Weekly Market Overview

U.S. markets started the week higher amid speculation that Alcoa could become the next blockbuster takeover target. Some investors are beginning to question, however, whether the higher yields will slow down potential M&A as debt becomes increasingly expensive for private equity firms. There is also increasing talk of a bubble in the corporate bond market - particularly speculative grade bonds - which is treading close to Treasury yield levels. Overall, investors seem relatively unconcerned, however, which suggests that we may continue to see strong performance in the short term for U.S. stocks.

Top 10 Stocks to Watch this Week

Fundamental Analysis

1. 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.
   
2. 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.
   
3. 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.
   
4. 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. Shares spiked on June 14th after the company reportedly saw a $2 billion bid; however, we are still waiting to hear any official announcement or of any competitive bids.
   
5. 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

1. Cisco Systems (CSCO) - Long-term bullish continuation diamond.
2. Unisys Corporation (UIS) - Intermediate-term bullish symmetrical continuation triangle.
3. Goldcorp Inc. (GG) - Intermediate-term bullish diamond bottom.
4. Windstream Corporation (WIN) - Long-term bullish continuation diamond.
5. Infineon Corporation (IFX) - Long-term bullish continuation diamond.

Stock of the Week : North Pittsburg Systems (NPSI)

North Pittsburg Systems (NDAQ:NPSI) shares moved up $0.68, or 3.49%, to $20.14 late Friday after Bulldog Investors disclosed a 7% stake in the company and again urged the company to put itself up for sale. The activist hedge fund argued that given CT Communication's recent buyout price, the company could fetch between $28.50 and $31 per share in the event of a sale. Meanwhile, shareholders are concerned about the declining stock price and Bulldog Investors said they would not think twice before launching a proxy battle.

Tip of the Week : Insider Transaction Forms

Insider transactions can provide great insight into a company’s financial and operational condition. After all, insiders do know the company best! All company officers, members of the board and affiliates of the company are required to report their transactions to the Securities and Exchange Commission in Forms 3, 4 and 5. By analyzing these forms, investors can paint a clearer picture of how well the company is doing and where it is headed. Let’s take a look at how…   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.

Weekly Market Overview

U.S. markets began the week mixed as investors continue to watch rising global interest rates and signs from the Federal Reserve. Investors will have very little in the way of corporate earnings and economic reports until later this week when key inflation measures wil help determine whether bonds will rise and pressure stocks further. Meanwhile, M&A deals have shown continued strength as Airtrans boosted their bid for Midwest and Dow Jones is rumored to be close to seeing some counter bids. These deals should help boost stocks through the week as investors continue to tread cautiously in this uncertain market.

Top 10 Stocks to Watch this Week

Fundamental Analysis

1. 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.
   
2. 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. Meanwhile, the company has promoted its CFO to CEO, so the company finally has some direction from a financial-minded officer.
   
3. 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.
   
4. 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. Shares spiked yesterday on talks of a possible deal...
   
5. 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

1. Planktos Corp. (PLKT) - Medium-term bullish breakout.
2. CF Industry Holdings (CF) - Medium-term ascending triangle breakout.
3. KMG Chemicals Inc. (KMGB) - Medium-term bullish breakout.
4. Lakes Entertainment Inc. (LACO) - Short-term bullish crossover.
5. Mastercard (MA) - Short-term trading range breakout watch.

Stock of the Week : Northwest Airlines (NWA)

Northwest Airlines (NYSE:NWA) emerged from bankruptcy in late May after more than 20 months under protection. The domestic carrier is the last of the major airlines to emerge from bankruptcy protection and many analysts believe it is now in a strong competitive position relative to other carriers. The company managed to reduce its cost structure by $2.4 billion annually, solve its pension problems, properly size its fleet and reduce its debt load by over $4 billion during its many months of bankruptcy protection. The carrier's operating statistics reported to the Department of Transportation are also promising: The company reduced its operating costs by nearly 11%, increased its yield (fare per mile) by 7% and increased its revenue per available seat mile by nearly 10%. Combined, these factors make NWA a stock worth watching!

Tip of the Week : Tar Sands - The Other Oil

Many people who hear the word “oil” immediately think of crude oil – the stuff that is extracted by giant drilling wells in the desert or ocean. In fact, the vast majority of all oil is crude obtained from the deserts of Saudi Arabia and giant rigs in the Pacific Ocean. There is, however, a growing industry in Canada, Venezuela and the U.S. centered on an alternative known as tar sands.  Read More

Final Words

The market remains optimistic despite questionable economic indicators and rising energy prices. Investors will be carefully watching the economic figures coming out during the next few weeks in order to get a better idea of what the Federal Reserve is up to and whether or not we can expect a pullback in the near future.

Weekly Market Overview

U.S. markets began the week higher despite high oil prices and bond yields. Many attribute these continuing gains to further buyout speculation among many major companies. The speculation was confirmed in a few instances today after a private equity firm purchased a 25% stake in Palm and Flextronics was purchased by Solectron. Combined these deals and continued optimism pushed the S&P500 to its fourth consecutive record high. Other big stories included an argument in Barron's favoring a breakup of GE, which pushed shares up more than 1%. Many are beginning to question how long this really can really last...

Top 10 Stocks to Watch this Week

Fundamental Analysis

1. 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.
   
2. 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. Meanwhile, the company has promoted its CFO to CEO, so the company finally has some direction from a financial-minded officer.
   
3. 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.
   
4. 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. Shares spiked yesterday on talks of a possible deal...
   
5. 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

1. Boston Scientific Corporation (BSX) - Intermediate-term bullish bottom triangle.
2. Eastman Kodak Co. (EK) - Long-term bullish continuation diamond.
3. Tibco Software Inc. (TIBX) - Long-term bullish continuation diamond.
4. Western Digital Corp. (WDC) - Intermediate-term bullish head and shoulders bottom.
5. Novavax Inc. (NVAX) - Long-term bullish symmetrical continuation triangle.
   

Stock of the Week : Griffon Corporation (GFF)

Griffon Corporation (NYSE:GFF) shares moved up more than 6% last week after Clinton Group disclosed an 8.5% stake in the company and suggested that the company undergo a recapitalization. The proposal would tender 50% of Griffon's outstanding shares at a price of $25 per share, but has yet to receive a meaningful response from the company. The activist hedge fund said that it believes the company could be worth as much as $34 in the event of a sale - something they have been pushing for for some time. If the hedge fund decides to take its fight public via a proxy battle, we could see a substantial increase in the share price over the near term. This makes GFF a stock worth watching!

Tip of the Week : Evaluating M&A Targets

Many of the best opportunities in today's market are companies being targeted for mergers and acquisitions. These stocks catch the fancy of investors due to their overnight movements of 25% or more. However, in a media environment that comes up with ten new rumors a day, it can be hard to identify reliable opportunities that will actually pay off. Read More

Final Words

The market remains optimistic despite questionable economic indicators and rising energy prices. Investors will be carefully watching the economic figures coming out this week to determine if this rally may finally be coming to an end.