Nucor (NYSE: NUE) closed at $81.44 Thursday. NUE is a manufacturer and marketer of steel products. NUE overall option implied volatility of 42 is near its 26-week average according to Track Data, suggesting non-directional price movement.
US Steel (NYSE: X) closed at $176.61. CIBC World has a $175 price target on X. X overall option implied volatility of 48 is near its 26-week of 51 average according to Track Data, suggesting non-directional price risk.
Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
TheStreet.com's Jim Cramer says that rebuilding from natural disasters can alter the growth picture for a country.
Is it Katrina all over again? Or is it bigger? Much bigger? That's what I am thinking about this Chinese earthquake.
Katrina distorted the U.S.'s growth pattern for more than a full year. The raw materials, the effort, the work, the reconstruction affected businesses from small-scale retail to refining and infrastructure.
We don't really know how China works, although a lot of people tell us they do. To me, the Chinese are always a day away from revolution or civil war and the trick of the government is to stay one step ahead of the posse. (Chinese hands will dispute that, but you have to appreciate that it takes a special skill to be wrong for more than a century and still maintain credibility.)
That means massive reconstruction: bricks, lumber, cement, steel and all the trimmings. Massive imports, not controlled by the Chinese and their little negotiation games like they play with iron and steel and coal. Just full-bore buying and something that could take growth for China back to the levels that everyone thought it couldn't absorb without more inflation.
Merck & Co. (NYSE: MRK) shares are dropping over 8% in premarket trading after it said its cholesterol pill Cordaptive failed to win approval from the U.S. Food and Drug Administration, less than a week after it was recommended for marketing in the European Union. While Merck intends to submit more data to the FDA, it is unclear it will succeed given even some European doctors said more research is needed on one of the drug's main components safety.
Who said higher oil prices aren't good? If you ask Royal Dutch Shell (NYSE: RDS.A) and BP (NYSE: BP), high oil prices are fantastic as the two oil giants beat forecasts when posting quarterly earnings Tuesday, reporting that net income, excluding unrealized gains from changes in inventory values, rose 12% to a record $7.8 billion and 48% to $6.6 billion respectively. Shell shares are climbing 5.7% in premarket trading and BP's over 4.8% as it seems investors think oil above $100 a barrel is here to stay.
Archer Daniels Midland Co. (NYSE: ADM), the world's largest grain processor, said third-quarter profit rose 42% to $517 million or 80 cents per share, topping analyst estimates of 69 cents per share, as it traded more grains and crushed more soybeans. Sales climbed 64% to $18.7 billion. Seems that being in agriculture lately is a positive and ADM shares are rising 3.75% in premarket trading.
PDUFA date for Genentech, Inc. (NYSE: DNA) and Roche Holding Ltd. (OTC: RHHBY)'s supplemental Biologics License Application for Herceptin for label expansion to include AC followed by docetaxel in treatment of adjuvant HER2+ breast cancer.
PDUFA date for Shire plc (NASDAQ: SHPGY) and New River Pharma's supplemental New Drug Application for Vyvanse (NRP-104) treatment of Attention Deficit Hyperactivity Disordre, or ADHD, in adult patients 18-55 years old; the drug is already approved for pediatric ADHD ages 6-12.
Verizon Communications Inc. (NYSE: VZ) to report Q earnings; conference call at 8:30am.
Tyson Foods, Inc. (NYSE: TSN) to report Q2 earnings; conference call at 9:00am.
Tuesday, April 29
Two-day FOMC meeting beginning at 8:30am.
PDUFA date for Merck & Co., Inc. (NYSE: MRK)'s New Drug Application for Cordaptive (MK-0524A) adjunctive therapy to diet for treating elevated LDL Cholesterol, low HDL Cholesterol and elevated triglycerides levels.
PDUFA date for Sucampo Pharmaceuticals, Inc. (NASDAQ: SCMP)'s supplemental New Drug Application for dose of 8mg treatment of Irritable Bowel Syndrome with Constipation; already approved for Chronic Idiopathic Constipation at 24ug dosage.
BP plc (NYSE: BP) to report Q1 earnings; conference call at 10:15am.
United States Steel Company (NYSE: X) to report Q1 earnings; conference call at 2:00pm.
First, the obvious -- there are too many Coach bags and bags of its ilk, and there isn't enough steel. Second, Coach couldn't pass on a price increase to save its life. Every price increase sticks for US Steel.
Third, on the Coach call where does Lew Frankfort -- who is great! -- want to expand? The U.S. Ouch! Worst market in the world. Saturated. No growth. Feeling poor.
Where does US Steel want to expand? Doesn't matter. The demand is so great it's really an issue of shipping, as CSX's (NYSE: CSX) (Cramer's Take) Michael Ward would tell you -- at least he told me last night on "Mad Money."
Citigroup downgraded US Steel (NYSE:X) from "buy" to "hold" according toBriefing.com. The financial news service also reports that Deutsche Bank downgrade Procter & Gamble (NYSE:PG) to "hold" from "buy"
International Paper (NYSE:IP) was cut to "neutral" from "outperform" at Credit Suisse according to 24/7 Wall St. The financial website also reports that Intl Flavors & Fragrances (NYSE:IFF) was cut to "underweight" from "neutral" at JPMorgan.
This market is tough. Pros and novices alike are having a tough time. Particularly in a down market, a market commentators like to call a ""stock picker's market," I find it illustrative to dig deeper into the holdings of those special professional money managers that have found a way to make a go of it.
Take the CGM Focus (CGMFX) fund. This fund consistently shows up at the top of 1-year, 3-year, and multi-year best performers. CGM Focus has returned on average 37% per year for the past five years. While this is absolutely no guarantee that it will continue to perform like this, fund manager Chuck Heebner seems to have the special sauce -- at least for now.
So, what has been so successful for the fund?
Commodity picks like fertilizer plays Potash (NYSE: POT) and Mosaic (NYSE: MOS) have been big positions and have been big winners. Steel plays like US Steel (NYSE: X) have performed very nicely for CGM as well.
Looking at what worked is somewhat like looking into a rear-view mirror. These gains were in the past. What's Heebner and team buying now?
TheStreet.com's Jim Cramer says that until we have some clarity on the way out, we'll have a tough road ahead.
This is a confusing moment, for the same reason as always -- the darned mortgage market. Dueling plans seem destined to go nowhere while defaults continue to go up. We need something to stabilize the house price depreciation and someone to take the hit: FHA, Fannie Mae (NYSE: FNM) (Cramer's Take), Freddie Mac (NYSE: FRE) (Cramer's Take)? I don't care.
The president's plan sounds like it tries to address who should take the hit -- a little bit bank, a little bit government -- but it is piecemeal, as is everything that has been done about this issue.
I am and have been banking on an expanded FHA plan that would put the onus on that organization to do long, low-interest-rate loan guarantees. It is a simple plan, and I bet the government would make money from it. It would end the madness of trying to figure out how to deal with each one of these stopgappers.
The financial media -- envious of the fat profits generated by such entertainment-based businesses as World Wrestling Entertainment Inc (NYSE: WWE), Las Vegas Sands Corp. (NYSE: LVS) and Wynn Resorts (NASDAQ: WYNN) -- has brainwashed you into believing that in order to make money in the stock market, you must keep up to date with every single headline and development in the business world. Hogwash!
I have no problem with financial entertainment, but I do take issue with all these media outlets making their content out to be useful to investors. I've repeatedly echoed this theme in articles like this and I don't expect this industry to change anytime soon, but I am going to keep preaching so you will better understand how low your chances of success are if you bet on the most popular -- hence the most efficient -- topics du jour. Unless you are George Soros or Warren Buffett or a few other wealthy elderly men, there is always somebody better informed and more intelligent than you are. Hence, you are always at a disadvantage.
Goldman Sachs has upgraded Lehman Brothers (NYSE: LEH) from "hold" to "buy," according toMarketWatch. The financial website also reports that Morgan Stanley downgraded Ericsson AB (NASDAQ: ERIC) from "overweight" from "equal weight."
Merrill Lynch upgraded US Steel (NYSE: X) from "neutral" to "buy," according toBriefing.com. The news service also reports that Morgan Stanley initiated McDonald's (NYSE: MCD) at "overweight."
Douglas A. McIntyre is an editor at 247wallst.com.
TheStreet.com's Jim Cramer says U.S. Steel is a puzzle, and he ponders how to play it here.
U.S. Steel (NYSE: X) (Cramer's Take) presents the ultimate conundrum. It is hitting on all cylinders, courtesy of the incredible demand for steel domestically because of pipelines. And it is finally not suffering from dumped imports, because the dumpers are from countries growing so much faster than we are that they need all the steel they can get - China, for example, is struggling to build its own share instead of dumping.
John Surma, the CEO, has taken this once-great company right back to greatness with a rise from $9 to $127 in five years. That defies gravity. He has done that by cutting labor costs and growing the business, he has done it by emphasizing areas he can dominate and cutting ones he can t. And he has done it by taking advantage of the 30 bankruptcies in this sector, leaving him one of the few publicly traded companies left, including Nucor (NYSE: NUE) (Cramer's Take), which is a great company, AK Steel (NYSE: AKS) (Cramer's Take), which levitates all of the time on takeover talk and then DOESN'T come in, and Reliance (NYSE: RS) (Cramer's Take), which is another fave of mine.
Readers of this space know that my investment bias is toward large-cap companies with demonstrated business models and a competitive advantage in established markets, preferably with a favorable global trend as a support. With the above in mind, U.S. Steel is worth a review.
U.S. Steel Group (NYSE: X) is the fifth largest steel producer in the world.
Analysts expect U.S. Steel's 2008 revenue to increase 13-17%, primarily stemming from acquisitions. Further, distributor inventory levels reached unsustainably low levels in 2007, in the interpretation of many analysts, and the replenishing in 2008 should benefit X.
Meanwhile, oil producer country tube/tube-related products should remain strong, and additional steel sector consolidation should help the sector regain modest pricing power. The Reuters F2008/F2009 EPS consensus estimates for X are $10.87/$11.52.
The risks? Analysts remain concerned about rising raw material costs. A sustained global economic slowdown would hurt U.S. Steel's results.
The First Call mean rating for X is: Buy [15 firms]. Mean 2008 target: $119 [high: $134, low: $90].
Stock Analysis: U.S. Steel is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than two years should be rewarded from X's shares. Note: A safer position would involve waiting for X's shares to pull back to the $110-115 range, but they may not retreat to that level. I'd consider a Sell / Stop Loss at $83.
Disclosure: Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.
MOST NOTEWORTHY: Abbott Lab, Fannie Mae, Freddie Mac and Micromet were today's noteworthy upgrades:
Wachovia upgraded Abbott Lab (NYSE: ABT) to Outperform from Market Perform as they believe their earlier concerns have been addressed. Past concerns included the potential for a negative outcome from the FDA panel on Xience and slowing prescription growth of lead drug Humira.
Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) were raised to Outperform from Market Perform at Keefe Bruyette citing recent government actions to stabilize the mortgage markets.
Micromet (NASDAQ: MITI) was upgraded at RBC Capital to Outperform from Sector Perform as they expect positive data for its lead candidate, MT103, by year-end.
OTHER UPGRADES:
ThinkEquity raised Atheros Comm (NASDAQ: ATHR) to Buy from Accumulate.
Goldman upgraded US Steel (NYSE: X) to Buy from Neutral.
General Electric (NYSE: GE) was upgraded at Merrill to Buy from Neutral.
TheStreet.com's Jim Cramer says after big runs, bears present five points. The good news is that three of them have gotten a little better.
After big runs, you immediately hear the following:
1. Earnings are going to be terrible. 2. Commodity prices are out of control. 3. Housing prices are still falling. 4. Credit is a real problem and mortgages are hard to come by and at higher prices. 5. Someone else -- a bank, a credit firm, a monoline -- is about to fail.
Then we go down again. And we get frightened.
I don't have anything to counter the first one. I particularly think that tech earnings are going to be bad, like those out of Sony Ericsson. I think the only big winners in tech will be those who go up against big losers, and the wins won't be that great anyway: Intel (NASDAQ: INTC) (Cramer's Take) over AMD (NYSE: AMD) (Cramer's Take), Cisco (NASDAQ: CSCO) (Cramer's Take) over everybody, Apple (NASDAQ: AAPL) (Cramer's Take) over everybody. The safe place is real-economy "Rest of World"ers like CSX (NYSE: CSX) (Cramer's Take) and U.S. Steel (NYSE: X) (Cramer's Take) and Nucor (NYSE: NUE) (Cramer's Take), or the drug stocks with big overseas exposure.
Nucor (NYSE: NUE) closed at $81.44 Thursday. NUE is a manufacturer and marketer of steel products. NUE overall option implied volatility of 42 is near its 26-week average according to Track Data, suggesting non-directional price movement.
Here are some highlights from this past week's 
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Just how high will U.S. gasoline prices rise?
Nordstrom and Kohl's post smaller-than-expected Q1 profit declines
Oil hits record $127.43 on supply concerns, raised Goldman forecast
