The twin headwinds of rising interest rates and tumbling oil prices abated, as crude stabilized and the yield on the Ten-Tear Treasury declined. As expected the Fed raised the target fed funds target rate by 25 basis points to 0.75%, and traders interpreted the language around future hikes as being dovish. The equity markets remained firm with the S&P 500 gaining 0.24% and the Russell 2000 1.92%. It has now been 110 trading sessions since the market suffered a 1% or greater daily decline, the longest such stretch in 22 years. Barron’s points out that rally has been uneven, with “quality” stocks (largest market caps, least-shorted, highest rated) dramatically outperforming the rest of the field since Inauguration Day.
Peter Gottlieb and I attended the Roth Securities Growth Stock Conference, and the tone from the presenting companies was very upbeat. Even the risks of trade barriers or tariffs seemed mitigated by the expectation of a stronger economy. Most companies that would be disadvantaged by those policies suggested that it would be the end consumer who would likely suffer from higher prices, as all manufacturers would be faced with the higher costs. Moreover, there was a great deal of uncertainty over the size, scope, and likelihood of any such legislation.
Speaking of Peter Gottlieb, the Michigan Wolverines continue to win in the NCAA tournament, advancing to the sweet sixteen along with Director of Trading Melissa Diamond’s Wisconsin Badgers.
The political could be back in focus, as the House is scheduled for a floor vote on Ryan’s Health Care bill. It feels like 2009 again, with a great deal of political capital being spent on addressing Health Care. If this bill doesn’t pass it might call into question the likelihood of a compromise being reached on the much anticipated and investor-friendly tax reform initiative. There could also be some focus on the bevy of Fed speakers during the week, most notably Chair Yellen Thursday morning.
Stocks in the News:
1-800-Flowers.Com, Inc. (FLWS) announced that it sold all the equity of Fannie May Confections Brands, Inc. to Ferro International for $115 million. Sounds like a sweet deal to me.
Barnes & Noble Inc. (BKS) announced that its board authorized a new stock repurchase program of up to $50 million.
Ecology and Environment, Inc. (EEI) reported that quarterly earnings improved to a loss of $0.07 per share for the current quarter from a loss of $0.11 per share for the second quarter of the prior year. Net income before taxes improved to income of $0.2 million for the current quarter from a loss of $0.5 million for the same quarter last year. The current quarter loss was mainly due to a tax charge related to repatriation of dividends from the Company’s South American operations. Revenues increased 1% to $24.8 million. Mill Road Capital II, L.P., which owns 15.4 % of the outstanding shares of EEI has indicated that it will be sending shareholders a proxy card for the April 20th annual meeting, nominating two directors to the board.
RF Industries, Ltd. (RFIL) reported that sales for the first quarter of fiscal 2017 were $6.6 million compared to sales of $6.8 million for the same quarter last year. The net loss for the first quarter was $194,000, or $0.02 per share, compared to a net loss of $353,000, or $0.04 per share, in the same quarter last year. Howard Hill, Interim President and CEO said, “The first quarter is typically our weakest quarter, so we are pleased with the 36% increase in net sales from the RF Connector division. Higher sales of DAS products and a modest firming in demand for RF Connector products is encouraging for the remainder of fiscal 2017. I had the opportunity to meet with Mr. Hill last month, and was encouraged by his commitment to getting the Company back on track, as evidenced by his foregoing a salary after coming out of retirement.
Hawaiian Telcom Holdco, Inc. (HCOM) reported that fourth quarter revenue was $96.8 million, compared to $99.2 million in the fourth quarter of 2015. Adjusted EBITDA was $28.5 million, a decrease of $0.8 million year-over-year. “2016 was a year of significant milestones and growth for Hawaiian Telcom,” said Scott K. Barber, Hawaiian Telcom’s president and CEO. “Over the past six years, we have invested aggressively in fiber and systems, which has transformed our network, our products and services, and our growth profile. Compared to just three years ago, our combined consumer and business strategic revenue has grown 66 percent, while revenue from Hawaiian Telcom TV, our five-year-old IPTV product, more than tripled. We have made tremendous strides toward our vision of becoming the number one service provider of innovative fiber-based communication, information and entertainment solutions to the people and businesses of Hawaii.” Perhaps a field visit to Hawaii to see their offerings firsthand is in order?
AstroNova, Inc. (ALOT) announced that fourth quarter fiscal 2017 revenue increased 8 percent to $25.7 million from $23.8 million for the same period in 2016. Operating income in the quarter was $1.2 million, a 45 percent increase over the operating income of $0.8 million reported in the prior year’s fourth quarter. “We concluded a year of growth in fiscal 2017 with a fourth quarter highlighted by increased revenue, improved operating margin and a stronger cash position,” said AstroNova President and Chief Executive Officer Greg Woods. “Revenue growth in our International markets was especially strong, up 27 percent over the prior year, reflecting our strategic focus on broadening AstroNova’s global reach through expansion in regions including Asia and Latin America.”Tagged: alot, BKS, Chicago, Chicago Investment Management, EEI, Eric Kuby, financial commentary, FLWS, Fund Fact, Gold, HCOM, Kuby's Commentary, Market Commentary, North Star, North Star Financial Services, North Star Investment Management, NSIMC, Oil, RFIL, Russell 2000, S&P 500, Stocks In the News, VIX, Wealth Management.
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