The stock prices of companies manufacturing and selling fertilizer have been blasting off over the previous year. When most people hear about fertilizer they think about the smelly byproduct stuff from animals. But a large majority of fertilizer is manufactured from natural gas and the price of natural gas is cheaper than it was a year ago. Fertilizer manufacturers have benefited from the lower prices for natural gas.
US Productivity Down – Temp Staffing Up – Kforce (KFRC)
U.S. productivity slowed in the fourth quarter of 2006 and labor costs were on the rise. Nonfarm productivity increased only 1.6% the last quarter of 2006, significantly down from the original estimate of 3%. Unit labor costs increased 6.6% in the last quarter, significantly up from previous estimates of 1.7%. This bodes well for the temporary staffing industry. As the labor market tightens and labor costs rise, companies will shift to staffing with more temporary labor. And when the economy slows down, as it always does, temporary staffing will allow companies to more easily reduce their workforces.
Continued Trouble for Subprime Lenders – New Century (NEW), Freemont General (FMT) and HSBC Holding (HBC)
Regulators announced late last week their intention to begin a crackdown on subprime home mortgage lenders as two major lenders are having difficulties with large losses.
AMD vs. Intel (INTC) – Semiconductor War
For many years AMD was more of a nuisance than competition for Intel (INTC), but in recent years AMD has provided some pretty good competition for Intel. AMD recently warned it would not meet its projected revenue for the first quarter of 2007, mostly a result of Intel putting significant pressure on AMD’s profit margins. AMD recently acquired graphics and chipset semiconductor maker ATI hoping to gain a competitive edge over Intel through integration of the two company’s products, but positive results from the merger will take time to come to fruition, so AMD’s short term prospects are looking pretty grim.
Oracle (ORCL) Acquires Hyperion (HYSL) in Competitive Move Against SAP AG
In a move widely seen as an attempt to aggressively weaken rival SAP AG’s market position, Oracle announced today it would by Hyperion (HYSL) for $3.3 billion in cash.
Merck Raises Earnings – Drug Companies – Merck (MRK) & Bristol-Myers Squibb (BMY)
On the heels of an announcement the company would no longer actively lobby for Cervical Cancer Vaccine Laws, Merck (MRK) announced it is raising its first quarter earnings estimates.
Dow Stumbles – Concerned Investors – ACH
Tuesday was a rough day on Wall Street. The Dow Jones Industrial Average took a nearly instantaneous 200-point hit at 3 pm yesterday amid news of uncertainty in Shanghai, Iran, and Afghanistan.
El Paso (EP) – Natural Gas – Covered Calls
In a previous article, “Texas Utilities (TXU) Merger & Jim Cramer: Opportunity in Coal”, we analyzed the private equity acquisition of Texas Utilities and some of the potential ramifications of the deal. As part of the deal, Texas Utilities (TXU) will forgo building 11 new coal fired electric power plants. Another potential fallout from this deal is an increase in the demand for other sources of electrical energy, natural gas in particular. Electric energy consumption is not decreasing, so the electrical energy, which was to be generated by the 11 scuttled TXU coal fired power plants, has to come from someplace, and one potential avenue could be from natural gas.
Lance (LNCE) Snack Foods – Long Term Sales/Earnings Growth
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.
Texas Utilities (TXU) Merger & Jim Cramer: Opportunity in Coal
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.