Why Allergan, Big Lots, and Cheniere Energy Jumped Today

For most of Friday's session, stocks languished in negative territory, as investors remained uncertain about whether the market could build on gains from earlier in the week. Yet by the close, both the S&P 500 and the Dow had hit new all-time records -- and despite nervousness among some market participants, many believe that stocks could continue to climb into the summer. Allergan (NYSE: AGN  ) , Big Lots (NYSE: BIG  ) , and Cheniere Energy (NYSEMKT: LNG  ) were among the best performers in the stock market Friday.

Allergan gained almost 6% as the Botox maker's acquisition saga continued. Pershing Square's Bill Ackman has been pushing Valeant Pharmaceuticals to boost its takeover bid for Allergan, and today Valeant responded by increasing the amount of cash that it would pay to $72 per Allergan share, plus 0.83 shares of Valeant stock. The new deal adds $13.70 per share in cash to the former proposed deal. It's interesting that Allergan stock didn't rise by nearly that much, reflecting the previously held belief among Allergan shareholders that a better deal would be forthcoming. Even with the increases, many believe that Valeant will have to pay even more in order to get Allergan to agree to the deal without a proxy fight.

Big Lots jumped 13%, avoiding the fate of many of its retail peers by posting strong earnings results in its first-quarter report. Income from continuing operations beat the top end of the company's prior guidance range by a nickel per share, and same-store sales rose 0.9%. Big Lots also expects this quarter's results to be reasonably strong, with comps in the 1% to 3% range, and raised its full-year estimates by $0.10 to $0.15 per share. Investors applauded the apparent success of Big Lots' decision to restructure its business by winding up its operations in Canada and ending its wholesale business. Given the struggles that most retailers have had in the first quarter, Big Lots' report sent the stock to levels it hadn't seen since 2012.


Cheniere Sabine Pass facility. Source: Cheniere Energy.

Cheniere Energy picked up 9% after the natural gas exporter signed a 20-year deal to provide liquefied natural gas to Spanish utility Iberdrola. The deal will further help make Cheniere's Corpus Christi-based LNG project a reality, with construction expected to begin early next year and deliveries expected as early as 2018. Iberdrola represents the first customer to sign onto the proposed Train 2 of the project, with initial purchases of 0.4 million metric tons set to double to 0.8 million once Train 2 deliveries begin in 2019. Although the permitting and construction process for Cheniere has been long, the willingness of foreign customers to sign on to LNG projects bodes well for Cheniere's future success.

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