Today's 3 Best Stocks

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

Hold onto your seat because this doesn't happen nearly enough anymore, but today's U.S economic data and the strong move higher actually make sense. By that, I mean that lately we often see the market move higher despite negative economic data and lower on days when the data seems extraordinarily strong.

Helping move the broad-based S&P 500 (SNPINDEX: ^GSPC  ) higher today was positive housing data as well as another month of solid U.S. auto sales figures. On the housing front, the Mortgage Brokers Association reported that mortgage originations rose 1.3% last week -- a very rare increase since 30-year mortgage rates hit their lows in early May. Higher originations would portend good news for homebuilders looking to move new housing inventory.

Better-than-expected U.S. auto sales from General Motors and Ford also served as a sticking point for today's rally. In fact, all major automakers reported a double-digit increase in sales in the U.S. for August, with GM reporting a 15% increase in unit sales and Ford delivering a 12% increase. Perhaps the biggest surprise of all was Honda Motor and its 27% increase in unit sales over the previous year, but it's all good news for the auto industry, which relies on consumer spending to drive its growth.

By the day's end the S&P 500 had advanced 13.31 points (0.81%) to finish at 1,653.08, its second-straight day of gains.

Leading the charge higher today was brokerage firm E*TRADE Financial (NASDAQ: ETFC  ) , which gained 8.1% after announcing that its banking subsidiary will pay an ongoing $100 million dividend on a quarterly basis to its parent company. The move should allow E*TRADE to finally begin paying down its debt and deleveraging its assets even further away from its mortgage portfolio, which still contains toxic assets. It's a firm move in the right direction for E*TRADE, but still doesn't represent a buying opportunity in my opinion until the credit quality of its loan portfolio improves further.

Shares of network equipment maker Juniper Networks (NYSE: JNPR  ) jumped 6.5%, riding the coattails of Ciena (NYSE: CIEN  ) higher after it reported a better-than-expected third-quarter profit and fourth-quarter revenue forecast. The entire networking sector is set to benefit from increased spending in the communication services sector as the 4G LTE craze sweeps the United States. It often takes a few quarters for service providers' spending to trickle down to network equipment providers like Juniper and Ciena, but we're beginning to see the first signs of that happening. I expect this sector to be a big outperformer over the coming year or two.

Finally, struggling retailer J.C. Penney (NYSE: JCP  ) added 6.1% today after an SEC filing last night disclosed that Larry Robbins' hedge fund, Glenview Capital Management had taken a 9.1% position in J.C. Penney's stock. This news comes as Bill Ackman and his hedge fund Pershing Square Capital Management are hitting the exit door with their previously monstrous stake in Penney's. I'm sure everyone here would like to be the hero who got into J.C. Penney at the bottom, but I remain concerned that Penney's did too much harm to its core customer by removing its discounts under former CEO Ron Johnson to reverse its losses. Although Penney's second quarter showed some signs of improvement, I'm not sure it has the tools or talent to become profitable on an annual basis again -- and that's enough reason to keep away!

If anything, J.C. Penney's serves as notice that the retail space is in the midst of the biggest paradigm shift since mail order took off at the turn of the last century. Only those most forward-looking and capable companies will survive, and they'll handsomely reward those investors who understand the landscape. You can read about the 3 Companies Ready to Rule Retail in The Motley Fool's special report. Uncovering these top picks is free today; just click here to read more.


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  • Report this Comment On September 05, 2013, at 12:47 AM, DZPM wrote:

    FCS is > God short sell candidate

    Fairchild Semiconductor International Inc.'s earnings have declined to an estimated $0.16 from $0.49 over the past 5 quarters; they have shown deceleration in quarterly growth rates when adjusted for the volatility of earnings. This is an indication of weakness that could lead to declining earnings.

    FCS seems highly valued with the highest PEG value in the Semiconductors & Semiconductor Equipment industry of 104.3551, which is supported by a PE of 521.7755 that is also the highest in the industry.

    The prior quarter Operating Margin of 1.50% is less than the TTM Operating Margin of 7.85%.

    Balance Sheet Strength: n The Long-Term Debt/Capital is 15.57%. This indication of financial leverage measures the extent of a firm’s capital that is provided by lenders. Below 25% reflects well on a company’s financial stability. The average LT Debt/Capital for this Industry Group (Electr. Semi.) is 11.21%. Growth Potential: n The prior quarter EPS of $-0.06 is less than the EPS of the year over year quarter of $0.02. n The prior quarter EPS growth rate of -400.00% is smaller than the TTM EPS growth rate of -41.97%. n The TTM EPS growth rate of -41.97% is less than the TTM Sales Per Share (SPS) growth rate of -0.08%. n Earnings Trend is Negative for the last three quarters on a year over year basis. FCS is nothing but a SELL

    Nothing new! Federal Reserve comity and Ben Bernanke “Giant Ponzi Scheme” .When we have bad economic data market is going up on speculation Fed Chairman Ben S. Bernanke will kip printing money. When we have god economic data market is going up speculation Bernanke is steel printing? This entire look like exuberance sign of market is in the crash mod and will burst 1000 down ward point any second. There is no exist without big consequences Bernanke know that and kip printing money we all American will go down to drain. Either way he will finish as slowly anyway. Bernanke ruin billions and billions of ordinary people’s lives with kipping interest zero in favor of Banks and Speculators Bernanke committed the biggest crime to humanity The Biggest Ponzi Scheme Ever. Bernanke is a Scam bag! Communist was using seam principals like Fed > Bernanke (printing money for ever), and day collapsed next is USA to Collapse, because off sociopath Bernanke. Printing money is poor pyramid scams, artificial unreal! Stock and everything is doom for crash. Every pyramid scam crash everybody loses regular investor watch out doesn’t fall in to the trap.

    A record breaking stock market is distorting a frightening reality: The U.S. is being eaten alive by a horrific cancer that will ultimately destroy the economy and impoverish the vast majority of its citizens.

    That's according to Peter Schiff, the best-selling author and CEO of Euro Pacific Capital, who delivered his harsh warning to investors in a recent interview on Fox Business.

    "I think we are heading for a worse economic crisis than we had in 2007," Schiff said. "You're going to have a collapse in the dollar...a huge spike in interest rates... and our whole economy, which is built on the foundation of cheap money, is going to topple when you pull the rug out from under it."

    Schiff says that, despite "phony" signs of an economic recovery, the cancer destroying America stems from a lethal concoction of our $16 trillion federal debt and the Fed's never ending money printing.

    Currently, Bernanke and company is buying $1 trillion of Treasury and mortgage bonds a year. That's about $85 billion per month against a budget deficit that is about the same level.

    According to Schiff, these numbers are unsustainable. And the Fed has no credible "exit strategy."

    Eventually interest rates will rise... and when they do, Schiff says, stocks will tank and bonds dip to nothing. Massive new tax hikes will be imposed and programs and entitlements will be cut to the bone.

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