Weekly Market Overview
U.S.
markets started the week with a bang after a series of mergers and acquisitions pushed financial, oil-drilling and equipment-rentals higher while strong earnings announcements from Merck and others helped out the general indexes. Acquisition activity is what has been driving the markets for the past six months and dealflow shows no sign of slowing amid low costs of debt, eager investors and series of public hedge funds. Meanwhile, credit markets were a lot more passive after last weeks volatility. Investors should look towards a broad trend upwards with an eye out for any meaningful corrections - after all, there is plenty of justification for one these days!
Top 10 Stocks to Watch this Week
Fundamental Analysis
- Brinks Company (BCO)
– The Brink’s Company remains on our watchlist since both MMI and
Pirate Capital still hold significant stakes in the company. The
company recently announced higher than expected earnings along with a
dividend increase. We are still waiting to hear about the activist
situation.
- Ceridian Corporation (CEN)
– Bill Ackman’s activist play also continues to hold appeal with us
since the breakup could unlock substantial value. We have not seen an
announcement of an official date, but as of March 13th, Pershing Square
is still engaged in a proxy contest with the company’s board of
directors. Recently, Pershing Square lost its battle to obtain
questionable letters, but vowed to continue pursuing its objectives.
However, news came out today stating that one potential buyer of
Ceridian was able to obtain $3.5 billion in debt financing, which is
great news for shareholders holding out for a buyout. Meanwhile,
shareholders recently won a lawsuit against the company that may level
the competitive bidding landscape, paving the way for an increased bid.
- Hexcel Corporation (HXL)
– OSS Capital demanded today that the company engage an investment bank
to explore strategic alternatives. The company’s shares are worth $14
per share above the current market price if priced at its peers’
levels. All we are waiting on is the support of the board of directors!
Meanwhile, the company has received several analyst upgrades and sits
near its 52-week high.
- Applebees International (APPB)
– Breeden Capital Management first approached Applebees several months
ago suggesting that the company put itself up for sale. Three weeks
ago, the company announced that it had received several takeover offers
and would review the bids before taking final offers. Recently, the
company also agreed to yield two board seats to activist investor
Breeden Partners. The company finally announced a sale today at $2.1
billion - a 4% premium to Friday's close and a substantial increase
from when we first mentioned the stock.
- Universal Power Group (UPG)
– 3V Capital Management announced last week that they weren’t pleased
with the company’s valuation. They recommended several changes that
they hope would enhance shareholder value. We are still waiting on more
details and a response from the company, but this was definitely a
stock worth following!
Technical Analysis
- Haliburton Co. (HAL) - Intermediate term bullish upside breakout.
- Imax Corp. (IMAX) - Intermediate term bullish symmetrical triangle.
- Progenics Pharmaceuticals (PGNX) - Intermediate term bullish tripple bottom.
- Delta Petroleum Corp. (DPTR) - Intermediate term bullish bottom triangle.
- Adolor Corp. (ADLR) - Intermediate term bullish diamond bottom.
Stock of the Week : WABCO (WBC)American Standard Companies Inc. (NYSE:ASD) announced last week that its spin-off of WABCO Holdings Inc.
(NYSE:WBC) is set to take place on July 31st. Under the terms of the
deal, shareholders are American Standard on record July 12th will
receive one share of WBC for every three shares of ASD that they own.
Investors and shareholders should watch this spin-off as it presents
several opportunities to profit! (Read More)
Tip of the Week : How to Profit from Activism
Shareholder activism is becoming an increasingly large part of the
investment equation. Many hedge funds are actively engaging management
in efforts to unlock shareholder value, but are these efforts actually
helping or hurting investors? This article will take a look at the
past, present and future of shareholder activism. (Read More)
Final Words
The
market remains optimistic despite questionable yields and other
economic data. While this is good news for investors in the short term,
be sure to use caution and only invest prudently.