Friday, June 06, 2008

Quick Update

Market is selling off pretty good today. Last couple of days were awesome for the Wet Seal (WTSLA) with shares closing at $5 yesterday, but it's selling off a fair bit today along with the entire market. Today, Credit Suisse reiterated their Outperform rating and increased their target price to $6.

A snippet from their report:

With Wet Seal’s recent top line momentum in this challenging retail environment, we have further confidence that the co. has earnings upside driven by expense initiatives and easy sales and gross margin comparisons (especially in 2H08). Trading at 10x our F09E (and even less when considering the $1-$2/share in cash/NOL), the stock is attractively valued.

Also, I realized I neglected to mention this, but not long ago, I averaged down on Citigroup (C) and my updated cost basis is 22.60. I am not looking to add any more to that one. I'm willing to hold it for a while. Today's not so good though, as now it's trading in the 20.30's.

--- Edit #1 ---

The pain is over... for now. What a sick sell-off. Not cool when oil spikes like it did, and the jobs data hurts instead of helps. Brutal day for me. The Seal gave back most of its gains from the last two sessions. At least it's up for the week, moving from 4.48 to 4.65.

All but one of my holdings was red today. Talk about swimming in a sea of blood. The one bright spot was Manitowoc (MTW), which managed to go up by about two-thirds of a percent.

Anyway, not a good way to end the week, but it is what it is. Have a nice weekend.

--- Edit #2 ---

If I'm going to give an update, I might as well update on everything.

Stifel Nicolaus started Mattel (MAT) at a Buy and Hasbro (HAS) at a Hold.

They say that the toy industry, while mature, is profitable with generally favorable underlying trends, including modest pricing leverage, share gains, improving demographics in the U.S., as well as opportunities in emerging markets. The research note mentions that these should lend support to low to mid single digit revenue growth for industry participants. Specifically to Mattel, the analyst says that the company is well-positioned to benefit from in the preschool category over the longer term and that its profit margins are expected to rebound going forward. They also mention the company’s operating leverage being significant.

The board at General Electric (GE) authorized the quarterly dividend today. The ex-dividend date is June 19, which is two days prior to the options expiration. Given how much GE has fallen since we entered our buy-write position, the dividend date doesn't really play much of a role any more. Anyway, I'm out of here (for real this time).

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