Dow Climbs As Tesla Plans Major Investment and J. Crew Considers IPO

Good morning, good lookin'. Here are the three things you need to know on Feb. 27.

Feb 27, 2014 at 7:00AM

Don't get too distracted by the Adidas World Cup "graphic tees" that were just banned in Brazil. It's way more interesting to check out the J. Crew rumors, Tesla headlines, and surprise home sales data that lifted the Dow Jones Industrial Average (DJINDICES:^DJI) 19 points Wednesday.

1. J. Crew making IPO plans
Hold on to your plaid Oxford button-down shirt, because word on Wall Street is that your favorite post-work casual-wear brand is thinking about going public. According to a Bloomberg source, J. Crew is in talks with major banks about an initial public offering for later this year.

Just as some background, J. Crew went public in '06. Visionary CEO Mickey Drexler left Gap to reinvent J. Crew with bright colors that your non-hipster girlfriend loves, making J. Crew wear the unofficial dress code of start-up and advertising young professionals nationwide. A couple of years later, J. Crew was bought out by TPG Capital and Leonard Green and Partners for $2.6 billion, taking the once public company back into private equity hands.

J. Crew's numbers feel as good as their slim-fit flannels. J's got 451 stores worldwide (including its Madewell brand), enjoys $2.4 billion in annual sales (which rose 9% last year), and is currently valued at around $5 billion -- plus, it's expanding overseas to London and Hong Kong.

The takeaway is that as IPOs increased throughout 2012 and 2013 with the improving U.S. markets, American fashion labels have led the way (think Michael Kors and Vince) -- so investors have been speculating/hoping hard for years about J. Crew's intentions. Instead of the standard $50 J. Crew gift certificate from your parents' friends, we'd request the stock for Christmas.

2. Tesla Motors rockets to record high
The best things come in pairs. And two electric developments thrust Tesla Motors (NASDAQ:TSLA) to an all-time high stock price. Its Model S was voted best overall car by Consumer Reports, and it announced plans on its blog to build a giant battery factory that will obliterate the Energizer Bunny population. 

Tesla sold 0.2% as many cars as General Motors (NYSE:GM) in 2013 (9.7 million vs. 22.5 thousand), yet Wall Street values Tesla at $31 billion, a respectable little brother to GM and its $59 billion value. Tesla is a force to be reckoned with not just in cars, but also in energy, thanks to its plan to build a Gigafactory.

Wall Street analysts were shocked by the bold news Tuesday that Tesla is raising almost $2 billion in bonds to build its own Gigafactory that will develop and build high-power lithium ion batteries. Instead of gas, Teslas suck on the juice from these important (and expensive) batteries. The bold investment brightens the future for electric cars (it's expected to lower the price of the battery pack by 30%) and is also freaking out the stuffy old electric utility industry. Well played, CEO Elon Musk.

3. Home sales (shockingly) surge in January
Surpriiiise. Sales of new homes catapulted 9.6% in January to an annualized rate of 468,000 home sales, its most impressive rate since July 2008. The report was the exact opposite of what economists were expecting -- a sales decline.

Why all the pessimism? Because the story of 2014, besides when Justin Bieber went crazy, has been how much the brutally cold winter has affected the U.S. economy. Almost every econ report has shown that retail sales fell, existing home sales dropped, and demand for manufacturing just chilled over the past six weeks.

The takeaway is that when you break the data down by region, you'll understand why. New home sales across the South reached more than a seven-year high -- which was enough to cancel out the 17% plummet in new home sales across the snow-crushed Midwest.


  • Weekly jobless claims
  • Fourth-quarter earnings reports: Wal-Mart, Nordstrom

MarketSnacks Fact of the Day: To revolutionize the $375 billion shipping industry that controls 90% of the world's trade, luxury car and engine maker Rolls-Royce is designing an unmanned drone cargo ship.

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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.

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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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