Tag - :FLE

quotesThe Russell 2000 (NYSE: IWM) posted the largest percentage gain as the major U.S. rallied on news of a plan to ease the pain on subprime borrowers. The small-cap index added 21.31 points, or 2.78%, to 786.95. The Dow Jones Industrial Average (INDU) moved up 174.93 points, or 1.30%, to 13,619.89.

On a year-to-date basis, the Russell 2000 is off 0.06%, while the Dow has climbed 9.18% and the S&P 500 has advanced 6.41%.

The bulls completely dominated today on news that the U.S. government is introducing measures to prevent struggling borrowers with subprime adjustable-rate mortgages from entering foreclosure.

The plan, unveiled by the Bush Administration after the start of trading, will freeze the rates on some subprime mortgages with adjustable rate loans that are set to shift to higher rates, forcing many homeowners into foreclosure. The interest rates on more than one million mortgages will reset higher in 2008, potentially overwhelming borrowers who are currently struggling to make their monthly payments.

Stocks opened strong as investors anticipated news of the relief plan, which has yet to be voted on by the U.S. Congress, with the rally gaining speed after President Bush’s press conference.

As if on cue, the statistics reported by the Mortgage Bankers Association today showed the dire state of the U.S. housing market.

The Russell 2000 (NYSE: IWM) is posting strong gains as investors react to the U.S. government’s plan to provide help to homeowners. At 2:39 p.m. ET, the small-cap index had added 17.16 points, or 2.24%, to 782.80. The Dow Jones Industrial Average (INDU) was up 107.87 points, or 0.80%, to 13,552.83.

The U.S. government and the lending industry have agreed to freeze the rates on some subprime mortgages to help cash-strapped borrowers and alleviate the prolonged slump in the housing sector. Some borrowers will be allowed to move to more favorable Federal Housing Administration mortgages.

The plan will affect borrowers with adjustable rate loans that are set to shift to higher rates, forcing many homeowners into foreclosure.

The relief comes just in time: the Mortgage Bankers Association reported today that 5.59% borrowers are now at least 30 days late making their mortgage payments, the highest percentage in more than 20 years. The trade group also said that the foreclosure process has been on 0.78% of mortgages in the three months ended Sept. 30, more than twice the rate a year ago.

Home prices began to stagnate in the second half of 2006 and the slump shows no signs of slowing down. The subsequent wave of foreclosures swelled the inventory of unsold homes, feeding the vicious cycle.

Here are the current biggest percentage gainers and losers among companies with a market cap between $100 million and $750 million:

Biggest percentage gainers:

• Methode Electronics, Inc. (MEI), up 31% on news that fiscal second-quarter profit beat expectations.
• Fleetwood Enterprises, Inc. (FLE), up 23% on news of a narrower fiscal second-quarter loss.
• Hoku Scientific, Inc. (HOKU), up 26% on news it will borrow up to $185 million for the construction of a polysilicon production plant.

Biggest percentage losers:

• Innovative Solutions and Support, Inc. (ISSC) down 20% on news of a wider fiscal fourth-quarter loss.
• Zumiez Inc. (ZUMZ) down 13% on news of an analyst downgrade.
• China Natural Resources Inc. (CHNR), down 12%.

Shares of Fleetwood Enterprises, Inc. (Nasdaq: FLE) are accelerating on news before the start of trading that the maker of recreational vehicles and manufactured housing narrowed its loss in the second quarter of fiscal 2008.

The Riverside, Calif.-based company reported that its net loss of the three months ended Oct. 28 was $1.2 million, or $0.02 per share, compared with a net loss of $20.4 million, or $0.32 per share, in the second quarter of fiscal 2007. Five analysts polled by Thomson Financial were projecting a net loss of $0.06 per share.

Revenues for the quarter fell 7% to $490.1 million, from $526.6 million a year earlier.

“Our much-improved operating results despite lower revenues are encouraging,” said president and CEO Elden Smith in a statement. “Our cost-cutting and capacity-consolidation initiatives are taking hold, allowing us to make further progress.”

Fleetwood Enterprises, which has a total of 24 manufacturing facilities, also announced that it consolidated its plants in Washington and Oregon and intends to relocate a plant in Gallatin, Tenn. to Lafayette, Tenn. during the third quarter in order to lower costs and boost efficiency.

At 1:33 p.m. ET, shares of Fleetwood Enterprises (FLE) had advanced $1.51, or 31%, to $6.33. The 52-week high of $11.41 was reached on July 13, while the 52-week low of $4.45 was set on Dec. 4.

The Russell 2000 (NYSE: IWM) and the other major U.S. indices are posting modest gains on news of an agreement to help struggling homeowners.
 
At 10:55 a.m. ET, the small-cap index had added 10.47 points, or 1.37%, to 776.11. The Dow Jones Industrial Average (INDU) had gained 39.99 points, or 0.30%, to 13,484.95.

The interest rates on some subprime mortgages will stay put for five years to help cash-strapped homeowners make their payments and avoid foreclosure, according to news reports this morning.

The details of the Bush Administration’s plan to ease the burden on homeowners have not been made public yet, but an announcement is expected soon.

That news is helping the bulls and calming investors who worry that the prolonged slump in the U.S. housing sector could lead to a sharp slowdown in economic growth or a recession.

Elsewhere, U.S. retailers posted mixed sales in November. Among the big players, Wal-Mart Stores Inc. (NYSE: WMT) reported a 1.5% increase in U.S. same-store sales, a figure towards the higher end of its previously announced expected range.

Among small-cap retailers, The Bon-Ton Stores, Inc. (Nasdaq: BONT) said that its total sales for the month increased 7.1% to $393.1 million, compared with $367 million a year earlier.

In economic news, the number of unemployment claims for the week ended Dec. 1 was 338,000, a decrease of 15,000 from the previous week’s upwardly revised figure of 353,000, according to the U.S. Labor Department. Economists were expecting to see a slightly larger decline.

BIDZ.com, Inc. (Nasdaq: BIDZ), China Finance Online Co. (Nasdaq: JRJC) and Genesco Inc. (NYSE: GCO) are among the biggest percentage losers in Tuesday's trading among companies with market capitalizations under $750 million.

Here are today's biggest percentage losers:

Monaco Coach Corporation (NYSE: MNC) may be smarting now as weak consumer confidence,  interest rate instability and pricey fuel stall sales of recreation vehicles. But a match made in demographic heaven--the new-look RV industry and comfort-seeking baby boomers—looks set to take hold in 2008.

Monaco’s middle name should be Luxury. Its high-end motor coaches are not complete without a Sharp LCD 37-inch TV screen, Corian solid surface kitchen and bath countertops, leather furniture, imported ceramic tile, and Ralph Lauren fabrics. They’ve got GPS systems and automatic satellite systems and big, new chassis, ready to be wheeled to one of Monaco’s motor home resorts. Enjoy the swimming pool, the golf course and all the other amenities that make life so, well, luxurious.

And costly. Suggested retail for motor coaches runs from $45,000 is $600,000; towable RVs can range from $11,000 to $80,000. Coburg, Ore.-based Monaco is the top manufacturer in Class A motor coaches (those built on the mightiest of chassis), owning 24% of the market for diesel Class A motor vehicles, based on 2006 retail registrations. Monaco also had an 8% share of the market for gas Class A motor coaches, and a 16% share of the market for all Class A motor coaches. In other categories, including the towable market, percentages fall dramatically.

As the leading maker of premium Class A vehicles, Monaco’s results have been particularly susceptible to increasing interest rates and gas prices. Just small rises in interest rates can turn consumers away from buying an RV, which many—particularly in the case of Monaco—consider to be second homes.

While the overall housing market is cooling, this is not necessarily the case for the modular home market. Modular homes, which are homes built in sections at a factory and then transported and assembled on-site, are a relatively new concept. They differ from traditional site-built homes and from manufactured homes, also known as mobile homes. Modular homes sales were particularly brisk after Hurricane Katrina, when the government paid nearly $900 million for mobile and modular homes to shelter dislocated residents. While Katrina-related demand fueled huge sales gains for modular home builders in 2006, growth is not entirely disaster-related. Their affordability compared to site-built homes is driving demand as well; the cost of modular homes typically averages 10% to 25% less than site-built homes.

Housing starts and modular home sales have moved in different cycles since the 1970s. One reason for this is the interest rate impact. When interest rates go up, demand for modular homes rises as well as new home buyers seek more affordable alternatives. Also, rising interest rates squeeze family budgets and some homeowners seek relief by trading down to a modular home.

Demographics are favoring long-term growth for the modular home industry. Retiring baby boomers on fixed budgets are expected to drive demand for modular homes in the Sunbelt states. In addition, while down from 2005 peak levels, demand in the New Orleans market is expected to remain strong for years to come.

Modular home starts in the United States totaled approximately 38,300 last year, representing about 2% of total 2006 housing starts. In the Northeast, Atlantic and Midwest, modular presently accounts for approximately 5% of all housing starts. In the West and South, areas primed for growth due to retiring baby boomers, penetration is less than 1%. Modular structures are also used in the construction of prisons, military housing, hotels and multi-story apartments.  Demand is fueled by modular housing’s advantages versus off-site construction, which include dramatically reduced construction time, lower costs and minimal site disruption.