for a 1% or 2% pop in a static market Monday.
SandRidge Energy, Inc. (NYSE: SD) has finally closed its merger with Arena Resources. That deal was incredibly dilutive in share count as the float seems to have effectively more than doubled and its market cap will have doubled as well when it is all said and done. The beauty of this deal was that SandRidge is now more of an oil company than a nat-gas company and management is viewed as strong here; and the new profit estimates for the combined company should start coming out favorably from analysts this coming week. Shares closed up 1.7% at $6.58, which looks to be partly from a Jim Cramer endorsement this week, but the 52-week range is $5.20 to $15.00. Despite the new-normal and the bias against energy companies, holders of the combined NewCo no longer have to worry about the endless shorting and pre-closing trades any longer.
VIVUS, Inc. (NASDAQ: VVUS) was given yet another huge blow after the FDA panel said that the risks in Qnexa for weight loss should keep the drug off the market. As a reminder, FDA “approvals or rejections” do not always follow the advice of their panels. The verdict is that VIVUS won’t have a blockbuster with Qnexa now. Shares were down 55% at $5.41 on Friday.
VocalTec Communications Ltd. (NASDAQ: VOCL) got on the map Friday. It merged in almost what felt like a SPAC merger. VocalTec and YMAX Corp., the creator of MagicJack, have successfully merged and will be traded on the NASDAQ under the symbol “CALL” on Monday, July 16, 2010. MagicJack is that $21 or $22 a year telephone service you see advertised on TV all the time. More details are here for the company’s outlook, new share price for a reverse split and more. The stock closed up 150% at $3.30 as the news is that well received.
Vonage Holdings Corporation (NYSE: VG) was down on Friday, but mostly because of the market. The VocalTec-YMAX-MagicJack situation is going to bring Vonage more in the light and more as a target of price competition. While MagicJack is different, it seems to be the hands down winner on price. Closing on the lows of the day Friday at $2.28, the 52-week range is $0.33 to $2.79.
- 11 DJIA Components report this week; full previews and color added on each.
- Almost all major airline companies report earnings this week.
- Rethinking Apple earnings and options.
JON C. OGG
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