Tag - Earnings

Intel's blowout earnings report last night is certainly making it look as though earnings estimates were revised too low for corporations. And so the overwhelmingly pessimism that drove stocks lower since early May seems to be shifting to optimism that maybe things aren't that bad after all.

Intel's second quarter EPS were $0.51 on revenue of $10.8 billion. Those numbers crushed the analyst expectations. Analysts wanted $0.43 with $10.3 billion in sales. Guidance was also way above expectations. Intel's management expects third quarter revenue of $11.6 billion from $11 billion.

CEO Paul Otellini made sure to let analyst know during the conference call that this quarter was the best quarter in the company's 42 year corporate history.

It's clear that corporations have been spending money on technology. That's a key factor for the economic recovery. With record amounts of cash on their books, it's hoped that corporations' willingness to spend will translate to jobs growth.

I would also point out that Intel's bullish forecast bodes well for sales of Microsoft's (Nasdaq:MSFT) latest office suite.

Of course, we've only has two days of earnings season, so it's a little early to say that 2Q earnings will be great for all companies. Intel, for instance, traded higher following each of its last two quarterly earnings reports, only to give those gains up.

After six straight up days, it might seem like the market should pull back a little. And there should be a little nervousness ahead of bank earnings, which start with JP Morgan (NYSE:JPM) tomorrow.

But I have a feeling this market is not going to back off much, making it difficult for investors to find what they feel is an attractive entry point.

This is typical of the start of a good rally. The stock market will surge off of lows when investor sentiment is low, as the S&P 500 just did, jumping from 1,011 to 1,100. Now, investors will be torn by the dueling emotions of fear and greed. In one ear, greed will tell them to buy, that prices are headed higher.

But in the other ear, fear will say that they are suckers to buy after the break higher, better prices will be available if they just wait.

When this happens, the stock market tends to not give investors the lower entry prices they are hoping for. Investors are then in the difficult position of having to chase prices, which is not a comfortable place to be.

Fortunately, Daily Profit readers had the opportunity to get some upside exposure before the rally began with Citigroup (NYSE:C), JP Morgan (NYSE:JPM) and Maguire Properties (NYSE:MPG).

This will make it much easier to mediate between the voices of fear and greed.

There are a couple things we'll want to see in the days to come. Good earnings from banks aside, it will be a good sign if gold and Treasuries decline and oil prices rally.

Gold is especially important, as a decline for gold prices would be an important sign that investors are ready to embrace risk in the form of stocks and a general sense that the economy is improving.

TradeMaster's Jason Cimpl is very bullish on Chinese stocks. A year long bear market for Chinese stocks has left valuations at extremely attractive levels. And Jason is already seeing signs that these stocks are ready to move. One Chinese stock, China TransInfo (Nasdaq:CTFO), jumped 25% yesterday.

If you haven't signed up for Jason's TradeMaster Boot Camp you can should. This 5-part instructional video series is free and will help you profit in the stock market. You can sign up for the TradeMaster Boot Camp and start receiving Jason's e-letter, TradeMaster Market Forecast, HERE.

As always, thanks for all of your comments, and please keep them coming:ianwyatt@wyattresearch.com

In a recent survey by the National Association of Business Economics, 70% of economists said they believe the U.S. economy will grow by more than 2%. Just three months ago, only 61% of surveyed economists had such bullish expectations.   

 

And it gets better. 24% of surveyed economists believe 3% growth is coming, up from just 14% January.   

 

The details of the survey also show that employment is improving in the hardest-hit sectors: real estate, finance and manufacturing. And salaries are also on the rise.   

 

Heavy equipment maker Caterpillar (NYSE:CAT), a bellwether for global economic conditions, reported solid earnings this morning. And it raised full-year 2010 earnings projections, saying that “…economic conditions are definitely improving…”   

 

The stock market is certainly acting as though better times are ahead. Still, it seems that individual investors remain skeptical.   

 

Caterpillar’s comments point to the reason why: much of the growth in orders it is seeing is coming from outside the U.S. Caterpillar actually lowered its estimate of housing starts in the U.S. by 20%, from 1 million to 800,000. It said the weak labor market was "the major reason many remain pessimistic about the U.S. economy." 

 

I suspect that fact is what’s weighing on investors right now. How can the economy improve if unemployment remains stuck? And how can the stock market hold onto to its gains if consumer spending is capped by the unemployed?

Stock prices are forward-looking. That means that current valuations are not solely based on the current business environment, but rather, on what investors expect in the future.   

 

Over the past few quarters, corporate earnings have beaten estimates handily. Around 80% of companies are beating estimates for 1st quarter 2010. That’s phenomenal. And the current rally reflects the likelihood that earnings growth will continue into the future.   

 

Companies have clearly cut their expenses to the point that current spending from both consumers and businesses is having a big impact on profits. What’s more, companies haven’t had to take on more expenses to grow profits at a healthy pace.   

 

I think that we’re at the outset of a virtuous cycle, where increased demand leads to increased employment which leads to increased demand…  

 

Mutual fund inflows continued to grow in the 1^st quarter. In fact, investors added as much money between January and March 2010 as they did at the market’s bottom in March 2009.   

 

But most of the $123 billion in fund inflows went to bond funds. Equity funds only attracted $15 billion in new funds. That’s less than half the $35 billion in net new funds that went into bond funds.   

 

Again, investors’ behavior suggests they remain skeptical and prefer the relative safety of bonds.  

 

Now, skepticism is almost a pre-requisite for strong bull market. And this particular bull run has no shortage of strength or skeptics.   

 

According to Ned Davis research, 90% of stocks are trading above their 50-day moving average. That’s triggered a “breadth thrust buy signal.”   

 

Apparently there have only been 12 breadth thrust buy signal since 1967. 2 occurred in the last year. And this particular buy signal seems very robust.  

 

In the ensuing month, the S&P 500 has averaged a 4.6% gain. In the following quarter, the gain is 8.2%. And the gains for the entire year following a “breadth thrust buy signal” have averaged 19.7%. What’s more, from the research presented, there has never been a loss for the S&P 500 in the 12 months following this buy signal.   

 

Maybe it’s time to drop the skepticism…   

If the stock market has you scratching your head, don’t worry. You’re not alone. 

 

I’ve been half-jokingly calling the stock market “bulletproof” for the last couple of weeks. And it’s because stock prices just keep marching higher. It’s like there’s no bad news that could possibly bring it down.   

 

Last week, we had a volcano eruption that grounded European flights and cost those airlines at least $2 billion. Then Goldman Sachs was accused of fraud by the SEC, which makes a financial reform bill that could affect the entire banking industry’s profits, and the net result for stock was a one-day decline.   

 

And even then, the S&P 500 immediately recovered that loss and made a new yearly high. What’s going on?   

 

It’s pretty easy to look at how far they’ve run just this year and imagine that there’s plenty of downside potential. And there may well be. So far this earnings season, companies that miss earnings estimates are getting absolutely pounded.  

 

Again, it’s easy to imagine what could happen to the stock market if economic data starts missing expectations by a wide margin. But the fact is, even when economic data misses expectations, the stock market barely reacts.   

 

It’s enough to put the conspiracy theorists into high gear. I’ve been reading more and more commentary that’s calling the market manipulated and propped up by the government or the Fed or the hedge funds. The market doesn’t sell-off because it isn’t “allowed” to, they say.   

 

I’m not one to buy into massive conspiracy theories. I don’t find them helpful. Sure, we could certainly say that government stimulus efforts are a form of manipulation. Low interest rates and emergency lending programs have certainly made things happen that would have otherwise been impossible.   

 

Ultimately, I have a hard time believing our government could pull off a widespread market manipulation scheme. And besides, I prefer the KISS principle and Occam’s razor – let’s not introduce more variables into an explanation than are needed.   

 

Interest rates are low. Money is cheap. And we’ve seen the effects of cheap money before. Between 2004 and 2007, housing prices and commodities took off due to the effects of cheap money.   

 

Cheap money has certainly helped the banks return to respectability. And it’s helping the housing market, too. Just look at what a free $8,000 credit is doing for new home sales.   

 

Automakers, commodities, credit card companies -- it’s hard to find an area that cheap money hasn’t helped. Well, except for unemployment. There is a point where cheap money will boost hiring significantly. Unfortunately, that point coincides with inflation. And interest rates will start rising before it has an impact on the unemployment rate.   

 

At some point the trend for the stock market will change. It will be pretty obvious when that happens. It seems logical that a trend change will occur in conjunction with a change in sentiment toward interest rates.   

 

Right now, it is believed that interest rates won’t rise until early in 2011. But those expectations are subject to change and there may not be anything logical about it.   

 

So what’s an investor to do? Well, if you choose to simply stand aside and not participate in the stock market rally, I can’t blame you.      

 

But there is money to be made in stocks. For the most part, earnings have come in much better than expected. Again. There is strength in the stock market, and some investors are buying with conviction.   

 

Today is the last day to send TradeMaster Daily Stock Alerts’ Jason Cimpl a ticker symbol for him to review. If you’re interested, Jason does a great job with chart analysis. And his skills have lead to some excellent short-term gains for his readers.   

 

You can follow this LINK to get your stock reviewed and get 2 weeks of TradeMaster Daily Stock Alerts for just $9.95.  

 

Jason’s TradeMaster service has one of the lowest cancellation rates I’ve ever seen. That’s because his readers love his work. And they make good money from his analysis. I’m betting you’ll make some money too, if you give him a try.  

Today, I start by offering my condolences. It’s tax day, never a pleasant time of the year.   

 

Yesterday, I noted that the recent rally lacked enthusiasm. Low volume and small daily gains were the hallmarks. Did all that change yesterday after Intel (Nasdaq:INTC) posted blowout numbers?   

 

Maybe. Volume posted its best totals since February. And the S&P 500 made its biggest gain since March 5.   

 

But more importantly, we’re seeing money come out of money-market funds. iMoneyNet reports that U.S. money market mutual fund assets fell by $31.49 billion to $2.908 trillion in the week ended April 13.   

 

Clearly, there’s still a lot of cash sitting on the sidelines. Some would say that this money belongs to individual investors who don’t want to be burned by another market crash. And cynics would say that the recent rally has been engineered to attract this money back into the stock market.   

 

Unfortunately, the individual investor has a tendency to get bullish right at the top of a rally.  

 

Now, just because anecdotal evidence suggests that the retail investor may be getting bullish is not a definitive sign that the stock market has peaked. Still, if the advance for prices continues like yesterday, we should be on our guard.   

 

China’s economy surged 11.9% in the first quarter this year. And that’s despite efforts by the central bank to slow growth and head off inflation in the real estate market. 

 

Analysts are saying this gives China even more incentive to let its currency appreciate in value. The irony here is that China’s yuan is pegged to the U.S. dollar. The Fed could guarantee the yuan appreciates by simply raising interest rates.   

 

Of course, that defeats the purpose. We want our currency to be the weakest in the world.   

 

I’ve been following the General Growth Properties (NYSE:GGP) buyout scenario closely. It’s fascinating to a stock market geek like me.   

 

If you’ve been following my narrative, you know that the #2 shopping mall owner in the U.S., General Growth, is attempting to emerge from bankruptcy. #1 shopping mall owner Simon Property Group (NYSE:SGP) tried to buy GGP out for $10 billion a few months ago.   

 

GGP and some of its big hedge fund investors (including China’s sovereign wealth fund, the CIC) believe this offer is too low, and so they set up their own plan to inject the needed capital into GGP and emerge from bankruptcy as a stand alone company.   

 

Part of this plan required GGP to issue a boat-load of warrants that could be converted to stock. The purpose of the warrants is a direct response to Simon’s $10 billion bid. If Simon wants to buy GGP, it needs to do so before a bankruptcy judge approves the capital-injection plan, or there will be some massive dilution to the stock.  

 

Pretty savvy move to turn the heat up on Simon. And investors have been waiting to see what Simon’s next move would be. The hope was that Simon would panic and make a much sweeter offer for General Growth.   

 

Not so fast. Simon has some tricks up its sleeve.   

 

Yesterday, Simon offered to match the capital injection offered by the hedge funds, except Simon won’t ask for warrants. That makes Simon’s offer more attractive and more likely to be accepted by the bankruptcy judge.   

 

Neither of these players wants to be a GGP shareholder. The hedge funds want a better buyout number, and Simon wants to own the company. But Simon doesn’t want to be in a bidding war, and it also doesn’t know who else has its eye on GGP.   

 

So this move by Simon is brilliant. For one, the company bought time for itself. And it may force the hands of any other GGP suitors who may be panicking at the thought of Simon becoming a big shareholder. Brilliant.   

 

Now, the General Growth buyout saga has implications for other beaten down commercial real estate companies. Because these companies own valuable assets. It’s just that their cost structure is all out of whack due to the financial crisis. Rents are down, but commercial mortgage debt is not, nor can it be refinanced in the current environment.   

 

That means the people with cash – hedge funds and sovereign wealth for instance – are in the cat-bird seat because they can pick up valuable assets on the cheap. Daily Profit readers shouldn’t miss the fact that the former CEO of Maguire Properties (NYSE:MPG) has offered to take a few problem buildings off Maguire’s hands.   

 

The increasing interest in the assets of commercial real estate companies has helped them rally recently. And that rally isn’t done. These stocks will continue higher until the buyouts actually start. And depending on buyout terms, they will likely continue to rally.   

 

If you haven’t seen TradeMaster Jason Cimpl’s video report of commercial real estate stocks breaking out to higher prices, you can do so HERE .  

It’s hard to believe that just a year ago, the Dow Industrials were trading around 6,500. It’s easy to look back and see this as an obvious buying opportunity, but it sure didn’t feel that way at the time.   

 

Of course, I was recommending stocks in SmallCapInvestor PRO, because valuations were incredibly low. But I was mitigating the risk by taking profits quickly.   

 

For instance, we took profits on SXC Health Solutions (Nasdaq:SXCI) in April with a 19% gain. That stock has gone on to post some fantastic gains. Conversely, we made a quick 33% on Arena Pharmaceuticals (Nasdaq:ARNA) between March 3 and March 11, 2009. That stock is now much lower than our exit price.   

 

In light of the anniversary of the market lows, the AP ran a great article over the weekend that included a bunch of interesting stock market stats. I’d like to share a few:  

 

• $5.6 trillion: Total gains in the stock market since March 9, as measured by the Dow Jones U.S. Total Stock Market Index, which tracks nearly all U.S.-based companies.  $
• 5.6 trillion: The amount that stocks are still down from October 2007, when the Dow peaked at 14,164. 83 percent: Amount the technology-dominated Nasdaq composite index is up since March 9. 
• $386 billion: Net cash flow for bond mutual funds $918: The price of an ounce of gold a year ago.
• $1,135.20: The price of an ounce of gold on Friday.
• 726,000: Jobs lost in February last year. 36,000: Jobs lost in February of this year.  
• $202.1 billion: Losses of the companies in the S&P 500 index in the final three months of 2008, a record.
• $132.7 billion: Estimated earnings of the companies in the S&P 500 index in the final three months of 2009.
• 25.3: Consumer confidence a year ago — a record low.
• 46: Consumer confidence today.
• 90: Consumer confidence number that economists believe signifies a healthy economy.

There are a few numbers that really stand out here. First and foremost is the negative $1.5 billion stock mutual fund flow and the positive $386 billion bond fund flow. This is perhaps the most telling stat of them all.   Individual investors have not embraced the stock market rally, despite the $5.6 trillion gain in market capitalization for stocks. And the potential for another $5.6 trillion in market cap gains for stocks is a potential missed opportunity.

Corporate earnings have improved dramatically, and we are nearing the end of another very good earnings season. The current trailing 12-month P/E for the S&P 500 is 21, according to the Wall Street Journal. But the forward number is 14.5, which is reasonable. And if earnings continue to beat expectations, this number is actually low.  

 

Judging from the consumer confidence number, Americans are not sold on the economic recovery. I don’t think it’s a leap to assume that this is because unemployment remains uncomfortably high.  

 

I take consumer confidence to be a lagging indicator. I expect the consumer will come around when the economy starts to add jobs, which is imminent.  

 

The S&P 500 has made a nice move sine the early February lows. And I think we can expect to see more investors embrace stocks as employment numbers improve. As TradeMaster Daily Stock Alerts’ Jason Cimpl has told us, the S&P 500 has already taken out an important resistance level at 1,132, and should be on pace to make new 52-week highs above 1,150. We should be on the lookout for an upside surprise to an employment report soon.  

 

I received an interesting letter from a reader. Larry S. asked: We have shares of stock in Enviro Energy (China) and Petromin (Canada).  Friends say they will be doing well shortly.  What do you know about these stocks.  Are they worth holding onto?  Thank you for checking these stocks and your newsletters.  We enjoy reading them.  

 

Petromin (PTR.V) is a Canadian oil driller operating in China. And Enviro Energy appears to be a Chinese stock trading in Hong Kong (I’m not sure I’m looking at the right stock here).  

 

Because these stocks don’t trade on U.S. exchange, it’s difficult to get reliable financial information on them, and it’s equally difficult to get the latest news.  

 

I can imagine that drilling for oil in China could be very profitable. And I know that environmental and clean energy stocks are strong performers in China. But again, reliable information on these two companies is difficult to come by. What’s more, the chart for Petromin does not look good.  

 

For my subscribers’ money, I much prefer to recommend Chinese stocks that are listed on the NASDAQ and the NYSE. That’s because there are rules for these exchanges. Earnings reports have to follow certain guidelines, as does the dissemination of news.       

 

As you know, I have several Chinese stocks in the SmallCapInvestor PRO portfolio. We’ve got gains of 93% and 52%, and we also have one that’s down 30%. But because I can read the earnings statements and quarterly reports, I have no problem holding for more gains, or waiting for a loss to reverse.  

 

Chinese stocks have sold off some because the government is managing its economy to keep it from overheating. I’ve carefully selected the Chinese stocks for the SmallCapInvestor PRO portfolio to represent areas that are vital to China’s growth, like environmental protection and energy. I have no doubts that these stocks will continue to grow earnings and revenues. The stock prices will follow. 

 

So, to answer the question, I have no way to form an opinion of the stocks in question. I would recommend investing in Chinese stocks that are listed on a U.S. exchange.  

 

I understand a few Daily Profit readers were unable to take advantage of the 50% OFF sale for SmallCapInvestor PRO before we hit our sales goal and closed the sale.  

 

So in the interest of fair play, I’ve re-opened the sale until midnight tonight. Respond today and you can get a year of SmallCapInvestor PRO for just $99. It’s going to be a while before I offer such a discount again, so I encourage you to take advantage of this offer. Click HERE to get the details.  

 

And if you hurry, you’ll get my latest investment report during market hours. SmallCapInvestor PRO are buying a leading Smart Card company that’s got a forward P/E of 9, a PEG ratio of 0.4. The company does $59 million in annual revenue and has $3.45 per share in cash.  

 

With those shares trading for just $6.50, it’s extremely undervalued. But that’s not going to last. With over 900% earnings growth coming this year as the U.S. market opens up, this stock has tremendous upside potential.   

 

Here’s that link for SmallCapInvestor PRO again.  

$-1.55 billion: Net cash flow for stock mutual funds, representing the money put into funds minus the money taken out.

There’s no doubt that there are investors who believe that current valuations for stocks and an improving economy offer money-making opportunity. It’s also true that there are plenty of investors who feel the exact opposite and are selling stock. And for the last three weeks, the sellers have been winning.

The fact that stocks couldn’t hold a 1% gain after a stellar 4Q GDP number on Friday is a little worrisome. That was a lay-up for the bulls, and still, stocks finished the day with losses.

Volume has been stronger on the down days lately, and the S&P 500 is now well below its 50-day moving average, a common measure of support. I expect we’ll see stocks bounce before Dow 10,000 is breached to the downside.

But at the same time, there’s nothing magical about Dow 10K. Just because it holds on the first test or two doesn’t make it an important line in the sand. The Dow is just 30 stocks. Far more important is the S&P 500. And interestingly, there is an important support point at 1064 on the S&P 500. And 1071 actually lines up with Dow 10,000 nicely.

*****There aren’t any market-moving earnings reports today, but tomorrow we get UPS (NYSE:UPS), Whirlpool (NYSE:WHR), News Corp (NYSE:NWS), DR Horton (NYSE:DHI), and British Petroleum (NYSE:BP). 

Wednesday is a heavy day, with Black & Decker (NYSE:BDK), Cisco (Nasdaq:CSCO), Honda Motors (NYSE:HMC), Pfizer (NYSE:PFE) and Visa (NYSE:V).

Thursday, it’s Chicago Mercantile Exchange (NYSE:CME), Deutsche Bank (NYSE:DB), MasterCard (NYSE:MC), Starwood Hotels (NYSE:HOT) and Toyota (NYSE:TM).

Finally on a light day Friday, we’ll hear from Beazer Homes (NYSE:BZH) and Aetna (NYSE:AET).

Of all the companies to report this week, Cisco may be the most important because it’s the ultimate barometer of corporate spending. Cisco is one of the best run companies around. CEO John Chambers runs a tight ship and it’s unlikely Cisco will miss its numbers. An upside surprise, and more importantly, some improved guidance and a little optimism going forward would be good news.

*****Another item to watch for is kind of tax credit for business that hire new employees or expand their payroll. Politically, some kind of stimulus spending to help unemployment will be easy to accomplish. And now that TARP investigator Neil Barofsky is feeling better about how much TARP money the government will recoup, we’ll probably see new stimulus measures sooner rather than later.

And by the way, Barofsky initiated 25 more legal cases surrounding the use of TARP funds. That brings the total to 77 active cases.

*****The China bulls are starting to push back. All the talk that China is a bubble about to explode misses the important points: domestic consumption is growing in China, consumer spending rose 16.9% in 2009; China’s very high savings rate and foreign currency reserves acts as a foundation for lending; China’s government is proactively dealing with monetary policy before inflation becomes an issue (U.S., eat your heart out).

The recent sell-off has left Chinese banks trading at the same price-to-book ratios as early 2009. You may recall, Chinese stock put in a pretty good rally from these levels last year.

Right now is the time to take positions in quality Chinese stocks at attractive valuations.

SmallCapInvestor PRO members just discovered a $3 U.S. based company that makes amorphous alloy core transformers for the Chinese market. The Chinese government has mandated that old silicon steel core transformers be replaced by more efficient transformers, like the amorphous alloy core ones.

This isn’t earth-shaking news, but this little company is expanding capacity by 200% to meet the demand. I’ve got a $5.82 target for the stock, which is a 82% gain from current level. You can get the details HERE

America's Car-Mart, Inc. (Nasdaq:CRMT) announced Thursday it had tripled its fourth- quarter earnings, which sent its stock up more than 15%. The Bentonville, Ariz.-based company had net income of $6 million, or $0.51 per share, compared with $2.1 million, or $0.17 per share, for the same quarter a year ago. The fourth-quarter results beat analyst estimates of $0.29 per share. The automotive retailer said the improved earnings were the result of both improved advertising and car selections. America’s Car-Mart traded at $16.92, up about 15.1% from Wednesday’s close.

For detailed price information and recent news stories about America’s Car-Mart, click CRMT.

Apogee Enterprises, Inc. (Nasdaq:APOG) shares dropped more than 18% Wednesday after the Minneapolis-based company’s Tuesday announcement of lower-than-expected first-quarter earnings. Shares were trading at $18.15 after the glass-making company reported first-quarter net income of $0.36 per share compared with $0.34 per share a year ago. Wall Street had been expecting earnings of $0.43 a share for the quarter ending May 30.

For detailed price information and recent news stories about Apogee Enterprises, click APOG.

Shares of Consolidated Water Co. (Nasdaq: CWCO) are tumbling today after Barron’s reported over the weekend that shares of the water company could plunge by as much as half if it cannot resolve a disagreement with one of its biggest customers.

According to Barrons, the Cayman Islands-based small cap is in a dispute with the British Virgin Islands’ government over payments for water from a desalinization plant. The British Virgin Islands, who has been in discussions with Consolidated Water for the past 10 years to purchase the plant, which removes salts from sea water, claims it, not Consolidated, owns the plant, according to the publication.

The Virgin Islands is the only customer for a desalinization plant that could account for up to a quarter of the company's current earnings, Barron’s says.

Barron’s says problems such as the Virgin Islands dispute could cut Consolidated's 2008 earnings by roughly one-third below the $1 per share now forecast by Wall Street analysts and shares could forfeit their premium valuation, causing the stock to plummet by as much as half. The stock currently trades at 30 times its expected earnings of $0.80 for the current year.

In the mean time, the company continues to record revenues and earnings from the British Virgin Islands, despite the fact that local authorities have been withholding payments for a year.

Shares of Consolidated Water (CWCO) skidded 23.6%, or $7.62, to $24.73 at 11:55 a.m. ET. Shares of Consolidated Water have been trading in the range of $23.29 to $37.49 for the past 52 weeks.

SigmaTron International Inc. (Nasdaq: SGMA) is trading higher this morning after the electronic manufacturing services provider before the opening announced a tripling in its first-quarter profit.
 
Net income for the first quarter of fiscal 2008 ended July 31 was $0.83 million, or $0.21 per share, a stunning rise of 320%, compared with a net income of $0.26 million a year earlier. Analyst estimates for the Elk Grove Village, Ill.-based company were not available.

Revenues increased a more modest 8% to $39.8 million, from $36.9 million during the same three months of fiscal 2007.

“This is the nature of our business as it is dependent on revenue volume, assuming that our fixed costs are relatively constant,” said CEO and president Gary Fairhead in a press release. “This increase in profitability was related to the mix of products sold more than anything else.”

SigmaTron provides printed circuit board assemblies and completely assembled electronic products through four facilities in Illinois, California, China and Mexico. The company is working on a second facility in Mexico and also has offices in Taiwan.

At 11:37 a.m. ET shares had added $0.76, or 8%, to $10.50. That’s near the 52-week high of $11.64, set on July 24. The 52-week low of $7.90 was touched on March 14.

Horse track owner and operator Magna Entertainment Corp. (Nasdaq: MECA) was cut to a “hold” rating from a “buy” rating by Brean Murray Carrett & Co. Monday.

Brean Murray Carrett & Co analyst Ryan Worst cut the company’s rating on the idea that that Magna’s change in CEO reduces confidence in the company’s ability to execute on existing assets.

Worst wrote in a research note, “…the risk that Friday’s CEO change arose from a disagreement over Magna’s strategic direction or execution outweighs other potential reasons for the departure and reduces our confidence in MECA shares.”

On Friday, Magna announced that then current CEO Michael Nueman was stepping down to pursue other opportunities. The Canadian company named Chairman Frank Stronach to be interim CEO.

“We are concerned that the execution of asset sales and the company’s strategy may differ under Mr. Stronach,” Worst wrote.

Worst forecasts earnings per share of $0.67 for fiscal year 2007 compared with earnings per share of $1.01 in 2006.

Shares of Magna Entertainment were up 2.1%, or $0.06, to $2.89 Monday morning.

Publishing company Journal Register Co. (NYSE: JRC) recorded a 9.2% drop in May revenue on account of lower ad revenue and the faltering economies of two metropolitan areas. The Pennsylvania-based media company said total revenue fell to $37.6 million from $41.4 million for the four weeks ended June 3; while ad revenue dropped 11.5% to $29 million from $32.8 million in the same period one year ago.

First California Financial Group Inc. (Nasdaq: FCAL) reported that it completed the sale of the national bank charters to Texas banks United Central Bank and The Independent Bankers Bank.  As a result, the company said it will recognize a pre-tax gain of $2.4 million in the second quarter. The California-based bank also announced that it completed integrating Mercantile National Bank, South Bay Bank and First California Bank today. All three banks now report under the name First California Bank.

New 52-week highs were established Tuesday in the following exchange-traded issues with market capitalizations or values under $500 million:

		Price at		%
		4:00 et	Change	Change	Volume	Year High	Year Low
ZN	ZION OIL & GAS INC	5.49	-0.73	-11.7%	142.6k	14.05	6.03
BKRS	BAKERS FOOTWEAR GROUP INC	7.20	-1.10	-13.3%	76.4k	15.75	7.88
FOLD	AMICUS THERAPEUTICS INC	12.76	-0.32	-2.4%	127.8k	16.80	13.08
FACE	PHYSICIANS FORMULA HLDGS INC	14.75	-0.53	-3.5%	422.9k	23.25	14.99
JRC	JOURNAL REGISTER CO	5.01	-0.17	-3.3%	678.5k	9.67	5.08
PFED	PARK BANCORP INC	29.92	-0.41	-1.4%	2.3k	36.00	30.33
CWBC	COMMUNITY WEST BANCSHARES	13.85	-0.21	-1.5%	1.6k	16.00	14.00
VCF	DELAWARE INV CO INS MUN INC	15.30	-0.13	-0.8%	6.1k	18.68	15.43
RMTI	ROCKWELL MEDICAL TECH	5.37	-0.09	-1.6%	19.5k	8.10	5.40
ABNJ	AMERICAN BANCORP N J INC	10.35	-0.06	-0.6%	200.8k	12.39	10.40
NMY	NUVEEN MD PREM INCOME MUN FD	13.98	-0.16	-1.1%	22.8k	15.40	14.03
FCAL	FIRST CALIFORNIA FINANCIAL G	11.50	-0.05	-0.4%	3.8k	13.95	11.54
MGPI	MGP INGREDIENTS INC	16.16	-0.08	-0.5%	243.5k	25.36	16.19
OFG	ORIENTAL FINL GROUP INC	11.05	-0.24	-2.1%	214.6k	14.15	11.07
NNC	NUVEEN N C PREM INCOME MUN F	14.00	-0.04	-0.3%	8.9k	15.38	14.02
VSBN	VSB BANCORP INC N Y	13.49	-0.01	-0.1%	0.9k	18.15	13.50
DCR	CLAYMORE MACROSHS OIL DOWN T	44.47	-0.43	-1.0%	2.9k	65.50	44.50
VFL	DELAWARE INV FL INS MUN INC	14.02	-0.06	-0.4%	1.0k	16.15	14.02
FRI	FIRST TR S&P REIT INDEX FD	18.87	-0.17	-0.9%	5.0k	20.38	18.87

Source Interlink Companies, Inc. (Nasdaq: SORC) traded on both sides of Monday’s close in after hours trading, following news that the company missed analysts’ estimates in the latest quarter.   

 
For the fiscal first quarter 2008 ended April 30, Source Interlink reported earnings of $0.03 per share, compared with $0.06 per share a year earlier.  Analysts polled by Thomson First Call expected EPS of $0.13.  Company officials stated that it earned $0.10 per share, excluding $3.9 million in one-time charges for depreciation and amortization of acquired intangibles.

 
The Florida-based provider of home entertainment products and marketing services reported a 6% increase in revenues of $475.4 million for the first quarter, compared with $ 447.9 million a year earlier. Operating income increased 33% to $8.8 million, from $6.6 million in the first quarter of fiscal 2007.

“We continue to perform favorably against the backdrop of challenging markets at retail for music and at the newsstand for magazines, posting solid revenue and adjusted EBITDA growth,” said Source Interlink Chairman Michael R. Duckworth. “We are expanding our market share and enhancing our retailer relationships, while moving aggressively to improve the cost structure of our company.”

At 5:30 p.m. ET, Source Interlink was up $0.06, or 1.46% at $5.57.