J.C. Penney Surges on Last-Minute Earnings Hopes; Home Depot Soars on Outlook

Home Depot's 4% jump cant save the Dow; Melco Crown Entertainment Limited announces curious new dividend policy.

Feb 25, 2014 at 6:12PM

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.

Stocks -- as they are prone to do -- zigged and zagged their way through the trading session on Tuesday, eventually deciding on slim losses as real estate prices and consumer confidence numbers did more to confuse than inform. The S&P/Case-Shiller home price index, which measures prices of existing single-family residential homes in 20 U.S. cities, ticked up 0.8% in December from November. From December 2012, however, home prices were up 13.4%, as low interest rates facilitated a booming year for real estate. The Dow Jones Industrial Average (DJINDICES:^DJI) lost 27 points, or less than 0.2%, to end at 16,179. 

Sure, Home Depot (NYSE:HD) shareholders love to hear about a booming housing market, but the stock's Dow-topping 4% jump today wasn't driven by rising home prices. It wasn't even driven by Home Depot's quarterly results, which were hot off the presses on Tuesday. In fact, Home Depot actually missed sales expectations in the fourth quarter – it was the company's guidance that caught Wall Street's eyes. While the brutal winter weather dinged the retailer's revenue, the company sees itself well positioned for spring, as people flock to Home Depot for belated repairs. 

Shares of troubled department store chain J.C. Penney (NYSE:JCP) showed no signs of trouble Tuesday, as shares rallied 7.7%. Swings like these, however, are precisely why day-to-day stock swings can't be viewed as gauges of a company's health. Wall Street still lacks confidence in J.C. Penney's liquidity, especially after the company's decision to close 33 stores and lay off 2,000 employees in mid-January. Still, investors are holding their breath, crossing their fingers, and rubbing their lucky rabbits' feet for J.C. Penney's quarterly earnings report tomorrow afternoon, which will tell us once and for all how the business capitalized on the holiday season.

Hong Kong-based Melco Crown Entertainment Limited (NASDAQ:MPEL), a gaming and resort operator with casinos in the gambling capital of the world, Macau, announced a new, unique dividend policy that will change the way shareholders participate in the company's success. The board of directors of Melco Crown Entertainment, which previously paid no dividend, recommended that a special quarterly dividend be issued from now on, returning roughly 30% of the casino's net yearly earnings to shareholders directly. This means the dividend will fluctuate with the company's earnings from year to year, and those profits will no longer be reinvested in the company itself. The first quarterly payment, scheduled for April 16, will be to the tune of $0.1147 per share, which, when annualized and computed at today's closing price, represents a 1.1% annual dividend.

John Divine is long January 2015 $10 calls on J.C. Penney. You can follow him on Twitter, @divinebizkid, and on Motley Fool CAPS, @TMFDivine.

The Motley Fool recommends Home Depot. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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.

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