A grim day on Wall Street has some upside
Today's Financial News - Posted January 14, 2009
Just as expected, investors are suffering this week. Earnings season does not get into high gear until next week. Is this an opportunity to profit as the Street “buys” the news?
By Andrew Snyder, TodaysFinancialNews.com
Baltimore – (TFN): Sometimes it hurts to be right. On Monday, I told readers we were in for a rough week and volatility was sure to climb. I even told speculative investors to look at VIX put options. Those that did are sitting on big gains.
Since that article, the Dow has been mired in red and the VIX has soared. Just today, the closely watched index is up by more than 17%. While we are still more than 30 points away from highs reached in December, the sudden surge is stirring memories many investors hoped were behind them.
Unfortunately, as we get further into earnings season, the roller coaster will only get more nauseating.
If your head is spinning while watching the major indices, you will certainly lose your lunch looking at the list of winners and losers today. Just a handful of companies are hitting new yearly highs today (they are tiny little guys, too), while nearly 100 well-known firms are retreating below their 52-week lows.
Is the economy “de-railed”
One company making shorts happy is Burlington Northern Santa Fe (NYSE:BNI). The giant rail carrier has lost 15% of its value in the last three days as investors brace for next week’s annual earnings report. Investors were sent running like light-sensitive cockroaches after the news rival CSX (NYSE:CSX) announced a preliminary Q4 earnings figure 10% below analyst expectations.
The decline in the auto and construction industry has, according to industry executives, “significantly” hampered demand. But there is hope for Burlington. The company is a leader when it comes to carrying coal and its exposure to the pipeline-hating ethanol industry remains large. This could provide investors a positive spin as earnings are released on January 20 and will help propel the company to a double-digit earnings increase.
For investors looking for an undervalued Blue Chip, this could be it. Warren Buffet and his Berkshire Hathaway spent over $165 million buying a chunk of the company at a price of about $75 per share. This could be your chance to get in at levels more than $10 cheaper.
Keep a close eye on this company over the next few weeks. If the overall market even hints of a rebound, Burlington’s shares will surge.
As for the rest of the market, I wish I could have similar feelings. But the numbers do not add up. The bad news will not end with today’s retail figures.
Next Article: Energy Crisis: This stock market is ready for a giant crash!
Posted by Andrew Snyder · Filed Under News that Matters, US Stocks and Markets
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