Here’s What They’re Snapping Up

December 27, 2001
Daniel Beighley

U.S. stocks are up for a second day as investors
snapped up computer-related companies they say will benefit the most from a
rebound in profit growth. Better-than-expected holiday sales lifted some
retailers.

Corporate earnings are projected to drop 5.9% in the first quarter before rising 8.8% in the
second according
to Thomson Financial/First Call. Yet benchmark indexes have rallied this
quarter on expectations the recession has bottomed.

Trading was far below average as many traders
took this week off for the Christmas holidays. Just 308 million shares have traded on
the New York Stock Exchange by 11:40 a.m., down 41% from a week ago.
Almost two stocks are up for every one that fell on the Big Board.

The decline in drug stocks underlines how
investors are shifting more money into fast-growing companies and away from
businesses with more stable profit-growth. The Federal Reserve’s 11 interest
rate cuts this year have begun to help reverse the slide in corporate
earnings, analysts said.

The pace of companies lowering their forecasts
has slowed this quarter, while the number of companies raising profit
projections has gained, according to First Call.

About 525 companies lowered earnings targets in
the current quarter, compared to the 561 firms at the same point in the previous
period. The number of companies increasing forecasts this quarter is 78%
higher than in the third quarter and 58% more than at the same point last
year, First Call said.

Chipmakers Rise

Renewed confidence in technology stocks helped
drive the Nasdaq up 34% since the beginning of October, its biggest
quarterly increase since 1999. Even so, the three major stock measures are
moving toward their second straight annual drop as the recession and
after-effects of the Sept. 11 terrorist attacks slice profits.

Chip shares are contributing almost one-fifth of the
gain in the S&P 500. All 23 members in the S&P’s semiconductor index are up. Intel, the largest chipmaker,
is up 49 cents to $32.78, and Texas
Instruments
(
TXN |
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PowerRating) whose semiconductors power two-thirds of all
wireless phones, has climbed 84 cents to $28.89.

Atmel
(
ATML |
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PowerRating), which makes chips for
mobile phones and other portable devices, is up 70 cents, or 11%, to $7.32
after it was raised to “strong buy” from “buy” at A.G. Edwards Inc.

Retailers

A report from Wal-Mart Stores
(
WMT |
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PowerRating) that
holiday sales were better than expected helped trigger yesterday’s gain in
benchmark indexes. The largest U.S. retailer is up 36 cents to $58.51 today,
building on yesterday’s 1.8% advance, and also after saying markdowns will be
“minimal.”

San Francisco-based Sharper Image
(
SHRP |
Quote |
Chart |
News |
PowerRating),
a retailer of gadgets and electronic toys, said Christmas shopping ended with a
bang. Sales in the five days before the holiday rose more than 10% from
the same period last year. Its shares have jumped 23 cents to $11.64.

The Gap, the largest U.S. clothing store chain
and the second-biggest decliner this year on the S&P’s index of retail stores,
has rallied 58 cents to $13.83.

Internet sales between Nov. 19 and Dec. 23
climbed 34% to $6.32 billion from $4.7 billion a year earlier, according
to a spokesperson from the company.

Same-store sales at traditional retailers are
expected to rise 1.5%, the smallest holiday sales increase since at least
1986, according to several retail analysts.

Amazon
(
AMZN |
Quote |
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PowerRating), the biggest Internet
merchant, is up 18 cents to $11.28.

Oil-Related Shares Drop

The second- and third-largest oil
field services companies, respectively, have dropped as crude oil prices retreated
2.4% from yesterday’s 8% surge as traders bet an OPEC plan to
lower production won’t prevent a glut caused by slowing world economies.

Pharmaceutical companies are also
currently down, led by Merck, which has slipped 70 cents to $59.25 and Pfizer
(
PFE |
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PowerRating)
which has fallen 51 cents to $40.11.

TMP Worldwide Inc. said it won’t
raise its bid to buy the Internet job site listing company HotJobs.com Ltd.
HotJobs said Monday it would accept Yahoo’s $436 million bid unless TMP
Worldwide increased its offer by this morning.

Cardiac Science
(
DFIB |
Quote |
Chart |
News |
PowerRating),
a maker of equipment used to restore a normal heartbeat to patients in cardiac
arrest, has jumped .33 cents to $4.61. The company won contracts from airports to
deploy its equipment.

Here’s What They’re Snapping Up

BUY THE FEAR, SELL THE GREED

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