Q-C economic foundation stocks fare well
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By Jim Victor | Thursday, April 03, 2008 |
Agribusiness and industrials rallied again last week. As we have seen in the past, investor preferences can rotate from group to group. And while a two-week focus on financial and consumer stocks had been accompanied by money leaving these dominant Quad-City business sectors, last week brought renewed interest to our economic foundation stocks. Our Quad-City Times Key 15 got a ride too, rising 14.85 to 1,356.48.
A week of economic reports produced few surprises but plenty of perspective. Indeed, our economy saw just
0.6 percent annualized growth of output in the fourth quarter, after stripping out inflation. That is slow growth, confirmed by the Federal Reserve. Housing and housing-related slowness in finance were offset by growing exports.
My favorite is Friday’s latest on the nation’s personal income and spending. While some may wish to make something of each month’s 0.1 percent move up or down, the full-year perspective is much more telling. The Commerce Department says our combined personal income is up 4.6 percent over last February, helped by more people working and pay raises. And our spending is up 5.1 percent, attesting to modest growth over the last year.
The Illinois Department of Employment Security says February employment in the Quad-Cities MSA (multi-state area) is 165,200. That’s up 1,500 jobs from last February’s 183,700. Furthermore, last week’s hiring intentions report from Manpower Inc. showed many more area employers expecting to hire in the next three months rather than reduce their work forces. If you’re looking, things are looking up.
Monsanto (b) is looking up as well. The big agribusiness seed, seed traits, and herbicide firm awakened investors to action last Tuesday by upping sales and earning forecasts. It is Monsanto’s third upward revision in three months as seed sales have been progressing better than expected. Monsanto said its seed division’s gross profit may climb 20 percent for this quarter. And the company now sees full fiscal year earnings of $3.15 to $3.25 per share, up 45 cents from last month’s forecast. This was substantial, as was the 17.17 increase in share price to 114.30.
The agribusiness sector will be in the spotlight again this week, with the U.S. Department of Agriculture’s annual “prospective plantings” report out Monday. According to a Dow Jones preview, that survey of planting intentions may show farmers switching more acres back from corn to soybeans to cut down on costs. All this could change demands for seeds and herbicides and fertilizer, said the report. Other agribusiness favorites last week included Deere & Co. (a) (b), with shares up .71 to 79.94, and Archer Daniels Midland (a) (b) gaining 2.10 to 42.28.
Brothers Jeff and Rob Goldstein have been buying Isle of Capri shares. Their father, Bernie, is chairman of the board; Jeff and Rob are directors. Last week’s filings released by the Securities and Exchange Commission show Jeff buying 54,597 shares in January and 7,990 in February, bringing his direct holdings to 1,211,007 shares and indirect holdings to another 918,881. Rob’s purchase in January was 49,721 shares and in March, 7,290 more, totaling 1,147,934 owned directly and 850,219 indirectly. Trading near their lows, Isle of Capri shares were off .22 last week to 7.02. The full 52-week rage is 6.87 to 27.99.
The new week brings a new month, and it brings Wednesday’s newest Commerce Department report on factory orders, crucial to our Quad-City factories. Friday brings the latest on U.S. employment. Let’s hope both reports will be looking up.
Jim Victor is senior vice president-wealth management and financial advisor for Smith Barney, Davenport. Smith Barney is a division and service mark of Citigroup Global Markets Inc. and its affiliates and is used and registered throughout the world.
The information contained herein has been obtained by the writer from sources believed to be reliable, but he does not guarantee its accuracy or completeness. Neither the information nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. a) The firm is a market maker in the publicly traded equity securities of this company. b) Within the past 3 years, Citigroup or its affiliates has acted as manager or co-manager of a public offering of securities of this company.
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