Rite Aid Stock Roars, J.C. Penney Wilts Into Weekend

The Dow’s gains belie generally bearish sentiment; McDonald’s stock slumps.

Jan 17, 2014 at 6:00PM

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

Earnings season continued to drive the direction of the stock market today and, in response to weak results from corporate heavyweights like Intel and General Electric, that direction was mostly downward. While 21 of its 30 components fell, a handful of the Dow Jones Industrial Average's (DJINDICES:^DJI) heaviest-weighted members posted big gains today, and the index actually advanced 41 points, or 0.3%, to end at 16,458. While the other two benchmark U.S. indexes fell, the Dow managed to evade losses, and now heads into the long weekend having eked out 0.1% gains on the week. 

McDonald's (NYSE:MCD) stock did nothing to contribute to the Dow's deceptive gains Friday, as shares shed 1.2%. Investors may understandably be a little anxious about next Thursday's earnings release, which is unlikely to send the stock soaring. McDonald's most recent major product launch, Mighty Wings, was pretty much an abject failure, and the fast-food giant ended up with about 10 million pounds of the unsold product on its hands last month. Hopefully, its plan to team with Kraft to hawk its popular McCafe coffee line in grocery stores this year won't have the same result, but perhaps cartoonishly large mounds of unsold coffee could be consumed by executives to inspire some better ideas.

Rite Aid (NYSE:RAD) stock, on the other hand, climbed 4.7% Friday. This is nothing new for investors wise or lucky enough to have bought Rite Aid shares just a year ago; shares have soared more than 270% since then. In 2013, improving margins on generic drugs, and steadily increasing same-store sales growth, drove the company to its first profit in six years. Flu season, and a surging insured population due to Obamacare, remain potential catalysts moving forward, but the stock isn't without risk, of course. Aside from Rite Aid's potentially stretched valuation, rival CVS Caremark is taking aggressive steps to differentiate itself by adding a nutritional focus to its stores.

Beleaguered department store J.C. Penney (NYSE:JCP) finds itself in a much less enviable position, and the stock continued to slide on Friday in the wake of Wednesday's revelation that the company will be shutting down stores and laying off workers. J.C. Penney will close 33 of its worst-performing domestic locations, cutting about 2,000 jobs in the process. Sometimes, Wall Street applauds cost-cutting moves like these -- the business estimates it will save $65 million annually as a result of the decision -- but given the retailer's recent struggles, this move has desperation written all over it. Shares tumbled 5.5% today.

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John Divine has the following options: long January 2015 $10 calls on J.C. Penney Company. You can follow him on Twitter @divinebizkid and on Motley Fool CAPS @TMFDivine.

The Motley Fool recommends Intel and McDonald's. The Motley Fool owns shares of General Electric Company, Intel, and McDonald's. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

A Financial Plan on an Index Card

Keeping it simple.

Aug 7, 2015 at 11:26AM

Two years ago, University of Chicago professor Harold Pollack wrote his entire financial plan on an index card.

It blew up. People loved the idea. Financial advice is often intentionally complicated. Obscurity lets advisors charge higher fees. But the most important parts are painfully simple. Here's how Pollack put it:

The card came out of chat I had regarding what I view as the financial industry's basic dilemma: The best investment advice fits on an index card. A commenter asked for the actual index card. Although I was originally speaking in metaphor, I grabbed a pen and one of my daughter's note cards, scribbled this out in maybe three minutes, snapped a picture with my iPhone, and the rest was history.

More advisors and investors caught onto the idea and started writing their own financial plans on a single index card.

I love the exercise, because it makes you think about what's important and forces you to be succinct.

So, here's my index-card financial plan:


Everything else is details. 

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