The big earnings report this weekcomes from Wal-Mart (WMT) which beat on its top and bottom lines and offered lowered guidance, yet the shares are pointing much higher. Three takeaways:
1. U.S. continues to be stronger than other developed nations:
Revenue
US $70.0 billion +3.4%
International $33.7 billion +1.7%
Sam’s Club $14.4 billion +2.3%
2. Cheaper gas has had no impact yet:
Same store sales at Sam’s Club stores without fuel +0.4, but only +0.3% at locations with fuel… cheaper gas should see buyers take savings at pump and go instead to the store and spend more.
3. Taking market share:
While Wal-Mart is surging this week, JC Penny and Kohl’s are under serious pressure. We extrapolate the retail giant is successfully fending off recent share erosion.
Investing Beyond Stocks and Bonds
This has been a record-breaking week in the world of auctions with a pocket watch fetching $24 million dollars and two Rothko paintings $75 million.
The watch is the Patek Philippe Super-complication which features 24 functions including Westminster chimes and a scene of the NYC sky above Central Park. The watch was ordered in 1925 by banker Henry Graves Jr. (his father ran the Federal Reserve) and delivered in 1933. The 920 components made it one of the most complicated watches of all time, and the $15,000 is said to have helped the watch maker survive the Great Depression.
The Rothko paintings auctioned this week also has great back stories, including his Untitled 1970 piece which fetched $40 million; twice the auction estimate. The dark painting reflected Rothko’s mood during the time and he committed suicide shortly thereafter.
Of course art has been on fire for a long time, particularly modern work like Jean Basquiat whose “Dustheads” sold for a record $48.8 million last May… Before he died of a drug overdose in 1988, the highest amount paid for his work was $50,000, although lots of pieces were sold for half that amount.
I admit it’s hard to know what up and coming artists are going to be hot in the future. I knew of Basquiat 20 years ago, but only became a fan of his work in the last few years, which is too bad because a $100,000 investment in his work 20 years ago would be worth on average $9.2 million now.
Ironically, the strength in the art market makes me feel better about the stock market as the most reasonable place to invest based on value and potential. But art underscores the notion that intrinsic value is always the way to go. When it comes to investing, the ability to store value is critically important and art has done the trick.
Please tune into my show tonight as we discuss whether or not it is time to buy gold and silver. There are interesting trends hinting gold miners are a buy now and the metal could be finding a bottom, too.
Outside of Wal-Mart’s numbers, earnings are decidedly mixed, save for newer tech names like Cyber-Ark Software (CYBR) and Rocket Fuel (FUEL).
| Company | Ticker | EPS (Actual) | EPS (Est) | Rev (Actual $M) | Rev (Est $M) |
| Cisco Systems** | CSCO | 0.54 | 0.53 | $12,245.00 | $12,161.87 |
| Cyber-Ark Software* | CYBR | 0.20 | 0.01 | $28.00 | $20.90 |
| J.C. Penney | JCP | -0.77 | -0.81 | $2,764.00 | $2,805.75 |
| NetApp | NTAP | 0.70 | 0.69 | $1,542.50 | $1,548.42 |
| Rocket Fuel* | FUEL | -0.18 | -0.30 | $102.10 | $98.67 |
| Tetra Tech* | TTEK | 0.35 | 0.34 | $462.19 | $478.62 |
| Kohl's | KSS | 0.70 | 0.74 | $4,374.00 | $4,391.51 |
| Tyco | TYC | 0.56 | 0.56 | $2,704.00 | $2,721.11 |
| Viacom | VIAB | 1.71 | 1.68 | $3,991.00 | $3,892.28 |
| Wal-Mart** | WMT | 1.15 | 1.12 | $118,076.00 | $117,411.61 |
** = Dow Component * = Open WSS Idea
I’m not jumping for joy over the early morning action, although I think beneath the surface, some great things are happening and the rally is poised for a big leg higher… but it’s seeking a spark.
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