Tag - Aea

Small-cap stocks extended morning losses into the midday time frame, as another batch of dour economic numbers quickly refocused attention from the U.S. elections back onto the recession. Today's small-cap gainers were BlueLinx Holdings (NYSE:BXC), Venoco, Inc. (NYSE:VQ) and Medco Health (NYSE:MHS).

Other Market Watch highlights included:

• Commodities (a big plus for the market on Tuesday) were struggling today. Crude oil prices were off 7% after soaring 10% Tuesday.  
• The best performers are homebuilders, health care services, managed health care and office supplies.  
• Forest products, tire and rubber stocks, health care facilities, coal, Internet retail and broadcast TV companies are the worst performers.  
• The jobs issue is now on the front burner ahead of Friday’s big employment report, which is expected to show a nasty decline.  
• Drug, technology and financial shares paced today’s decline, fueled by worries that a recession in the U.S., global slowdown would dampen corporate profitability and deepen jobs losses.  

Small Cap Gainers:

• BlueLinx Holdings up 20% after appointing George Judd CEO today. See (NYSE:BXC).
• Independent energy company Venoco, Inc. up 16% on higher-than-average volume. See (NYSE:VQ).  
• Medco Health shares up 13% after seeing 38% rise in Q3 profit. See (NYSE:MHS).  
• Natural Gas Services Group announces a 43% increase in Diluted EPS for Q3; shares climb over 11%. See (NYSE:NGS).  
• Genco Shipping cancels agreement to acquire six drybulk newbuildings; shares up over 8%. See (NYSE:GNK).  

Small Cap Losers:

• NeuStar reports Q3 results, downgraded to "buy" from "strong buy." Shares dive 20%. See (NYSE:NSR).
• Ashford Hospitality Trust down 20% after naming interim CFO. See (NYSE:AHT).  
• Reports say Advance America, Cash Advance could take $42M hit if forced to close Ohio centers. Shares careen 15%. See (NYSE:AEA).
• Fitch downgraded Colonial BancGroup's ratings last week; shares dive over 22% today. See (NYSE:CNB).  
• Simcere Pharmaceutical Group down 25% on heavier-than-average volume. See (NYSE:SCR)

The Russell 2000 (NYSE: IWM) posted a big loss as news of liquidity problems at Bear Stearns spread credit fears. The small-cap index fell 16.81 points, or 2.47%, to 662.90. The Dow Jones Industrial Average (INDU) declined 194.65 points, or 1.60%, to 11,951.09.

On a year-to-date basis, the Russell 2000 has lost13.46%, while the Dow is down 9.90% and the S&P 500 has retreated 12.27%.

Stocks small and large tumbled today on news that Bear Stearns’ (NYSE: BSC) cash position has deteriorated significantly over the past 24 hours. The investment bank, which has been highly exposed to the subprime mortgage sector, turned to J.P. Morgan Chase & Co. (NYSE: JPM) and the New York Federal Reserve for short-term financing to alleviate its liquidity problems.

There’s speculation that Bear Stearns will soon be purchased by one of its larger rivals. News of the company’s problems spread fears of a severe credit squeeze, leading to a sharp sell-off.

Everyone needs love, and everyone needs credit. On the former, even the most dinged and damaged among us can find it, if they just look. And on the latter, the dinged and damaged can find it if they just saunter into one of Spartanburg, S.C.-based Advance America, Cash Advance's (NYSE: AEA) many retail centers. 

Advance America is the country's leading provider of payday loans. Here's how it transacts business: a borrower completes an application, presents identification (a pay-stub or other evidence of income and a bank statement) and writes a personal check for the loan amount plus a fee (typically $15 for a $100 advance). Two weeks later (typically) the loan is repaid and the personal check is reclaimed. No probing credit checks or embarrassing questions asked.

Estimates vary on the size of the payday economy, but the Center for Responsible Lending estimates payday loan volume at $28 billion while Stephens Inc. estimates it around $40 billion. Either way, growth has been impressive, considering estimates for loan volume ranged from $8 billion to $14 billion in 2000. Depending on how the numbers are coupled that produces an average annual growth rate of anywhere from 12.2% to 30.8%.

Advance America's haul of the payday-loan take has been impressive too. From 2002 through 2006, total revenues grew at an average annual clip of 13% to $672 million, with net income growth tagging along at an average annual clip of 7% to $70 million. 

Contemporary growth, though, has been slightly more subdued. For the nine months ended Sept. 30, total revenue increased 8.1% to $525.9 million, compared with $486.6 million for the same period in 2006. EPS, meanwhile, posted at $0.54, compared with $0.63 in 2006. The EPS shortfall was due to a poor third-quarter showing, where Advance America posted EPS of $0.07, a number stifled by write-downs related to the closure of 31 centers in Pennsylvania, 45 in Oregon and 27 in various other states.