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Which sector will benefit the most from today’s data?

Today's Financial News - Posted November 23, 2009

iStock_000005580858XSmallThe markets are moving forward once again today. It’s a positive sign for all investors, but is fantastic news for the small-cap sector.

By Andrew Snyder, TodaysFinancialNews.com

Baltimore – (TFN): It’s a good way to start out the week. With tangible economic data actually worth celebrating for once, the equities market tore out of the gates this morning. It’s all because of signs the nation’s consumers may not be as broke as we thought.

Word that late payments on credit cards dropped by 6% during the third quarter is not only good for credit card issuers, but it’s good for everybody else with a stake in the nation’s economy.

With 1.1% of all accounts 90-days past due, versus 1.17% three months ago, there is evidence Americans are finding ways to deal with their debt.

Or, better yet, they are not entering as much debt.

This is an important piece of data to watch as we enter the critical holiday buying period. With more room between their current balance and their credit limit, consumers may be willing to shell out a few extra bucks this Christmas.

One-time spurt?

Another piece of good news comes from the National Association of Realtors, which tells us existing homes sales surge by a whopping 10.1% from last month. It’s the highest month-to-month sales increase on record.

Better yet, the sale of previously owned homes has not been on this pace for over two and a half years.

But there is a caveat. Remember, just a few weeks ago, buyers believe the homebuyers credit would expire on December 1. Today’s positive figures are certainly a result of a surge in buying as folks hurried to take advantage of the credit while it was still available.

Next month’s figures may show a strong turnaround now that the rush of last-minute buyers has left the market.

But in this short-sighted market, few investors care what tomorrow may bring. They are stuck in the moment. And at the moment, the news is good and plenty of stocks are surging.

One of them has been a popular play over the past few months, Origin Agritech (NASDAQ:SEED).

Shares of the $200 million Chinese seed producer are up by a hefty 80% today as word spreads of the company’s latest piece of good news.

Over the weekend, the company announced it has received Bio-Safety certification from China’s Ministry of Agriculture for its genetically modified phytase corn.

This is a big breakthrough for the company and China’s farmers. It means animal feed producers will no longer have to purchase corn and phytase (which helps animals better absorb phosphorous). Now, they can buy Origin Agritech’s modified blend and save the hassle and expense of mixing phytase separately.

Start of a trend?

Another big gainer today worth discussing is iBasis (NASDAQ:IBAS), a $212 million calling-card distributor.

Unfortunately, now that the company and Koninklijke (NYSE:KPE), the hard-to-spell European telecom service provider have worked out a $3-per-share deal to finalize KPE’s takeover, investors won’t be able to squeeze further gains out of the stock.

But this is a great indicator for small-cap and penny stock investors. It proves that merger and acquisition activity is on the rise in the sector and buyers are once again ready to open their wallets in the name of growth.

I expect plenty more pieces of news like this one out of the country’s smallest companies in the next few months. With organic growth tough to find, companies will have to buy it.

That is good news for you and I.


Next Article: Oil – Silent, Stealthy, and ready to Rumble

Posted by Andrew Snyder · Filed Under Featuring..., US Stocks and Markets 

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