Author Archives: Scalper1

This Blue-Collar Stock Group Is Acting Like A Fad Item

In the past five weeks, an industry group that normally attracts little attention has rocketed higher. IBD’s Machinery-General Industrial subgroup might sound like a collection of companies that have been around forever, but that doesn’t mean the group can’t be a winner. Charts tell the story. The Nasdaq and S&P 500 both hit a  low Jan. 20 and then rebounded — only to soon go down and strike a fresh low. Machinery-General Industrial handled the situation better. The group hit a closing low Jan. 21 and then marched steadily higher. There was no second low. While the Nasdaq and S&P 500 are up about 4% and 6% since their first low, Machinery-General Industrial is up 16%. If you’ve been following the news, you know that the press has been reciting over and over that manufacturing is in  terrible shape. Perhaps the problems are overblown. The action of the machinery stocks tells a less pessimistic story. And the latest industrial production report seemed to back the optimists: January output rose 0.9%, more than double expectations. The February numbers aren’t expected until later this month. Meanwhile, February’s ISM Manufacturing Index released Tuesday showed the best number in five months, though at 49.5 reflecting a slight contraction. Which stocks in the Machinery-General Industrial group led over the past five weeks? Nordson ( NDSN ), which manufactures products used to dispense adhesives, coatings and sealants, jumped 35% in roughly five weeks.  Colfax ( CFX ), a diversified manufacturing and engineering company, rumbled 32% higher.  Hyster-Yale Materials Handling ( HY ), a maker of lift trucks, popped more than 30%. Graco ( GGG ), a manufacturer of equipment for fluid applications, advanced 25%. The charts: Nordson is near a 74.34 buy point in a double-bottom base. Colfax is 51% off its high with no entry in sight. Hyster-Yale is working on its seventh weekly gain in a row but is 20% off its 76.50 high in May. Graco is 2% above a 77.65 buy point and extended past a 73.59 double-bottom-with-handle entry. What about earnings? For some, it’s a turnaround story. Nordson’s earnings, on a year-ago basis, declined 7% in fiscal 2015 ended in October. The Street, though, expects earning to grow 9% in fiscal 2016 and 10% in fiscal 2017. Both percentages reflect upward revisions. Colfax’s earnings slid 27% in 2015. Analysts expect a 9% drop this year and an 11% increase in 2017. Both represent upward revisions. Hyster-Yale’s earnings skidded 22% in 2015. The Street’s consensus estimate is for an earnings drop of 10% this year and then a 25% jump in 2017. Both reflect downward revisions. Graco’s EPS rose 7% last year. Analysts are pegging earnings growth in 2016-17 at 6% and 9% respectively. Both are upward revisions.    

First Apple, Now Facebook Under Pressure To Turn Over User Data

Brazilian federal police arrested the head of Facebook ‘s ( FB ) Latin America operations early Tuesday for not complying with police requests to access WhatsApp messages linked to an organized-crime and drug-trafficking case, the Wall Street Journal reported. The arrest is expected to draw the attention of other U.S. tech companies watching the combat taking place between Apple ( AAPL ) and the U.S. government. The U.S. Justice Department recently requested that Apple unlock an iPhone that belonged to a terrorist involved in a mass shooting last year in San Bernardino, Calif. Apple has said that it won’t comply, seeking to safeguard product users’ privacy. In the WhatsApp case, Diego Dzodan was arrested on his way to work in São Paulo and is being held under “preventative arrest,” according to a police spokeswoman in the state of Sergipe, where a judge’s order was issued, the WSJ said. A Facebook spokesman said that the company is “disappointed with the extreme and disproportionate measure” of taking Dzodan into custody. The Facebook spokesman said that Dzodan was detained for questioning, not arrested. Facebook owns WhatsApp, but WhatsApp operates separately from Facebook. According to the court, Facebook was fined about $250,000 — more than BRL 1 million, the local currency — for not complying with three previous requests, said the WSJ. This is the second time in three months that Facebook has clashed with Brazilian authorities, the report said. In December, a different judge ordered the shutdown of WhatsApp throughout the entire country for 48 hours after the service didn’t comply with a criminal investigation. The ruling affected millions of users but was overturned the next day. WhatsApp is popular in Brazil, where half of the country’s 204 million residents rely on the free text- and voice-messaging service. Many poorer Brazilians depend on WhatsApp for their day-to-day communications, the WSJ said, since texting in Brazil is about 55 times more expensive than in the U.S., according to advisory firm Activate. WhatsApp says that it doesn’t store its users’ messages after they’ve been delivered and has also been rolling out end-to-end encryption so that it can’t intercept or compromise those messages, according to the WSJ. “This means police have arrested someone over data that doesn’t exist,” a WhatsApp spokesman said. “We cannot provide information we do not have.” Both the police and the court declined to provide additional information about the case. Facebook stock was up 2% in afternoon trading in the stock market today , near 71. Apple stock was up 3%, near 100. Apple executives and FBI officials are making their cases Tuesday at a House Judiciary Committee meeting.

Instant Gratification A Hit For Amazon.com With Prime Now

With the lofty goal of delivering vast swaths of his mighty e-commerce firm’s sprawling inventory within one hour, Amazon.com ( AMZN ) CEO Jeff Bezos has struck cybergold — shoppers have flocked to the latest iteration of his Amazon Prime loyalty program, Prime Now. Amazon executives have described rapid delivery as both difficult and expensive — and have acknowledged that customers love it. And Amazon loves its customers, so much that Bezos repeatedly has said the company will forego profits to please them. Cowen & Co. Tuesday released results of its survey of 1,200 Amazon Prime customers that it says shows one in four already have adopted Prime Now. It’s basically free. With order via a mobile app, Prime Now will deliver a large number of Amazon-bought goods within two hours in areas of the nation where the service is available. Customers can use the app for one-hour delivery as well, but there’s a $7.99 charge for that. Prime Now is one Amazon salvo in a multiyear campaign to snatch more of the household budget. Amazon.com stock was up more than 3.5%, near 573, in afternoon trading on the stock market today . The company carries an IBD Composite Rating of 78, where 99 is the highest. Cowen analyst John Blackledge, in the research report, says that Bezos’ approach with Prime Now complements Amazon’s same-day and two-day services, and adds more value to its grocery operations Pantry and Fresh. Wal-Mart Vs. Amazon Heating Up Wal-Mart ( WMT ) — by far the largest brick-and-mortar retailer — makes bank on its grocery business, which accounts for about half of its top line, according to ChannelAdvisor ( ECOM ) Executive Chairman Scot Wingo. But Amazon is encroaching on Wal-Mart’s business. “We view Prime Now as one of the pathways Amazon is using to gain share in the $1 trillion grocery market,” Blackledge wrote. “Our early survey work suggests the strategy is working.” The survey indicated that 70% of those responding bought goods via Prime Now multiple times a month — and about a third of shoppers bought groceries from a local store that elected to list its items on Prime Now. The service is available in 24 markets that account for nearly half of the U.S. gross domestic product, says Blackledge. Food delivery is available in seven markets. Prime Now’s success is also a blow to eBay ( EBAY ), which continues to struggle to maintain relevancy for shoppers. Plagued by problems such as a significant data breach and SEO challenges following a change in Alphabet ( GOOGL ) subsidiary Google’s search engine algorithm, eBay has been unable to match Amazon’s double-digital growth rate. Disagreeing with recent investor sentiment — eBay stock has had a choppy beginning to 2016 — Wells Fargo analyst Matt Nemer says that eBay has potential, albeit as a hedge against a potentially slowing global economy. And for its part, eBay has been making significant bets on restructuring the way it lists items. But as Amazon continues to innovate its way to riches, some say that its position as the dominant e-tailer is impenetrable . That hasn’t stopped rivals, however. Privately held Jet.com is making a stab, also offering two-day shipping, and Alibaba ( BABA )-backed ShopRunner is also taking aim at Amazon. ShopRunner executives have told IBD that the company plans to take on Amazon in categories where the Seattle-based company doesn’t have a strong foothold, such as fashion.