Stock Market Today: Wal-Mart’s Video Game Threat and Hertz’s $1 Billion Stock Buyback

Why GameStop, Hertz, and DSW stocks are on the move today.

Mar 18, 2014 at 9:00AM

Investors can expect a positive start for the stock market today: The Dow Jones Industrial Average (DJINDICES:^DJI) gained 61 points in pre-market trading. World indexes didn't budge much overnight, with European shares lower by 0.20% as of 7:30 a.m EST.

The Federal Reserve today kicks off its two-day rate-setting meeting, after which Chairwoman Janet Yellen is expected to announce that the central bank will continue to carefully scale back its stimulus measures. Yellen is also scheduled tomorrow afternoon give her first press conference since taking up the leadership position of the Fed. 

Meanwhile, news is breaking this morning on several stocks that could see heavy trading in today's session, including GameStop (NYSE:GME), Hertz (NYSE:HTZ), and DSW (NYSE:DSW).

GameStop has a brand new threat on its hands. The video game retailer's stock was down 4.4% in pre-market trading after The Wall Street Journal reported that Wal-Mart (NYSE:WMT) is jumping into the used video game business. Wal-Mart will soon begin paying customers for pre-owned games and allowing them to apply that cash toward new game purchases, or for any other items within its stores. Despite a successful push into other business categories over the last few years, used game profits remain key to GameStop's bottom line, accounting for almost 25% of earnings. Still, the company has fended off many other challenges to that lucrative business.

Hertz shares are up 0.6% in pre-market trading after the car rental company reported fourth-quarter earnings results and announced plans to break its equipment rental business off into a separate company. Hertz plans to perform the split as a tax free spinoff to shareholders, with much of the $2.5 billion in proceeds set to fund a huge stock buyback of up to 20% of the company's outstanding shares. Separately, Hertz booked a slightly disappointing 10% increase in fourth-quarter sales to $2.6 billion, which resulted in a 20% dip in profit to $0.26 a share.

Finally, DSW said this morning that revenue improved by a slim 3.8% in its fiscal fourth quarter as comparable-store sales growth was flat. The shoe retailer's adjusted profit also fell to $0.31 a share from last year's $0.35 a share. Still, DSW management seems confident in the company's future: The company hiked its dividend by 50% and boosted its outlook for store potential to 525 locations, about 30% greater than its current store footprint. DSW's stock is unchanged in pre-market trading.

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Demitrios Kalogeropoulos has no position in any stocks mentioned. The Motley Fool owns shares of GameStop and Hertz Global Holdings. 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.

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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