Filed under: Toll Brothers (TOL), Options

Toll Brothers (NYSE: TOL), a leading U.S. builder of luxury houses, closed at a four year low of $16.04. TOL over all option implied volatility of 64 is above its 26-week average of 48 according to Track Data, suggesting larger risk.

Pulte Homes Inc. (NYSE: PHM), a home builder with operations in 51 markets, closed at a five year low of $8.66. PHM February option implied volatility of 90 is above its 26-week average of 62 according to Track Data, suggesting larger risk.

Options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

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Filed under: Major movement, Good news, Options, Technical Analysis

E*TRADE Financial Corporation (NASDAQ: ETFC) shares are making an early jump today after the company announced it has sold about $3 billion of mortgage-backed securities and municipal bonds. The sale was part of a restructuring plan to reduce risk and maintain higher capital levels. The sale will result in a loss of less than $5 million, according to the company.

ETFC also said it will exit its institutional trading business. Both moves are part of an attempt to give the company added ballast in the wake of write-downs related to the sub-prime crisis. If you think that the company may have finally found the bottom, then now could be a good time to look at a bullish hedged trade on ETFC.

After hitting a one-year high of $26.08 in last January, the stock hit a new one-year low of $2.08 yesterday. ETFC opened this morning at $2.60. So far today the stock has hit a low of $2.35 and a high of $2.60. As of 11:10, ETFC is trading at $2.42, up $0.17 (7.5%). The chart for ETFC looks bearish but improving, while S&P gives the stock a negative 2 STARS (out of 5) sell rating.

Continue reading E*Trade (ETFC) sells $3 billion in assets

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Filed under: Analyst initiations

MOST NOTEWORTHY: Linc Energy, Equinix and Smith & Wesson were today’s noteworthy initiations:

• Merriman initiated Linc Energy (OTC: LNCGY) with a Buy rating and believes the company is well-positioned to become a large producer of ultra-clean, high quality diesel fuel, at extremely high margins.
• Equinix (NASDAQ: EQIX) was assumed with a Buy rating and $120 target at Deutsche Bank. The firm thinks the company continues to benefit from favorable industry dynamics as customer demand continues to outstrip supply of new co-location space industry-wide.
• Susquehanna is positive on Smith & Wesson’s (NASDAQ: SWHC) leading market position in the handgun market and top line growth. The firm started shares with a Positive rating.

OTHER INITIATIONS:

• ComScore Inc. (NASDAQ: SCOR) was reinstated with an Outperform rating at Credit Suisse.
• UBS initiated Willbros Group (NYSE: WG) with a Buy rating and $4 target.
• Lazard started BladeLogic (NASDAQ: BLOG) with a Hold rating.

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Filed under: Analyst upgrades and downgrades, Garmin Ltd (GRMN)

MOST NOTEWORTHY: Garmin, Express Scripts and ArQule were today’s noteworthy downgrades:

• Deutsche Bank downgraded shares of Garmin Ltd. (NASDAQ: GRMN) to Hold from Buy and lowered their target to $90 from $125 after channel checks at CES raised concerns about competitive pressure in the U.S. and pricing. Deutsche sees increasing uncertainty for 2008.
• Express Scripts (NASDAQ: ESRX) was lowered to Market Perform from Outperform based on valuation and risk to 2008 guidance.
• Banc of America downgraded shares of ArQule (NASDAQ: ARQL) to Neutral from Buy following the departure of CEO Dr. Stephen Hill, to reflect greater execution risk and uncertainty.

OTHER DOWNGRADES:

• Keefe Bruyette downgraded IberiaBank (NASDAQ: IBKC) to Underperform from Market Perform.
• JMP Securities lowered Red Lion Hotels (NYSE: RLH) to Market Outperform from Strong Buy.
• Bear Stearns downgraded Family Dollar (NYSE: FDO) to Underperform from Peer Perform.

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Filed under: Earnings reports, Private equity, SLM Corp (SLM)

Since the early 1970s, the Apollo Group (NASDAQ: APOL) has transformed the private education business. The company not only has a broad network of campuses called the University of Phoenix, but also a thriving online education system.

As seen with yesterday’s fiscal Q1 results, Apollo is continuing to grow at a nice clip. Net income increased 23% to $139.9 million, or $0.83 per share. Revenues were up 17% to $780.7 million.

Apollo got a boost from enrollments, which increased 11% to 325,000. But the company has also made important strides with student retention as well as the quality of the curriculum.

True, there are worries about the credit crunch. Just take a look at school loan provider Sallie Mae (NYSE: SLM), which plans to pull back somewhat. Yet, Apollo has anticipated some of this and has tried to reduce its reliance on private student lending.

Continue reading Apollo’s earnings: A nice lesson for shareholders

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Filed under: International markets, Forecasts, Other issues, Federal Reserve

In the “counter-intuitive thesis of the month” category, Morgan Stanley’s global head of currency research Stephen Jen is predicting a rise in the dollar during a possible U.S. economic slowdown, Forbes reported Wednesday.

Jen said his research shows that, historically, the dollar tends to rise when the U.S. economy is either growing 1.5% a year or contracting by 1.5% or more a year, and Jen is predicting that the dollar’s 2008 performance will be similar to 2005, when the dollar climbed 10% against the largest European currencies.

On Wednesday, the dollar was higher against the world’s major currencies, improving 0.21 cents to $1.4684 versus the euro, 0.50 yen to 108.39 versus Japan’s yen, and improving 1.35 cents to $1.9596 versus the British pound.

Andrew Resnick, independent currency trader, told BloggingStocks Wednesday that Jen’s thesis is plausible.

Continue reading Analyst says dollar could rise despite slow-growth U.S. economy

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Filed under: Analyst upgrades and downgrades, AMR Corp (AMR), Contl Airlines’B’ (CAL), Delta Air Lines (DAL)

MOST NOTEWORTHY: Airline stocks, LDK Solar and AU Optronics were today’s noteworthy upgrades:

• UBS upgraded legacy airline stocks based on the recent pullback in the group. The firm upgraded Continental Airlines (NYSE: CAL) and Delta (NYSE: DAL) to Buy from Neutral and AMR Corp. (NYSE: AMR) to Neutral from Sell.
• CIBC upgraded shares of LDK Solar (NYSE: LDK) to Sector Performer from Sector Underperformer following a meeting with management as they have greater visibility on polysilicon supply for 2008 as well as comfort that average sales price declines will be lower than previously expected in 2009.
• Lehman upgraded shares of AU Optronics (NYSE: AUO) to Overweight from Equal Weight after raising the Asia Display industry to Positive from Neutral.

OTHER UPGRADES:

• Repsol SA (NYSE: REP) was upgraded to Equal Weight from Underweight.
• Jefferies raised its rating on Shutterfly (NASDAQ: SFLY) to Buy from Hold.
• Baird upgraded Shire Plc (NASDAQ: SHPGY) to Outperform from Neutral.

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Filed under: Competitive strategy, Economic data, SanDisk Corp (SNDK)

SanDisk Corp. (NASDAQ: SNDK) has made its name in the consumer electronics arena mostly through flash memory products (like that card inside your digital camera). It is also the second-largest maker of digital media players, behind only Apple, Inc. (NASDAQ: AAPL) and its ubiquitous iPod.

But, as talk of a 2008 U.S. consumer spending slowdown make the rounds in the media (with some betting against it until later this year), SanDisk CEO Eli Harari believes his computer memory company will mostly be insulated from any slowdown effects in the U.S. He has a great reason too — for years, SanDisk has ensured that it grows international sales to diversify itself against a slowdown in any particular market.

Gee, what a novel idea. Harari recently said, “Two-thirds of our revenue in the third quarter came from overseas and this is not by accident . . . we are absolutely driving market share outside of the United States. If there is to be a recession, we are very well positioned.”

As long as international and U.S. consumer see a need to feed themselves more digital storage (phones, cameras, computers, you name it), SanDisk will be there to supply the demand and provide more product for less price over time. Unfortunately, SNDK investors aren’t recognizing this, as the company’s shares are trading at two-year lows on fears of an oversupply in the flash memory market, combined with fears of consumers curbing their digital memory purchases. Hey, everyone — stop using all those gadgets and prove the market right, okay? Yeah, right.

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Filed under: Apple Inc (AAPL), Options

Apple Inc. (NASDAQ: AAPL) is trading at $173.15 at 10 am, up a bit more than 1%.

Steve Jobs is expected to introduce the Apple 3G iPhone with pricing in early 2008, and AAPL is expected to report EPS in mid-January. Macworld will be held January 14-18 in San Francisco.

AAPL January and February option implied volatility of 68 is above its 26-week average of 48 according to Track Data, suggesting larger risk.

Options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

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Filed under: Rumors, Products and services, Apple Inc (AAPL), Netflix, Inc. (NFLX)

It’s been said that the physical disc format, including the DVD and the Blu-ray disc, will eventually become extinct as more customers download movies and content right from the internet. While that scenario is not stopping the Blu-ray disc camp from saying exciting things about having customers buy their beloved movies on yet another format, some are already looking past the latest movie disc craze.

Apple, Inc. (NASDAQ: AAPL), always one to take a firm grasp of the future and make it today’s reality, has announced that it will begin giving its iTunes customers the ability to rent digital movies in addition to buying them directly from its iTunes store — and it’s already signed up Fox Studios and Warner Bros. as partners in the new venture.

With JVC and other manufacturers building iPod capability directly into new television sets, the ability to rent a movie from iTunes, download it onto your iPod and then dock that unit into a new 50-inch flat-panel television is a scenario that may become reality soon. If it does, then renting movies using the DVD format would start to become stale. Netflix, Inc. (NASDAQ: NFLX) knows this, which is why it’s moving into alternative distribution methods already. Although movies are already available via Apple’s iTunes, the ability to rent content from all the major movie studios may be on the agenda for 2008. If so, how long will it be before DVDs and physical media become extinct? Give it a few years.

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