Rite Aid's Healthy Earnings, Best Buy's Bad Ones, and Why Tech Stocks Got Short-Circuited All Last Week

Good evening, good lookin'. Here are the four things you need to know on April 12.

Apr 12, 2014 at 7:00PM

As if the last few days before your taxes are due couldn't be more frustrating, the S&P 500 suffered its worst week since January. Despite the start of corporate earnings season, a bunch of IPOs, and pure excitement over the upcoming NHL playoffs, investors sold off stocks -- especially in the tech sector.

1. Stock market winner ...
Drugs are bad. But drugstores are good. And apparently Rite Aid (NYSE:RAD) is one heck of a drug store. Shares of Rite Aid popped over 8% on Thursday after the company announced a first-quarter earnings report that made investors feel more chill than the Vicodin pharmacists keep behind the counter.

More specifically, over the past three months, Rite Aid brought in $55 billion in earnings, resulting in a total profit of $249 million for the year. That's the company's sixth consecutive quarter of positive net income, making fiscal 2014 its second positive year in the past five.

The takeaway is that Rite Aid is staging quite the turnaround. Way back when, during the '08 financial crisis, the company was losing $3 per share -- since then, it's taken some major medication with a nationwide turnaround effort to remodel over 300 of its stores, updating them with new lights, friendlier staff, and more products. Over at Rite Aid, they've been calling this their "Health and Wellness Strategy." And it's working well in its current dosage.

2. ... And stock market loser
You know all those times you got dragged through a Bed Bath & Beyond (NASDAQ:BBBY) with your parents, loading up on toothbrush holders? Well this past week was your redemption. The company's shares fell 8% Thursday following a pretty poor earnings report on Wednesday afternoon after the market closed.

What were the detes? Good question. The report was focused on 2013 fourth-quarter numbers as well as full-year numbers for last year, so investors paid particularly close attention. Investors had lowered their fourth-quarter expectations, so the company's $3.2 billion in sales were not impressive, but in line with Wall Street's projections. What concerned investors more were the same-store sales (which are revenues generated by stores that have been open more than a year) -- those rose by only 1.7% over the fourth quarter, a fairly significant dip from their 2.5% gain during the same period in 2012.

So why the tough quarter? Take a wild guess, because it's been the excuse -- we mean, "theme" -- of big-box retailers all winter long. The frustratingly brutal winter blizzard conditions nationwide and a not-as-active holiday shopping season (remember it was a week shorter than usual because of the late Thanksgiving) had consumers checking only the "bed" and "bath" sections, with little time for the store's "beyond."

3. Tough week for tech stocks
Tech stocks had a worse week than an iPhone that fell in the toilet. The Nasdaq stock market index, made up of 3,000 (mostly) tech stocks, dropped over 3% on Thursday and ended the week at its lowest point since early February. Since reaching its peak on March 6, the index has dropped over 7% as Wall Streeters realize they may have been pumping up fun, sexy tech companies more than they should have recently. As a result, they sold down more start-up-y publicly traded tech giants, like Facebook (NASDAQ:FB) -- don't take it personally, Zuck.
4. IPOs were everywhere
It was like bar mitzvah season on Wall Street all week long -- 14 companies began selling their shares in the stock market through initial public offerings. How'd they do? The two most notable ones flopped. Hotel chain La Quinta (NYSE:LQ), owned by private equity giant Blackstone, raised $650 million through its IPO, but dropped 4% right after it began trading and finished its first day up less than 1%. And former government bailout recipient Ally Financial (NYSE:ALLY) raised $2.4 billion through its IPO to make it the biggest of 2014 so far, but it got pummeled for a 4% loss in its debut.

MarketSnacks this week:
  • Monday: Retail sales; earnings reports: Citigroup
  • Tuesday: Empire State Manufacturing Survey; earnings reports: Charles Schwab, Yahoo!, Coca-Cola
  • Wednesday: The Fed's "Beige Book"; earnings reports: Bank of America, Credit Suisse
  • Thursday: Weekly jobless claims; earnings reports: Morgan Stanley, BlackRock, Chipotle Mexican Grill
  • Friday: Stock market closed for Good Friday

MarketSnacks Fact of the Day: Amazon.com will pay its warehouse employees up to $5,000 to quit to make sure they actually want to be there.

As originally published on MarketSnacks.com

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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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