Lance Inc. (LNCE) released its fourth quarter earnings Monday in a report showing profit more than tripling over the same period one year ago. But higher commodity prices, such as flour and corn, as well as less than anticipated sales of cookies and crackers slightly decreased results in the fourth quarter causing the stock to be below Wall Street estimates.
Is this an aberration? Are energy companies really yielding to environmental demands? Texas Utilities (TXU), the Texas energy giant, has scrapped plans to build 11 coal fired power plants and will give a 10% price cut to many of its residential customers.
Former Federal Reserve Chairman Alan Greenspan warned recently the U.S. economy’s next phase is recessionary. Mr. Greenspan did not specify when a recession might occur, but indicated it could be as early as the end of 2007. The economy behaves in a cyclical manner: expansion, peak, contraction (recession) and trough. For example, if the last economic phase experienced is expansion, then the next phase is peak, followed by contraction, etc. So Mr. Greenspan’s comments aren’t so surprising, it’s kind of like saying “sunset follows sunrise”, it always happens that way. In the case of sunset/sunrise we know the timing of the event, but in the case of the economy, we don’t know the timing.
It used to be you could walk into any Starbucks and it would be the same. The smooth sounds of Nora Jones or Nat King Cole and the warm call of the handsome leather sofas. The attractive baristas and the girl studying biochemistry also make you feel a little giddy inside. But nowadays you’re likely to have the experience interrupted by a tinny voice over a loudspeaker blaring, “Customer needs assistance in Sporting Goods” and the mood is broken.
Subprime lenders are in the business of lending money for mortgages to borrowers with poor credit. During the heyday of low interest rates, the loan requirements of many subprime lenders were too lax as many of the subprime loans made during that time period are in default or behind in payments. The subprime mortgage industry will be in the bear’s house for some time to come, as there will probably more fallout from poor loan quality and interest rates won’t be coming down for a while, maybe a long while, so we’re bearish on the subprime mortgage lenders.
In the article, “Visa – Plastic Money – IPO”, we analyzed the credit card industry and illustrated how profitable a covered call strategy for credit card companies can be. In article, “Making Money on Credit Returns +4.3% in Dec 06”, we selected two covered call positions for MasterCard (MA) for January stock options expiration and both positions were profitable returning an average of +4.8% in only 22 days! The credit card covered calls investment strategy has worked so well we will try it again for next month’s stock options expiration. Using PowerOptions SmarSearchXL stock options search tool, we found the following position for stock options expiration in March of 2007:
In the article, “CME Buying CBOT”, we analyzed Chicago Mercantile Exchange’s (CME) purchase of CBOT (BOT), and in article, “CME Bull Put Spreads Strategy – Slick +5.8% in Jan 07”, we illustrated the profit potential of a bull put spreads strategy for CME and we selected positions for options expiration in February of 2007, which returned a very nice +7.5% in 24 days.
In the blog article, “Wal-Mart – Generic Drugs – Options Investing”, we analyzed the generic drug industry in light of Wal-Mart’s (WMT) introduction of $4 generic drugs. In article, “Generic Drug Investing Returns +1.3% in Nov.”, we showed the profitability of the strategy, and in article, “Generic Drug Investing – Returns Cool +4.6% in Jan 07”, we selected covered calls positions for February of 2007. We only found one position for PRX for February of 2007, but it generated a very nice return of +3.8% in only 24 days!
Google Inc. (GOOG) announced today it would expand its services to further compete with Microsoft’s (MSFT) product line with Web-based word-processing, spreadsheet and other applications similar to Microsoft’s Office Suite.
In article, “FedEx (FDX) Delivering Profits – Covered Calls” we analyzed the package delivery business in light of the declining cost of fuel. In article, “FedEx (FDX)/UPS – Covered Call Profits: +1.4% Dec 06”, we evaluated the performance of our selections and we selected new positions for expiration in February of 2007. All of the positions we selected for expiration in February of 2007 were profitable with an average return of +3.3% in only 58 days!