Think BIGhttp://www.bespokeinvest.com/thinkbig/en-US2012-02-17T19:52:03ZSquarespace Site Server v5.11.81 (http://www.squarespace.com/)New Daily Triple Plays Reporthttp://www.bespokeinvest.com/thinkbig/2012/2/17/new-daily-triple-plays-report.htmlBespoke2012-02-17T18:05:57ZMarket Analysis Stock AnalysisOver at Bespoke Premium, we have just released a new report that will be published daily covering earnings "triple plays."  As noted on Investopedia, a "triple play" is "a stock that simultaneously beats analyst expectations for revenue and earnings and also raises earnings guidance for future quarters.  The term triple play was first popularized by Bespoke Investment Group in the mid-2000s and is seen as a highly positive sign for the stock."

In our Daily Triple Plays report, we provide a list of all of the stocks that have reported triple plays over the last 40 days, and we also provide price charts of all of the new triple play stocks that are added to the list each day.  Please click on the thumbnail image below to view a sample of the report.  To begin receiving the report on a daily basis, become a Bespoke Premium member today.

]]>Spin Offs Back In Stylehttp://www.bespokeinvest.com/thinkbig/2012/2/17/spin-offs-back-in-style.htmlBespoke2012-02-17T15:49:11ZStock AnalysisIt seems as though throughout the history of Wall Street, there has been a continuous cycle where companies merge to form ‘synergies,’ and then years later spin off assets to ‘unlock’ value.  In the late 1990s, the merger of Salomon Smith Barney and Citigroup was lauded as a monumental merger whose synergies would lead to huge cost savings and cross selling that would benefit shareholders of the combined company.  We all know what happened in the ensuing years following that merger.  Citigroup, as the combined company is now a shell of its former self in terms of divisions and market cap.

These days the market seems to be in the unlocking phase where several companies are spinning off units in an effort to boost share prices.  In the last quarter of 2011 alone, there were eight spinoffs of $100 million or more.

So what's the best way to play corporate spin offs?  Should investors buy the child company, the parent, or avoid both?  To help answer this question we performed an analysis of all completed spin offs going back to 2001, and calculated the performance of the parent and child stocks in the ensuing weeks and months.  Clients wishing to view the analysis can click on the link below.  If you are not yet a Bespoke Premium client sign up today!  You'll be glad you did.

Spin Offs Back in Style

]]>Best and Worst Performing S&P 500 Stocks on Earningshttp://www.bespokeinvest.com/thinkbig/2012/2/17/best-and-worst-performing-sp-500-stocks-on-earnings.htmlBespoke2012-02-17T15:30:47ZStock AnalysisSo far this earnings season, 60% of the companies that have reported have beaten earnings estimates.  Looking at just the S&P 500 stocks that have reported, 63% have beaten estimates. 

The average S&P 500 stock that has reported has gained 0.55% on its report day this season.  (For companies that report after the close, we use the next day's change.)  Below are the 30 best and 30 worst performing S&P 500 stocks on their report days.  As shown, Netflix (NFLX) has been the best performing stock in the S&P 500 on its report day this earnings season.  The stock gained 22.06% following its report on January 25th.  Computer Sciences (CSC) ranks second with a gain of 18.54%, followed by Textron (TXT), Genworth Financials (GNW), Whirlpool (WHR) and Cerner (CERN).

E*TRADE (ETFC) has been the biggest loser in the S&P 500 this earnings season with a decline of 14.64% on its report day.  TripAdvisor (TRIP) comes in a close second with a one-day decline of 14.56%.  Supervalu (SVU) has been the third worst at -12.51%, followed by Masco (MAS), SanDisk (SNDK), Edwards Lifesciences (EW) and Corning (GLW).

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]]>India on the Cusp of New Bull Markethttp://www.bespokeinvest.com/thinkbig/2012/2/16/india-on-the-cusp-of-new-bull-market.htmlBespoke2012-02-16T23:21:40ZInternationalDon't look now, but India's stock market is on the cusp of entering a new bull market.  As shown in the chart below, India's Sensex is currently up 19.95% from its closing low on December 20th, which is just 5 basis points shy of the 20% threshold for a new bull market.

Below are all of the Sensex's bull and bear markets since 2000.  As shown, the index has been in a bear market for quite some time now -- since November 5th, 2010.  

Going back to 1986, the average bull market for India has seen the Sensex gain 111%.  The average length of its bull markets has been 394 days.

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]]>Apple as an Asset Classhttp://www.bespokeinvest.com/thinkbig/2012/2/16/apple-as-an-asset-class.htmlBespoke2012-02-16T20:45:00ZMarket Analysis Stock AnalysisBelow we highlight a list of the S&P 500 stocks that have been the most and least correlated with the Dow Jones Industrial Average over the last six months (using daily % change).  As shown, not one stock in the S&P 500 has an inverse correlation with the Dow, but Goodrich (GR) has a correlation of 0.04, which means the two are very close to being completely uncorrelated.  Netflix (NFLX) is the second least correlated stock in the S&P 500 with the Dow at 0.23.  Honeywell (HON) is the most correlated stock with the Dow at 0.93, followed by Loews (L), 3M (MMM), Exxon Mobil (XOM), Caterpillar (CAT), Nucor (NUE) and PPG Industries (PPG).  3M, Exxon and Caterpillar are all Dow members, but the others we mentioned are not.

Out of S&P 500 stocks, Apple (AAPL) is the 40th least correlated with the Dow at 0.55.  There has been lots of talk lately about Apple being its own asset class.  With that in mind, below we highlight the stock's correlation with other asset classes over the last six months.  As shown, Apple is the most highly correlated with the Nasdaq 100 at 0.76, which is not surprising given its huge weighting in the index.  Among the ten S&P 500 sectors, the stock is the most highly correlated with the Technology sector, followed by Consumer Discretionary and Industrials.  It is the least correlated with the Financial sector at 0.49.

Apple is inversely correlated with two asset classes -- the Dollar Index and the Long Bond future.  The asset class that comes closest to having a zero correlation with Apple is Gold at 0.16.

For Apple to be considered its own asset class, its correlation with other asset classes should be trending lower.  However, that has not really been the case.  Below are charts showing Apple's rolling 6-month correlation with eight asset classes over the last five years.  While correlation with the major equity indices has dropped over the past few weeks as Apple went parabolic, it's still much higher than it was five years ago.  And Apple's correlation with gold and oil has actually picked up significantly over the last six months.  The stock's correlation with oil is currently as high as it has been over the past five years.

Among other stocks (in the Russell 1,000), priceline.com (PCLN) has been the most highly correlated stock with Apple over the last six months at 0.66.  Las Vegas Sands (LVS) and QUALCOMM (QCOM) rank second at 0.65, followed by CA and Chipotle Mexican Grill (CMG) at 0.64.

Clearwire (CLWR) is the only stock in the Russell 1,000 that has had a negative correlation with Apple over the last six months.  Dendreon (DNDN), WebMD (WBMD), Education Management (EDMC) and Sears Holdings (SHLD) round out the top five least correlated stocks with Apple. 

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]]>Can the Market Rally Without Apple (AAPL)http://www.bespokeinvest.com/thinkbig/2012/2/16/can-the-market-rally-without-apple-aapl.htmlBespoke2012-02-16T19:45:25ZMarket Analysis Stock AnalysisYesterday's sharp reversal in shares of Apple (AAPL) and the subsequent decline in the overall market led many to argue that without shares of AAPL continuing to levitate, the rally in the overall market was in jeopardy.  Granted, AAPL does have the largest weight in the S&P 500 and the Nasdaq 100, but even at these weighting, it still is not necessarily the tail that wags the market.

Just look at the performance of the major averages in 2011.  While shares of AAPL rose by more than 25% in 2011, the Nasdaq 100 only rose by 2.7%, and the S&P 500 was unchanged.  If Apple surged in an environment where the market was flat, what makes people think that a decline in AAPL automatically means the market will decline?

A shorter term look shows a similar picture.  The chart below shows the intraday performance of the Nasdaq 100, S&P 500, and AAPL so far today (2/16).  As of around 3:00 PM ET, shares of AAPL were up about the same as the S&P 500 and a bit less than the Nasdaq 100.  More importantly, however, is how the two indices and AAPL got there.  Both indices opened near unchanged levels this morning and then traded sideways for the next hour and a half.  Then at around 11 AM, both indices started to rally.  

AAPL, on the other hand, opened down more than 1%, and then like the market, traded pretty much sideways.  In the case of AAPL, though, the rally in its shares did not begin until around noon when the rally in the rest of the market was well underway.  Today at least, rather than AAPL wagging the market, the market has been wagging AAPL.

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]]>Dow Dogs Are Dogs So Far in 2012http://www.bespokeinvest.com/thinkbig/2012/2/16/dow-dogs-are-dogs-so-far-in-2012.htmlBespoke2012-02-16T17:54:28ZMarket Analysis Stock AnalysisAs we noted at the end of last year, the Dogs of the Dow strategy -- which buys the 10 highest yielding Dow stocks at the start of each year -- did extremely well in 2011.  The opposite has been the case so far in 2012, however. 

As shown below, the ten 2012 Dogs are currently up an average of 2.06% year to date, while the other twenty stocks in the Dow are up an average of 10.54%.  The ten lowest yielding stocks in the index are doing even better with an average change of 14.56%.  Bank of America (BAC), which is the lowest yielding stock in the Dow, is up the most of any Dow stock so far in 2012 with a gain of 43.71%.  AT&T (T) was the highest yielding stock at the start of the year, and it's down 0.30% year to date.

 

]]>Jobless Claims Positive No Matter How You Look At Ithttp://www.bespokeinvest.com/thinkbig/2012/2/16/jobless-claims-positive-no-matter-how-you-look-at-it.htmlBespoke2012-02-16T14:57:13ZEconomyNo matter how you look at it, this morning's jobless claims report was positive.  In terms of expectations, this week's total of 348K was well below consensus expectations of 365K.  More importantly, it was also the lowest reading in nearly four years.

Looking at the four-week moving average, jobless claims are also at their lowest level since April 2008.

Even the non-seasonally adjusted (NSA) numbers, which skeptics had been trying to incorrectly classify as a negative a few weeks ago, are at multi-year lows.  In the last week, the NSA reading dropped to 361.9K.  The last time the NSA reading was this low in the second week of February was back in 2006.

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]]>Bullish Sentiment Shows Largest Weekly Drop Since Novemberhttp://www.bespokeinvest.com/thinkbig/2012/2/16/bullish-sentiment-shows-largest-weekly-drop-since-november.htmlBespoke2012-02-16T14:37:24ZSentimentIt doesn't take much to scare individual investors these days.  According to the weekly sentiment survey from the American Association of Individual Investors (AAII), bullish sentiment dropped from 51.6% down to 42.7% over the past week.  This week's 8.9 percentage point decline was the largest single week decline since 11/24.  With that kind of decline, one would think that the S&P 500 would be down more than the 50 basis points that it has fallen since last Thursday.

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]]>Market Performance During President's Day Weekhttp://www.bespokeinvest.com/thinkbig/2012/2/16/market-performance-during-presidents-day-week.htmlBespoke2012-02-16T14:18:46ZMarket AnalysisNext week will be the third four-day work week of the year as we celebrate President’s Day on Monday.  Below we highlight the historical performance of the S&P 500 during President’s Day weeks since the holiday was officially set as the third Monday in February back in 1971.

As shown, the S&P 500’s average performance during President’s Day weeks has been...

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