Tag - Bldr

It was a bad day for stocks. The Dow Industrials was down 185 points or 1.9%. The S&P 500 lost 22 points, the Nasdaq lost 40 points and the Russell 2000 dropped 15 points or 2.65%. On a percentage basis, the Russell was the biggest loser, which is to be expected. Small cap stocks outperform on both the up and the downside.

Retractable Tech (AMEX:RVP) was the top small cap gainer today, jumping 103%. This move came on no news that I could find, but somebody knows something – volume was huge. 

Mining and oil company U.S. Energy Corp (Nasdaq:USEG) came in second with a more reasonable 22% move. Rounding out the top 5 were Anadys Pharmaceutical (Nasdaq:ANDS) up 19% Digital Angel (Nasdaq:DIGA) up 17%, and Alpha Pro Tech (AMEX:APT) up 13%.

Not a good day for some small cap biotech stocks. Acadia Pharmaceutical (Nasdq:ACAD) was the top loser with a gut-wrenching 65% decline. Builders FirstSource (Nasdaq:BLDR) also made the list with a 35% drop. Other notable losers include, Catalyst Pharmaceutical Partners (Nasdaq:CPRX) down 21%, Gander Mountain (Nasdaq:GMTN) down 18%, and AIG (NYSE:AIG), yes THAT AIG, down 18%.

*****Yesterday's headlines made it sound like the sky was falling after China's Shanghai Index sold off 6.7%. There's no doubt, bulls are a bit nervous and bears are getting a bit bolder. That's to be expected after a six month rally that's been remarkable in that there have been no corrections.

That's also why it's imperative to keep a cool head these days: there's a big difference between what the financial media is saying and what investors are doing.

If you didn't read the news yesterday and simply watched the S&P 500, you'd wonder what the excitement was all about. The S&P dropped right out of the gate, but quickly recovered and finished the day with a -0.8% loss.

Even Chinese stocks listed on U.S. exchanges made a nice recovery from the early weakness.

*****The reason U.S. stocks are shrugging off seemingly bad news is pretty simple. The government has guaranteed much of the risk for the financial markets. That's lead to a recovery for the U.S. economy. And it's widely expected that the U.S. economy is putting up decent growth numbers in the third quarter, which is now two-thirds over.

Oil's action yesterday is also telling. Yes, oil was down. It traded below $70 a barrel yesterday. But it's hard to call that bearish. After all, oil just hit a new high at $75 a few days ago. A little consolidation, or profit-taking is in order.

Frankly, the relatively small correction for oil prices seems bullish when you consider how important the China growth story is for oil prices. That could change, of course. But right now, there's' no reason to panic that the rally is over and the bear market is coming back.

*****The main concern for the bulls right now should be third quarter earnings. In my opinion, the low rate of revenue growth for corporations is the biggest threat to the Cash for Clunker Stock Rally.

According to Goldman Sachs, 46% of companies soundly beat earnings expectations in the second quarter. But only 23% did so with a healthy boost to revenues.

For the most part, earnings growth was a result of cost-cutting. And without a rise in revenues, there's no way for earnings to keep growing. Retail stocks will show this most clearly, as they are most dependent on consumer spending.

*****Before I finish for the day, I want to discuss Chinese stocks a little more. Yesterday, I mentioned that economist Andy Xie is calling the Shanghai Composite a bubble. And that may be.

But ever time I review the Chinese stocks that are in the SmallCapInvestor PRO (and believe me, I review them frequently), I'm encouraged by the low valuation and attractive growth prospects.

The highest forward P/E among them is 14.5. And the PEG ratios average around .5.

Now, it could be that aggressive lending in China is pumping revenues artificially, and that's showing up in P/E and PEG ratios. But SmallCapInvestor PRO Chinese stocks are well diversified between energy, biotech, commodity and technology. I'm not convinced that all of these stocks are being lifted by the same loose lending practices.

*****Also, I'm releasing a new micro-cap report to SmallCapInvestor PRO readers today. This report features my "best bet" micro-cap stocks to post triple-digit returns. If you'd like to get that report, or find out about the Chinese stocks we're holding, click here.  
 
Until tomorrow,

Ian Wyatt
Editor
Small Cap Investor daily

P.S. My book The Small-Cap Investor: Secrets to Winning Big with Small-Cap Stocks is coming out on September 14 - visit www.smallcapbook.com to learn more. You can also follow me on http://twitter.com/ianwyatt 

Ian Wyatt is the Chief Investment Strategist of SmallCapInvestor.com and author of The Small-Cap Investor: Secrets to Winning Big with Small-Cap Stocks. You can learn more about his book and receive small-cap stock picks at www.smallcapbook.com.

Builders FirstSource Inc. (Nasdaq:BLDR), China Medical Technologies Inc. (Nasdaq:CMED) and Books-A-Million Inc. (Nasdaq:BAMM) are among the biggest percentage losers in Tuesday's trading among companies with market capitalizations under $1 billion.

Also included among the results: Sequenom Inc. (Nasdaq:SQNM), CPI Corp. (Nasdaq:CPY), Benihana National Corp. (Nasdaq:BNHNA), Female Health Co. (Nasdaq:FHCO), Facet Biotech Corp. (Nasdaq:FACT) and SIGA Technologies Inc. (Nasdaq:SIGA).

Energy Services of America Corp. (Nasdaq:ESA), Hallwood Group Inc. (Nasdaq:HWG) and American Axle & Manufacturing Holdings Inc. (Nasdaq:AXL) are among the biggest percentage gainers in Wednesday's trading among companies with market capitalizations under $1 billion.

Also included among the results: Perry Ellis International Inc. (Nasdaq:PERY), United Community Bancorp (Nasdaq:UCBA), Builders FirstSource Inc. (Nasdaq:BLDR), Dana Corp. (Nasdaq:DAN), Primeenergy Corp. (Nasdaq:PNRG) and AnnTaylor Stores Corp. (Nasdaq:ANN).

Builders FirstSource Inc. (Nasdaq:BLDR), 51Job Inc. (Nasdaq:JOBS) and US Auto Parts Network Inc. (Nasdaq:PRTS) are among the new 52-week highs in Friday's trading among companies with market capitalizations under $1 billion.

Also included among the results: IncrediMail Ltd. (Nasdaq:MAIL), Cogent Communications Group Inc. (Nasdaq:CCOI), IEC Electronics Corp. (Nasdaq:IEC), Tenneco Inc. (Nasdaq:TEN), Targacept Inc (Nasdaq:TRGT) and Cato Corp. (Nasdaq:CTR).

Media General Inc. (Nasdaq:MEG), Crocs Inc. (Nasdaq:CROX) and 51Job Inc. (Nasdaq:JOBS) are among the biggest percentage losers in Friday's trading among companies with market capitalizations under $1 billion.

Also included among the results: Brooks Automation Inc. (Nasdaq:BRKS), Builders FirstSource Inc. (Nasdaq:BLDR), WNS Holdings Ltd. (Nasdaq:WNS), Cogent Communications Group Inc. (Nasdaq:CCOI), Knot Inc. (Nasdaq:KNOT) and Aircastle Ltd. (Nasdaq:AYR).

Universal Travel Group (Nasdaq:UTA), Cray Inc. (Nasdaq:CRAY) and Home Inns & Hotels Management Inc. (Nasdaq:HMIN) are among the new 52-week highs in Tuesday's trading among companies with market capitalizations under $1 billion.

Also included among the results: RINO International Corp. (Nasdaq:RINO), Voltaire Ltd. (Nasdaq:VOLT), Builders FirstSource Inc. (Nasdaq:BLDR), John Bean Technologies Corp. (Nasdaq:JBT), LaserCard Corp. (Nasdaq:LCRD) and Clearwater Paper Corp. (Nasdaq:CLW).

Small-cap stocks rallied Monday, but most of the fireworks took place in the morning as the market awoke to news that government-sponsored enterprises Fannie Mae (NYSE:FNM) and Freddie Mac (NYSE:FRE) had been taken into conservator status by the government. There was an initial euphoria that pushed small-caps up some 3% in after-hours trading, but the market drifted well off the highs through midday as tech stocks continued to fret about the possibility of a global slowdown. An afternoon push in the final 30 minutes of trading helped lift the Russell 2000 (NYSE:IWM) to a gain of 14.01, or 1.95%, at 732.86; the small-cap benchmark is now down just 4.3% for the year. Meanwhile, the Dow was up 2.58% and the S&P 500 was up 2.05%. For 2008, the Dow is down 13.2% and the S&P 500 down 13.6%.

The market spent much of the day trying to decide if the Treasury Department’s takeover of Fannie Mae and Freddie Mac represented a long-term positive, or just a short-term stop-gap measure. Clearly, the outside world loved the news, as equity markets in Asia and Europe posted strong rallies overnight. There was a sense among investors that the government was basically forced to take this action, and that it would help pull some of the uncertainty out of the equation when it comes to trusting mortgage-related debt issues. Still, it’s a big leap from shoring up paper mortgage-backed securities debt to finding a bottom in the housing market slump.

In a research report earlier today, strategists at Goldman Sachs said that the GSE plan was a short-term bullish factor for equities and the U.S. dollar. “The move is consistent with the U.S. administration’s main aim to secure financial stability first, in the spirit of the Bear Stearns bailout in March and the declaration of the unusual and exigent circumstances by the Federal Reserve Board,” Goldman said . . .

Builders FirstSource, Inc. (Nasdaq:BLDR) skidded to a 52-week low on Monday as the building material supplier felt the impact of the weak housing market. Both housing starts and the sales of new and existing homes have steadily dropped as the fallout from the subprime mortgage industry continues. The Dallas-based Builders FirstSource shares fell to $5.22, down about 10% from Friday’s close. The company’s shares are down more than 67% from a year ago and have ranged from $16.65 to Monday’s low of $5.22.

Oxford Industries, Inc. (NYSE: OXM), Edge Petroleum Corp. (Nasdaq: EPEX) and Children's Place Retail Stores, Inc. (Nasdaq: PLCE) were among the new 52-week lows established Tuesday among companies with market capitalizations or values under $750 million.

Here are today's 52-week small-cap lows: