CMYK ➛
THE TIMES LEADER www.timesleader.com
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SUNDAY, AUGUST 28, 2011 PAGE 5D
MarketPulse GLEEFULLY AWAITING IRENE? Not everyone hates to see hurricanes. For roofing companies, big storms often mean big business. Ryan Merkel, an analyst at William Blair & Co., said in a note to clients this past week that Beacon Roofing Supply, one of the nation’s largest suppliers of roofing materials, could get a sales boost of $200 million in the 12 to 24 months following Hurricane Irene. Beacon’s sales rose by about $80 million in the 12 months after Hurricane Ike swept through the Gulf of Mexico and made landfall in Galveston, Texas in 2008. Merkel has an “outperform” rating on Beacon’s stock.
MONSTER OF A YEAR Here’s more proof that the job market is in a slump. Monster Worldwide, the operator of its namesake jobs website, has fallen 68 percent this year, more than any other company in the S&P 500. Most of Monster’s losses have occurred in the past month as investors have worried that the economy is headed for another recession. The unemployment rate remains at 9.1 percent. And the government reported on Thursday that applications for unemployment benefits rose 5,000 to a seasonally adjusted 417,000 last week. On Friday, Monster’s stock fell to $7, its lowest point over the past 52 weeks, although it recovered later.
Beacon Roofing Supply (BECN)
Friday’s close
$18.18
52-week price range $13.52 $23.54 Market value: $838M Price-to-earnings ratio: 19
(based on past 12 months’ earnings)
Average target price: $23.00 YTD change: 1.7% Russell 2000: -11.7% Source: FactSet
FEARING JUNK Investors are giving up on junk bonds. Mutual funds that own high-yield, or junk, bonds have fallen 5.8 percent over the past
Biggest losers
Worst stocks in the S&P 500 year-to-date: Genworth Financial
-51.0%
A shift towards safety
American International Group
Total return of bond funds over the past month:
-51.8
United States Steel
-52.8
Long-term government:
Hudson City Bancorp
-53.4
Akamai Technologies
-56.1
Monster Worldwide
-68.0
+13.2%
Inflation protected:
+1.8%
Emerging markets:
-0.9%
Multisector:
-2.5%
High-yield bond:
-5.8% Source: Morningstar
Source: FactSet
month. That’s the biggest decline of any bond-fund category tracked by Morningstar. Junk bonds are essentially IOUs from risky companies. Investors bought those bonds earlier this year because they paid higher interest rates than Treasurys. But the downgrade of the U.S. credit rating and the slowdown in the global economy have sent many investors looking for safer places to put their money. Long-term government bond funds are up 13 percent over the past month, for example. Chip Cutter, Kristen Girard • AP
Sticking with stocks
Stocks still look like the better bet than bonds, even after stocks’ wild ride the last month, say Sandy Villere III and George Young. They are portfolio managers who help run the Villere Balanced fund, which can invest in both stocks and bonds. Villere & Co. manages an additional $1.3 billion in assets outside the mutual fund.
InsiderQ&A
Stocks haven’t been this volatile since the 2008 financial crisis. Is this time different? Villere: This is not 2008, 2009. You’ve got banks with more capital Villere III than they had. Investors tend to look through the rear-view mirror as opposed to the windshield. They assume another financial crisis is going to happen. We’re cognizant that it Young could happen, but we don’t believe that it will. Young: There’s never an easy time to invest. You see that come up in the press a lot: ‘Oh, this is a very difficult time to invest.’ I’ve been doing this for 25 years, and there’s no day I’ve ever come in and said, ‘Oh, it’s obvious I should buy XYZ stock.’ It’s never apparent. Stocks are seldom cheap and popular at the same time. Villere: Look at balance sheets in the Russell 2000 (index of small stocks, where Villere tends to focus) It’s something like 15 percent debt to total (market value of the stocks). The average is more like 26 percent over time. So you’re using historically low leverage, because these businesses are hoarding cash. They’re healthy. They’re doing the worrying for people. You own several companies that depend on consumer spending, even though consumers are still hurting from the weak job market. Villere: Pool, they’re the largest supplier of pool products for the construction of new pools and for maintenance. When your pump breaks and your filter needs to be replaced, you buy it through Pool. As bad as things get, people are going to continue to pay their electric bills, and they’re going to continue to put chemicals in their pool so it doesn’t turn green or black. People have lost enough money on their houses that the last thing they’re going to want to do is fill in their pool and erode the value further. The CEO says they’re going to grow earnings 20 percent annually over the next five years because over three quarters of their sales is maintenance that people have been deferring. And Jos. A Bank, a men’s clothing retailer? People don’t need suits if they’re not working. Young: The interesting thing that people are not aware of with them is the wedding business. There is going to be a consistent number of people getting married, and you’ve got to get the right tuxedo from somewhere, and people tend to rent. Say you’re going to a wedding in New Orleans, and you live in Baltimore. You go to the Baltimore Jos. A Bank and get everything you need and pick it up in New Orleans. It’s a very high margin business because you can just rent and re-rent. And O’Reilly Automotive, which sells auto parts? Villere: The average age of cars is increasing, because people aren’t waltzing into a dealership and buying a new car. ... And as fuel prices come down, people are going to be driving more, which means more wear and tear. You’ve been shying away from bonds? Young: (Earlier in August,) we didn’t have enough room in our portfolio, cash, to buy Apple, but we wanted to buy Apple. So we had to sell a bond, and we sold a bond that had a 2.8 percent yield. In our mind, the question was: Do you think you’ll do better in Apple or a given stock over the next few years versus a bond that’s yielding 2.8 percent? That’s pretty easy to do.
Rising gold prices should mean stronger revenue for gold miners, but their stock prices haven't kept pace.
Treasury yields edge up
Gold
Goldcorp
+8.6%
0%
+24.0 %
Newmont Mining
-1.0%
2011
InterestRates
Barrick
-6.0%
J
F
M
A
M
J
J
Money market mutual funds
A
PRIME FED Taxable—national avg RATE FUNDS Selected Daily Govt Fund/Cl D FRIDAY 3.25 .13 Tax-exempt—national avg 6 MO AGO 3.25 .13 Alpine Municipal MMF/Investor 1 YR AGO 3.25 .13
Glittering opportunity?
Gold is up more than 20 percent this year, despite its recent stumble. Stocks of miners that produce gold haven’t kept up. Financial analysts say that leaves a buying opportunity for investors, even if gold falls. Consider Barrick Gold, the world's largest gold producer. Its stock is down 6 percent for 2011, through Thursday. That compares with a 7.8 percent drop for the S&P 500, and it's well below gold's 24 percent rise. Analysts say investors have sold Barrick and other miners with the rest of the stock market on worries about a weakening economy and Europe's debt problems. Some investors also are concerned that higher energy costs for
miners will erode profit margins. Others say that gold has simply gone too high, too fast. Gold fell 5.6 percent to $1,757.30 per ounce on Wednesday, its steepest drop since March 2008. But stock prices for Barrick and other top miners look fair only if gold falls all the way to $1,100 per ounce and stays there, RBC Capital Mar-
SOURCE: FactSet
Data through Aug. 25
kets analysts wrote in a report. The analysts came to that number by looking at the historical relationship between miner stock prices and the value of the gold in their mines. Citi Investment Research expects gold prices to fall, but only to $1,650 in 2012 and $1,500 in 2013. Even with that drop, Citi analyst Alexander Hacking says Barrick's stock could jump more than 50 percent over the next year to $78 from $49.99 Thursday. He expects investors to eventually give credit to Barrick and other gold miners for the higher price of gold. Another benefit for gold miners: Oil prices have dropped. That calms worries about profit margins.
Air Products
TICKER APD
98.01
78.64
4.5
t
t -13.5 +9.82
3
0.01 0.18 $ 2,500 min (888) 785-5578
2.43 4.45 3.72 5.08 8.76 1.10
0.14 0.18 0.19 0.05 0.31 -0.16
FRIDAY YIELD
1WK
0.01 0.08 0.01 0.19 0.94
0.00 -0.01 0.00 0.00 0.05
t t t t t
t t t t t
-0.13 -0.18 -0.17 -0.31 -0.44
0.16 0.34 0.20 0.83 2.39
0.07 0.01 0.18 0.88
10-year T-Note 2.19 30-year T-Bond 3.54 Money fund data provided by iMoneyNet Inc.
0.13 0.15
t t
t -0.30 t 0.01
3.72 4.77
2.06 3.39
%CHG 1MO
%RTN 1YR
TREASURYS 3-month T-Bill 1-year T-Bill 6-month T-Bill 2-year T-Note 5-year T-Note
CHANGE 1MO 3MO 1YR t t s t s t
6.1
14
3.0
52-WK HIGH LOW
t -0.03 t 0.17 s -0.03 t 0.22 s 0.27 t -0.42
3.29 5.31 4.22 5.95 8.81 2.46
CHANGE 1MO 3MO 1YR
Exchange-Traded Funds
Stan Choe, Kristen Girard • AP
3.40
0.01 0.12 $ 10,000 min (800) 243-1575
1WK
Broad market Lehman Triple-A corporate Moody’s Corp. Inv. Grade Lehman Municipal Bond Buyer U.S. high yield Barclays Treasury Barclays
52-WK RANGE FRIDAY $CHG %CHG %CHG %RTN RANK %RTN LOW HIGH CLOSE 1WK 1WK 1MO 1QTR YTD 1YR 1YR 5YRS* PE YLD 72.81 3
MIN INVEST PHONE
YIELD
FRIDAY YIELD
U.S. BOND INDEXES
LocalStocks COMPANY
The yield on the 10-year Treasury note rose slightly this past week after Federal Reserve Chairman Ben Bernanke said the economy will grow over the long term. That encouraged investors to buy riskier assets like stocks. The 10-year yield ended the week at 2.19 percent, up from 2.10 percent a week earlier. A bond's yield rises as its price falls. The average rate on the 30-year fixed mortgage rose to 4.22 percent.
2.25 4.21 3.36 4.86 6.61 1.10
52-WK HIGH LOW
FRIDAY CLOSE
CHG WK
RTLA
41.78
7.37
21.4
-34.6
...
COWL
30.69
5.11
20.0
-26.8
... -27.1
NAME
TICKER
iPath LgExt Rus2000 Direx Agbiz Bull3x
%CHG 1WK
ProShs UltraPro QQQ
TQQQ
62.04
9.67
18.5
-27.8
Direxion TechBull 3x
TYH
31.52
4.85
18.2
-30.1
16.3
Pro UltPro MidCap400
UMDD
54.40
8.35
18.1
-36.3
-37.6
Amer Water Works
AWK
21.72 9
30.70
29.02
1.79
6.6
s
t
14.7 +31.82
1 13.5a
17
3.2
Direx SOX Bull 3X
SOXL
25.19
3.77
17.6
-33.4
-6.3
Amerigas Part LP
APU
36.76 4
51.50
42.62
1.30
3.1
t
t -12.7 +5.71
3 13.2
27
6.9
CS Elem GlobWarm
GWO
8.31
1.24
17.5
-0.3
45.3
Aqua America Inc
WTR
18.90 6
23.79
21.62
0.72
3.4
s
t
-3.8 +13.30
2
1.7
22
3.1
Pro UltPro Russ2000
URTY
46.69
6.93
17.4
-41.3
-41.6
Arch Dan Mid
ADM
26.00 2
38.02
27.80
0.28
1.0
t
t
-7.6 —5.14
4
-6.1
9
2.3
Direx Matls Bull 3x
MATL
25.86
3.83
17.4
-35.0
...
AutoZone Inc
AZO
208.01 0 306.00 301.30
9.88
3.4
s
s
10.5 +42.49
1 28.1
17
...
Direxion SCapBull 3x
TNA
42.47
6.23
17.2
-41.6
15.7
Bank of America
BAC
Bk of NY Mellon
BK
Bon Ton Store
BONT
CIGNA Corp
CI
CVS Caremark Corp
CVS
26.84 6
CocaCola
KO
54.97 0
69.82
68.50
1.40
2.1
s
s
Comcast Corp A
CMCSA 16.76 4
27.16
20.57
0.61
3.1
t
t
Community Bk Sys
CBU
21.75 4
28.95
23.98
2.17
9.9
t
t -13.6 +10.26
Community Hlth Sys
CYH
17.60 1
42.50
19.39
-0.13
-0.7
t
Entercom Comm
ETM
4.91 1
13.63
5.67
0.49
9.5
t
t -51.0 +11.18
3 -18.8
6.01 2
15.31
7.76
0.79
11.3
t
t -41.8—37.45 5 -23.5
...
0.5
CS VS Vix Mid Term
VIIZ
88.67
12.53
16.5
30.5
...
18.77 2
32.50
20.21
1.26
6.6
t
t -33.1—14.60 4
-6.8
9
2.6
Direxion MCapBull3x
MWJ
31.26
4.37
16.3
-35.5
23.8
5.59 2
17.49
6.83
0.51
8.1
t
t -46.1 +5.48
3 -21.7
26
2.9
31.39 7
52.95
44.86
3.21
7.7
t
t
22.4 +40.31
1
4.2
8
0.1
...
39.50
34.34
1.97
6.1
t
t
-1.2 +25.37
2
1.7
14
1.5
4.2 +27.48
2
11.4
14
2.7
-5.9 +23.22
2
-1.7
14
2.2
3
5.6
12
4.0
t -48.1—27.49 5 -12.3
7
...
5
...
9
...
Fairchild Semicond
FCS
7.71 4
21.02
12.67
0.63
5.2
t
t -18.8 +59.37
1
-5.1
Frontier Comm
FTR
6.29 3
9.84
7.22
0.25
3.6
t
t -25.8 +4.05
3
-2.4
Genpact Ltd
G
13.09 5
18.71
15.88
0.81
5.4
t
t
2 4.6a
23
1.1
Harte Hanks Inc
HHS
7.28 1
13.74
7.57
0.20
2.7
t
t -40.7—24.01 4 -19.0
10
4.2
Heinz
HNZ
45.52 6
55.00
51.10
-0.75
-1.4
t
t
3.3 +14.57
2
7.5
17
3.8
Hershey Company
HSY
45.31 9
59.45
57.29
2.52
4.6
s
s
21.5 +26.15
2
3.3
22
2.4
Kraft Foods
KFT
28.88 7
36.30
33.95
0.50
1.5
t
t
7.7 +19.34
2
3.8
20
3.4
Lowes Cos
LOW
18.07 3
27.45
20.24
0.93
4.8
t
t -19.3 -+.29
3
-3.8
13
2.8
M&T Bank
MTB
69.23 2
95.00
74.39
4.53
6.5
t
t -14.5—10.92 4
-6.4
11
3.8
McDonalds Corp
MCD
72.14 0
90.46
89.93
2.70
3.1
s
s
2 23.1
18
2.7
NBT Bncp
NBTB
18.00 3
24.98
19.63
1.36
7.4
t
t -18.7 -+1.74
3
0.5
12
4.1
Nexstar Bdcstg Grp
NXST
3.64 4
10.28
6.03
-0.47
-7.2
t
t
0.7 +60.37
1
6.8
67
...
PNC Financial
PNC
42.70 2
65.19
46.84
3.72
8.6
t
t -22.9 —5.52
4
-4.7
7
3.0
PPL Corp
PPL
24.10 8
28.73
27.80
0.50
1.8
t
t
5.6 +9.65
3
0.1
12
5.0
Penn Millers Hldg
PMIC
12.31 8
17.72
16.13
0.34
2.2
s
t
21.9 +26.41
2
...
...
...
Penna REIT
PEI
9.26 1
17.34
10.03
0.31
3.2
t
t -31.0 -+1.43
3 -16.2
...
6.0
PepsiCo
PEP
60.10 3
71.89
63.16
1.09
1.8
t
t
-3.3 +1.54
3
2.2
16
3.3
Philip Morris Intl
PM
50.54 9
72.74
69.20
0.37
0.5
t
t
18.2 +40.54
1 11.7a
16
3.7
Procter & Gamble
PG
57.56 5
67.72
62.57
1.61
2.6
s
t
-2.7 +8.47
3
3.1
16
3.4
Prudential Fncl
PRU
45.34 2
67.52
47.56
1.07
2.3
t
t -19.0 —1.89
4
-6.5
7
2.4
SLM Corp
SLM
10.92 5
17.11
13.65
0.92
7.2
t
t
2 -20.6
10
2.9
4.5 +15.16
17.2 +26.18
8.4 +24.21 5.0
45 10.4
SLM Corp flt pfB
SLMpB 32.41 5
60.00
46.00
0.92
2.0
t
t
...
0.0
Southn Union Co
SUG
22.02 9
44.65
41.88
0.67
1.6
t
s
74.0 +88.05
1 10.3
22
... 10.1 1.4
TJX Cos
TJX
39.56 9
56.78
54.67
1.81
3.4
t
s
23.2 +36.46
1 16.9
16
1.4
UGI Corp
UGI
25.81 4
33.53
28.80
1.66
6.1
t
t
-8.8 +8.99
3
6.5
13
3.6
Verizon Comm
VZ
29.10 7
38.95
35.76
1.05
3.0
s
t
-0.1 +27.83
2
7.3
15
5.5
WalMart Strs
WMT
48.31 5
57.90
52.90
0.60
1.1
s
t
-1.9 +6.53
3
5.8
12
2.8
Weis Mkts
WMK
32.99 6
42.20
38.39
0.40
1.1
t
t
-4.8 +17.74
2
2.6
15
3.0
Notes on data: Total returns, shown for periods 1-year or greater, include dividend income and change in market price. Three-year and five-year returns annualized. Ellipses indicate data not available. Price-earnings ratio unavailable for closed-end funds and companies with net losses over prior four quarters. Rank classifies a stock’s performance relative to all U.S.-listed shares, from top 20 percent (far-left box) to bottom 20 percent (far-right box).
iPath LgExt S&P500
SFLA
49.75
6.63
15.4
-23.0
Direx Russia Bull3x
RUSL
22.39
2.92
15.0
-55.3
...
Direxion LCapBull 3x
BGU
53.75
6.78
14.4
-29.9
23.2
Direxion FinBull 3x
FAS
13.74
1.73
14.4
-40.1
-26.0
ProShs Ultra S&P500
UPRO
52.36
6.44
14.0
-28.6
-58.6 -26.2
DB 3x Sht UST ETN
SBND
13.80
1.69
14.0
-32.0
ProSh Ult Rus2KG
UKK
36.84
4.39
13.5
-27.4
26.2
ProSh Ultra Indls
UXI
35.31
4.08
13.1
-23.3
15.5
ProShs UltPro Dow30
UDOW
107.53
12.43
13.1
-22.7
32.4
ProSh UltraBasicMat
UYM
36.55
4.22
13.1
-26.3
26.2
Barc Long B LevS&P
BXUB
63.14
7.17
12.8
-20.0
36.8
ProShs UltRegBk
KRU
29.36
3.32
12.7
-32.0
-11.1
ProSh Ultra Tech
ROM
52.00
5.71
12.3
-20.1
17.2
ProShs Ultra QQQ
QLD
74.87
8.17
12.2
-17.8
33.7
ProSh Ultra MidCap
MVV
51.86
5.51
11.9
-23.7
21.8
ProShs Ultra R2K
UWM
31.79
3.38
11.9
-27.3
18.4
ProSh Ultra SmCap
SAA
36.44
3.86
11.8
-25.3
23.7
Fact S&PBullTBdBear
FSE
13.61
1.41
11.6
-30.2
...
iPath LgExt Rus1000
ROLA
48.59
4.95
11.3
-15.3
...
ProShs Ult R1K Gr
UKF
45.16
4.49
11.0
-18.4
27.4
ProSh Ult Rus MCG
UKW
39.73
3.94
11.0
-24.1
25.7
E-Tracs 2x BDC
BDCL
17.86
1.77
11.0
-16.1
...
Direxion EngyBull 3x
ERX
44.21
4.31
10.8
-41.3
65.2
Direx Hlthcre Bull3x
CURE
29.52
2.76
10.3
-19.5
...
Direx China Bull 3x
YINN
27.86
2.61
10.3
-39.6
-13.8
Dirx DlyRtlBull2x
RETL
53.26
4.89
10.1
-12.2
36.4
ProSh Ultra Fincl
UYG
43.50
4.00
10.1
-26.4
-11.8
Barc iPath GlobCarbn
GRN
22.59
2.05
10.0
5.6
-15.7
Gugg Solar
TAN
5.36
0.48
9.8
-16.6
-25.5 -30.7
MktVect Solar Engy
KWT
7.62
0.67
9.6
-18.1
PowerShares Software
PSJ
21.94
1.92
9.6
-11.6
3.6
Rydex 2x SP 500
RSU
35.43
3.09
9.6
-18.3
20.2
Direxion REst Bull3x
DRN
49.55
4.28
9.5
-33.8
16.1
ProShs Ultra S&P500
SSO
41.28
3.55
9.4
-18.5
19.7
ProSh Ult Rus2KV
UVT
22.40
1.91
9.3
-27.6
9.8
PwShs Bldg Construct
PKB
10.93
0.92
9.2
-12.2
2.5
ProShs Ult Pac exJpn
UXJ
30.52
2.55
9.1
-17.7
19.6
Barc LongC LevS&P
BXUC
117.95
9.74
9.0
-15.2
23.6
Beating the S&P, but still cheap It’s hard to find winners in the stock market these days. But this screen, powered by FactSet, highlights stocks that have outperformed the S&P 500 this year. All have a relatively high dividend yield above 2.3 percent, the average for the S&P 500. Even better: These stocks are still cheap. Each company has a price-to-earnings ratio below 11. The S&P 500’s P/E ratio is about 13. Dominion Resources, the parent of North Carolina Power and Virginia Power, tops the list. The company’s stock has risen about 15 percent this year, in part because people still need to power their homes and businesses even in tough economic times. The S&P 500 has fallen 6.5 percent in the same period. Drug maker Eli Lilly’s stock is up 2.4 percent, but it has a dividend yield of 5.5 percent, the highest on the list. Some investors have questioned whether Lilly will be able to keep paying a hefty dividend after it loses U.S.
Stock Screener
SOURCE: FactSet
p
TICKER
DIVIDEND YIELD
P/E
YTD
Dominion Resources Inc. H&R Block Inc.
D HRB
4.0% 4.4
10.3 9.4
14.6% 13.8
Chevron Corp. Public Service Enterprise Group Lockheed Martin Eli Lilly & Co. Exelon Corp.
CVX PEG LMT LLY EXC
3.3 4.1 4.2 5.5 5.0
10.1 10.8 9.1 7.8 10.9
5.2 4.2 3.0 2.4 1.6
COMPANY
patent protection for its top-selling drug, the antipsychotic Zyprexa, in October. But Leerink Swann analyst Seamus Fernandez said earlier this month he’s confident the dividend will remain at its current level as Lilly finds new ways to raise its revenue in emerging markets. Data through midday Aug. 26
p p p
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