Figuring Out Who to Trust

 | Jul 25, 2012 | 7:26 AM EDT  | Comments
  • Comment
  • Print Print
  • Print
Stock quotes in this article:

nsc

,

ups

,

bwld

,

dpz

,

whr

Who do you trust?

Do you trust Norfolk Southern (NSC) with great volumes in chemicals, oil, wood and automotive, with some possible turn in coal? Or do you trust UPS (UPS), which talked about business falling off a cliff. Do you trust Riverbed (RVBD), Broadcom (BRCM) and Altera (ALTR), all talking about increased telecom and wireless spending, or do you fret about Apple (AAPL)? Do you buy into Buffalo Wild Wings' (BWLD) sudden decline in growth or do you bank with Panera (PNRA) today and Domino's (DPZ) yesterday.

How hard is this game?

So let's suss it out. I think we have some winners over losers and some cyclical trends that only some are playing in.

NSC was terrific because it had enough business to augment a decline in coal, a decline, by the way, that will end if the heat keeps up. Automotive was terrific. Anything housing related was amazing. The Bakken and the Marcellus are generating tremendous demand for shipping oil and oily liquids to refineries.

UPS? Major moves into Europe and Asia simply aren't paying off.

Domino's? Great franchise model and raw costs are actually going down while they are going up for Buffalo Wild Wings. When commodity prices go down, just call it a win. When they double like they did for BWLD, you have a loss.

The telecom story seems like it's about who has the right products for a 4G build out and who is in the sweet spot with the telco companies that simply must spend. I believe them.

Also, while the relative number for Apple and Phones may have not been huge, the build out for the iPhone 5 and the new Samsung phones plus the iPad is simply not stopping. So, these companies did well, plus Broadcom's got some terrific set-top box business going. I often wonder if Cisco (CSCO) is seeing so much commoditizing that it will keep going lower, although a part of Broadcom does well if Cisco does well. Hewlett-Packard (HPQ), not that long ago, was going into networking. I think HPQ is going away. It is the J.C. Penney (JCP) of tech.

Perhaps the best analogue of the moment came yesterday from Whirlpool (WHR), which missed the quarter. Europe was weak. Brazil was terrible. But the U.S. was strong. Housing is coming back. Automotive in the U.S. is coming back. Oil is back. Chemicals are back.

It's just that those are all bad in Europe and some bad in Asia and those two now offset whatever we've got going, which is why the confusion, right now, is so palpable.

Random musings: You can always make it easy on yourself. Lilly (LLY) boosts its forecast even as Zyprexa is diminishing now that it is off patent. Regeneron (REGN) remain the single-best-growth pharma story off that amazing Eyelea number.

Columnist Conversations

THE FIBOCALL: GM-Follow up to July 24 GM column: " GM testing first support today" Using the April 11 low @ 3...
Polycom announced a new share repurchase authorization on Wednesday worth $200M and said that its previous pro...
Feeling very random this morning in front of last trading day of the week. Any chance of actual corporate tax ...
Core Labs (CLB) Sent May 12,2014 "Today is Day 1 of our 3-Day Rule, so we would look to take back some shorts ...

BEST IDEAS

REAL MONEY'S BEST IDEAS

Columnist Tweets

BROKERAGE PARTNERS

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.


TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.