I love, love, love stocks that go higher but I like them to go up on real news not just "ketch-up."
What's real news? The sharply better-than-expected performance of Morgan Stanley (MS) , which demonstrated Thursday morning a level of consistency that is sorely lack in the banking group.
Morgan Stanley's printing money at the rate of BlackRock (BLK) or a State Street (STT) , trust companies that simply gather assets, yet it trades as if its earnings are episodic. I say that because when you look at its price-to-earnings multiple you find it lumped in with the cyclical financials than it is anything but.
So, it is natural that its stock respond to its dramatic yet replicable quarter with a great multiple to its now consistent earnings stream. I don't want to slight trading and banking, they were superior to almost all banks, but I do want to say that it's ludicrous that a money machine like this is trading at half the market multiple, or average stock in the S&P 500. I predict continued increases in price as the stock gets what we call a re-rating by the deacons of Wall Street.
But then there's the other kind of gain, the ketch-up gain, and I have seen about 57 varieties of ketch-up since this earnings season began.
First there's the Advanced Micro Devices (AMD) kind of ketch-up that I saw from Barclays. AMD's killing it, in part because of the end of the drought for data center spend and because of share take with personal computers because it has hot new chips and because Intel's (INTC) having continued manufacturing problems.
Neither of these items is new news. But Thursday morning Barclays took AMD's price target from $32 to $50 because, in part, the problems at Intel "lasted longer than we thought." The "equal-weight" or hold rating the analyst has is being compromised by these action points, thus you get this analysis: "As long as Intel continues to struggle it's nearly impossible to be negative on AMD, particularly with a new game console ramp in the second half" as well as a new chip for the red-hot notebook category.
I say thanks for nothing, especially given that the stock is 31 cents from the new price target. I don't want recommendations based on intellectual vacations.
Sometimes you get the ultimate indignity, the price target increase and the downgrade simultaneously. That's what we scored with Morgan Stanley's mentally challenged price target increase, earnings increase and downgrade of the stock of Tesla (TSLA) . Here the analyst underestimated the growth, the earnings power and the price momentum that Tesla could have if it hit or exceeded its own goals and the goals of the analyst itself.
What does that trifecta produce? How about a price target change to $360 from $250 in recognition of all of Elon Musk's prowess? The rotten tomato in this Heinz Ketchup varietal? The stock's at $500. At least it's down $17 on the less-than-cogent substance of the downgrade consisting mainly that the stock's got too much risk in it. Excuse me but I would like to hear that from a bull not someone who missed the train leaving the station.
I make no bones of the fact that like a Morgan Stanley push more than an AMD push: I need revelatory info to go out this strong and we don't have it yet.
The Tesla downgrade? The stock's been too hot, but this is strictly the worst kind of the 57 varietals of ketch-up, it's nothing but an empty bottle.