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Financials Slaughtered

February 17, 2009 By Leave a Comment

Wow! This market is taking a beating. I was looking through companies at their 52 week lows and the list goes on an on. Many of these stocks are trading at prices that would have appeared unfathomable before last year. Some of these companies deserve their low share prices and others have been down unfairly. In this market it is difficult to tell the difference. Here are a few companies trading at or near their 52 week lows:

SunTrust Bank (STI) set a new 52 week low dropping to $7 per share today. There are fears that SunTrust will not pass the government’s stress test and will not qualify for future assistance.

Wells Fargo (WFC) dropped to $13.69 which is its lowest price in 12 years. I am still buying Wells shares because I think that the bank will be saved. It’s hard to have any conviction about any bank stock at these levels.

Capital One (COF) dropped below $10 and American Express (AXP) dropped to $13 amid concerns over rising credit card delinquencies. The pain is just beginning in the credit card industry. This makes me wonder about the credit card portfolios at Citigroup and Bank of America. They have already gotten TARP funds twice; any additional TARP funds may mean that nationalization is coming.

Dow Chemical (DOW) is down to $8.62 per share and now sports a market cap that is almost half of the proposed 15.3 billion dollar purchase price for Rohm & Haas.

United States Oil ETF (USO) is down to $23.45. Oil demand has fallen off a cliff. I don’t know how long this will last but it looks cheap at these levels.

General Electric (GE) is trading at $10.81. It could hit the single digits if the market keeps declining. The stock is yielding 10.80% and looks cheap if held for years.

US Bancorp (USB) hit $10.73 today.

Filed Under: Investing Tagged With: , , , ,

Stock Watchlist

February 3, 2009 By Leave a Comment

Stocks that I am watching for the coming week:

Electronic Arts (ERTS) announces earnings tomorrow after the bell. The stock has dropped to its 52 week low price of $14.66. I will be interested to see what the company’s earnings were for the past quarter. I still think that the EA franchise has value and if the shares stay around this level; it may be a buying opportunity.

General Electric (GE) set a new 52 week low today at $11.51. I have been accumulating GE shares at $11.87 and below recently. I know that GE Finance is 40% of GE’s earnings and that they are divesting themselves of some of their businesses. But I have a hard time seeing GE as a $12 stock 5 or 10 years from now. I am getting more concerned about the dividend as the stock drops. The shares either need to rise back to $15 or the dividend is gone. A 10% yield just cannot last.

There is a lot of talk about Wells Fargo (WFC) needing to slash its dividend. I honestly don’t know if this is true or not. Banks have such convoluted financial statements and so many off the balance sheet items that they make evaluating their financial position difficult. I have been disappointed by bank stocks before so it wouldn’t shock me. Wells remains a stock that I continue to buy for the long term.

Dow Chemical(DOW) hit the $10 level today. The stock dropped to$10.95. Tomorrow is probably the day when Dow will announce at least a 50% dividend cut. Dow is expected to announce earnings between 6 and 7 cents a share. This cannot support a dividend of $1.68 with a 14.5% yield. An interesting side note is that Dow Chemical has a market cap of 10 billion dollars. If Dow is forced to buy Rohm & Haas at the 15.3 billion dollar price, Dow will be buying a company that is worth 50% more than Dow. This deal would potentially bankrupt Dow.

Filed Under: Finance Tagged With: , , ,