Heavy News Week Rocks the Boat
We just experienced a pretty news-heavy week, with company earnings, economic reports and the turmoil in Egypt reaching a boiling point.
So I thought I’d review how some of the stocks I’ve mentioned recently fared.
Let’s get right to it…
~ SeaWorld (SEAS)
I recommended that we take a “wait-and-see” approach to the SeaWorld IPO. You’re welcome. The company went public on April 18, raising $245.4 million. And it wouldn’t surprise me if initial investors asked for their money back. In the first earnings report since going public, the company missed profits by 24%, and its stock sold off 8% in two days. Making matters worse, SeaWorld projects that it will fall short of the $1.5 billion in revenue that analysts estimated for 2013. The company places part of the blame on higher ticket prices and wet weather. Unless the price falls under the $27 IPO level, I wouldn’t touch it.
~ Wal-Mart (WMT)
I touted Wal-Mart as a back-to-school play earlier this month. And in many ways, Wal-Mart is a gauge for the overall health of retail. So when it reported lower-than-expected sales and earnings – and gave a pessimistic outlook for a full year – its stock fell 2%. Granted, so did the rest of the market because of imminent moves by the Fed to reduce stimulus. The following day, we discovered that the Thomson Reuters/University of Michigan’s index of consumer sentiment slipped to 80.0 from 85.1 for July. So perhaps Wal-Mart is, indeed, a microcosm of the overall retail sector. Either way, if consumer spending doesn’t meet expectations in September and into the holidays, we could be in for a long winter.
~ Frontier Market ETF (FM)
I brought frontier markets to your attention because of their diversification and lack of correlation with developed countries. Well, as you know, today’s global stocks can fall like dominoes. When one area of the world crashes down, it tends to take the others with it. Indeed, all three major indices sold off during a two-day period, and so did the iShares Emerging Markets ETF (EEM). On the other hand, the iShares Frontier Market ETF hardly flinched. So it still makes sense to save a small spot in your portfolio for them.
Last month, I told you to avoid bitcoins at all costs. Recent news confirmed my suspicions. Reports have surfaced that bitcoin wallets on Android are vulnerable to theft because of problems in a component that generates secure random numbers. Plus, the U.S. Financial Crimes Enforcement Network of the U.S Department of the Treasury has issued subpoenas to about 24 companies in its investigation of the virtual coin. Again, current investors should be squirming. Don’t fall for yet another hoax.
~ Egyptian Pound
The Egyptian pound was also in my crosshairs last month. Well, the Egyptian government declared a month-long state of emergency after clashes between security forces and Muslim Brotherhood supporters. All told, 525 died, including 43 police officers. Now, if that’s not enough to scare you away from investing in any Egyptian pound scam, this ought to do the trick: Analysts at Societe Generale say that they “keep a bearish stance on all Egyptian assets despite the central bank’s attempt to stabilize the Egyptian pound, and also expect a further re-pricing in Egyptian Eurobonds.” Again, stay away!
Ahead of the tape,