Four reasons to take Progressive for a test drive
Posted
Jun 12 2009, 02:10 PM
by
Minyanville
Rating:
Any big plans for the weekend? Mine will be spent at 5 different sporting events: a gymnastics show, a softball game, and 3 soccer games. Oh, and toss a play in there for good measure. Busy parents out there can appreciate what I’m talking about.
Asian stocks rose overnight. The Hang Seng was up 0.52% and the Nikkei was up 1.55%. Meanwhile, European stocks were in negative territory early this morning. And here in the US, we're currently trading lower.
Here’s what I’m focused on this morning (besides my busy weekend plans):
Progressive Corp (PGR):
I think the Ohio-based auto-insurance company deserves a mention. Here’s why I like it:
1. According to a release last night, its board of directors “approved a new authorization for the Company to repurchase up to 50 million of its Common Shares commencing on July 1, 2009.” It’s no accident (get it?) I dig this because it wouldn’t have done it unless it thought the company had the financial means to do it or the stock was a good value.
2. It tells me the company thinks the business is in pretty good shape, otherwise it could've used that coin on advertising to bring in new customers.
3. It trades at an attractive 10.4 times the current-year estimate.
4. Over the last 2 months or so, it appears the estimates have ticked up a bit, which grabs my eye. They're not up a tremendous amount, but it's noticeable. For example: It looks like the estimate for this year has risen from $1.39 to $1.50 over the last 60 days, while the estimate for 2010 has gone from $1.37 to $1.45.
I think the stock has the potential to punch through the $20 level within the next year.
National Semiconductor (NSM):
The California-based chipmaker was out with its fourth-quarter numbers.
It posted a loss of $0.28, but the company was quick to point out that there were $116 million in pre-tax charges. Meanwhile, its revenue line came in at $280.8 million, which was north of expectations.
But I think the big news was it's outlook. Per the release :
“National anticipates that sales in the first quarter of fiscal 2010 will range from $285 million to $305 million, or an increase of approximately 2% to 9% sequentially.”
That’s good news because the estimate I’m seeing is for just a little better than $282.5 million.
My thoughts on National Semiconductor:
1. Overall, the news seems positive, and I think the shares could get a bit of a lift in the session. That said, I'm not overly enthusiastic about the bigger picture. Sorry, National bulls.
2. It's expected to put up a whopping $0.16 this year and $0.18 next year. That's not a great value for a stock that trades better than $14.
3. Data shows it has a mixed record of meeting earnings estimates over the last year.
4. I’d like to see some insiders pony up in the open market right about now.
Bottom line: I’m not too enthusiastic, and given the better opportunities out there, I'm punting on this one.
Bristol Myers Squibb (BMY)/ McDonald's (MCD):
If you like to keep an eye out on what insiders are doing, you may be interested in the following:
Bristol Myers: While investors seem to have their eyes and ears on other drug companies or on the macro outlook (or let’s face it, summer), there was some insider buying at the New York-based drug company during the late-April time frame that deserves mention. Might this be a sign of good things to come?
Just as an aside, give the dividend situation a gander.
McDonald's: Traditional-service food chains could be where the action is down the road with the economy popping back, but I may be proven wrong. Data shows an insider bellied up in a fairly big way in mid-May.
Perhaps those burgers could sizzle a bit longer? And maybe that coffee idea it brewed up will end up being a good one.
Advanced Micro Devices (AMD):
I’ve had some folks ask me about my current take on the chipmaker, given its nice bounce off the lows:
1. All things considered, I’d much rather be knee-deep in Intel (INTC) right now, which may make me sound like a broken record.
2. The earnings picture still fails to inspire me, for lack of a better word. (Maybe I’ll get out my thesaurus.)
3. Insiders -- how about bellying up to the bar? I’m not sure I’d buy on news of a purchase alone, but it would make me feel better.
4. Management needs to find a way to get this baby north of $5 and hold the line.
5. Even if things were a lot better right now, I think it would take multiple quarters to get investors to snuggle up to the Advanced story.
6. Why should I open this door now?
Have a great day and a great weekend. And here's hoping this digital TV thing will force my dad to finally ditch those bunny ears he used to make me fiddle with!
Top Stocks blogging partner Todd Harrison is founder & CEO of Minyanville.com. This post was written by Minyanville Contributor Glenn Curtis.
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