Business & Real Estate
- Published on Wednesday, 13 August 2014 01:02
- Written by Clyde Noel
There is still a lot of trepidation in the stock market. The Dow Jones industrial average dropped 317 points Thursday for the biggest one-day loss since February. On the other hand, the economy is in a good position and the earnings season behind us has been mostly positive.
To add to the confusion, most stocks rose Friday as investors weighed the implications of the U.S. military strike against insurgents in Iraq along with rising tensions in the Russian-Ukraine situation. Solid earnings reports have countered the uncertainty in Ukraine and kept the major averages near all-time highs. Even the Federal Reserve has helped by delaying a move to hike interest rates.
While a near-term spurt in either direction would not be surprising, we are still inclined to view any correction as a buying opportunity and maintain a nearly fully invested posture.
The percentages of bullish investment newsletters have decreased since June, but there is not widespread caution among investors to sell everything. Bull markets don’t end because of age, they end because of major political events or in anticipation of a recession.
With the bulk of the earnings season in the rearview mirror, there is not much information coming our way. In other words, the trepidation will continue with daily volatility, and we are stuck with the market we’ve got for at least the next couple of months.
Two Town Crier “50” stocks are making news.
• Symantec Corp. (SYMC; $24.29) reported earnings last week that raised the stock price 45 cents per share in the past fiscal quarter, topping analysts’ expectations. The software security maker reported sales of $1.74 billion in the fiscal first quarter that ended July 4.
The Mountain View-based firm revealed that net income increased to $236 million, or 34 cents per share, from $157 million, or 22 cents per share, in the same quarter a year ago.
The company’s shares have risen 15 cents, or less than 1 percent, to $23.73 since the beginning of the year, but the stock has declined $2.93, or 11 percent, over the past 12 months. The average volume for Symantec has been 6 million shares per day over the past 30 days.
Symantec is benefiting from companies spending on security software to protect their network and data from hack attacks and malware. Global spending on security software and hardware is projected to climb 9.1 percent this year to $71.1 billion.
Symantec’s management is under pressure to break up the company because the PC industry slump is eroding one of its main sources of sales. Symantec has hired JPMorgan Chase to explore its options and defend against shareholders. Presently, one option includes a buyout by a private equity firm.
Analysts’ opinions mostly suggest a hold on the stock. The most recent report by BMO Capital Markets downgraded the stock to market perform. The mean target price is $23, with a high of $30. The dividend yield is 2.70 percent.
• Abaxis Inc. (ABAX; $45.02) two weeks ago reported financial results for its first quarter that ended June 30. The Union City-based medical products company makes point-of-care blood analysis systems that can be operated with minimal training and performs multiple routine tests on blood, serum and plasma samples.
Revenues of $47.5 million rose 10 percent over last year’s comparable quarter, and earnings per share of 21 cents were up 50 percent over last year’s quarter.
Included in those figures were sales in the veterinary market of $39.4 million, up 8 percent over last year, and medical market revenues that rose 20 percent over last year’s quarter at $7.2 million. Total medical and veterinary reagent disc sales for the first quarter of fiscal year 2015 came in at $26.9 million, an increase of 18 percent compared with last year.
“We are pleased with the strong financial results in both the veterinary and medical markets during the first quarter of 2015,” said Clint Severson, chairman and CEO of Abaxis. “By working more closely with our distribution partners, we were able to increase our revenue growth.”
The Abaxis Board of Directors declared a quarterly dividend of 10 cents per common share, to be paid Sept. 17 to all shareholders of record at the close of business Sept. 3.
The most recent analysts’ opinion – a hold – was issued more than a year ago. The high target price for Abaxis stock is $60.
Clyde Noel is a Los Altos Hills resident and longtime investor in stocks.