Friday, August 19, 2005

Eye on the Market/Stocks in the News

IBM has been the biggest Dow point gainer today.

It's up past $83 a share on PRU's bullish remarks.

Prudential said there are several important catalysts for the stock on the horizon, including "a reorganization of the company's services business, strength in servers and no more drag from the PC business."

Prudential reiterated its "overweight" rating and $105 per share price target on the stock.

For the record, our team isn't as bullish on Big Blue.

The unravelling of the PC unit won't transpire as fast as some of us would like, unfortunately.

Technically speaking, IBM is in a downward trend.

Both its net profit margins and ROE fall under the rest of the industry.

As we published in a note 2 days ago, we are more bullish on Hewlett Packard (HPQ), where we see greater upside potential under the leadership of CEO Hurd.

UBS raised Coke to "buy" from "neutral" and boosted its price target to $53 per share from $46 per share.

UBS says the company is turning around and sales growth will accelerate.

We don't follow Coke but suffice it to say that we are long some more interesting, growth play beverage stocks, like Hansen.

Hansen makes the Monster energy drink (now available at popular retailers like CVS) and were featured in Barrons 2 or 3 weeks ago.

The stock is just under its 50 day moving average as volume has ebbed over the last 2 weeks, which we think is nothing more than a bit of innocuous profit taking.

Even so, the chart looks phenomenal and we aren't afraid to double down on the dips insofar as the fundamentals remain attractive.

Finally, Caterpillar said it is expanding in China and resulted in a 3% spike in the stock price.

Again, the infatuation with China is fully overblown.

It's time for anyone who bought, for instance, to take money off the table (if they haven't already).

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