Why Integrys Energy Group, Thompson Creek Metals, and PLX Technology Are Today's 3 Best Stocks

The S&P 500's win streak comes to a close as Integrys Energy, Thompson Creek, and PLX Technology all blasted to the upside.

Jun 23, 2014 at 5:15PM

Sometimes Merger Mondays and positive economic data simply aren't good enough to propel the broad-based S&P 500 higher. Today was one such day, which saw the index dip ever so slightly as investors took some profits off the table. Of course, who can blame them after six previous days of gains?


Existing-home sales for May took center stage today, rising nearly 5% to a seasonally adjusted 4.89 million. By comparison, economists were looking for only 4.74 million total units. Rising home inventory levels are good news for consumers, as they'll stymie runaway home-price increases and offer a better selection of homes to choose from. In addition, we're seeing a healthy rebound from the first quarter, where the polar vortex put a stranglehold on most sectors, especially housing. Now we simply need to see follow-through purchasing from consumers, with lending rates threatening to touch a one-year low.

By a lesser token, but a nonetheless bullish one, the Markit Flash U.S. Manufacturing Purchasing Managers' Index rose to a reading of 57.5 in June from 56.4 in May. According to my Foolish colleague Justin Loiseau, who keeps a tight tab on leading U.S. economic indicators, this marked a four-year high for the manufacturing index and would imply that industrywide expansion is likely to continue.

By day's end, the S&P 500 had dipped by a fractional 0.26 points (-0.01%) to close at 1,962.61. However, just because the S&P 500's move was minimal doesn't mean that we didn't have a number of individual stocks screaming to the upside.


Source: katsrcool, Flickr.

Topping the charts today is electric utility and energy holding company Integrys Energy Group (NYSE:TEG), which tacked on 12.1% after Wisconsin Energy Group (NYSE:WEC) agreed to buy the company for $5.7 billion, excluding debt. Under the terms of the deal, Integrys shareholders will receive $18.58 per share in cash and 1.128 Wisconsin Energy shares, representing about a 17% premium to Friday's close.

The combined entity will serve more than 4.3 million people in Wisconsin, Illinois, Michigan, and Minnesota, and, most importantly, 99% of all revenue will come from regulated industries, meaning no surprises for shareholders and fairly predictable long-term growth potential. With the deal expected to be accretive to EPS in 2015 and the combined entity projected to grow at 5%-7% annually, I see no reason why investors in both parties shouldn't be excited.

Copper, gold, and molybdenum miner -- and also one of my largest personal portfolio holdings -- Thompson Creek Metals (NYSE:TC) advanced 9.7% on the day after announcing the conversion price for its tMEDS, or tangible equity units. Owners of tMEDS had the option of either exchanging their tMEDS for common shares based on the average price of Thompson Creek's common shares over the prior week of trading, with each tMEDS equating to 5.8457 shares of Thompson Creek common stock, or hanging on to their tMEDS for the entire term.

Source: Thompson Creek Metals.

Now in English, this simply means that Thompson Creek is looking for ways to reduce its debt load, and it offered tMEDS note holders the opportunity to convert their tMEDS into common shares. It would appear that traders had been trying to keep Thompson Creek's price low to minimize tMEDS conversion, since conversion would equal dilution. With an average price over the past week of $2.73, it's unlikely there will be many takers, which means little in the way of dilution for existing share and call holders like myself. With the company's Mt. Milligan copper and gold mine remaining on track and molybdenum prices up 50% over the past couple of months, I'm more positive than ever on Thompson Creek's future, but keep my ownership bias in mind as you read that last statement.


Source: Intel Free Press, Flickr.

Finally, integrated circuit developer PLX Technology (NASDAQ:PLXT) bid adieu to public listing by agreeing to be purchased by Avago Technologies (NASDAQ:AVGO) for $309 million, or $6.50 per share in cash. According to Hock Tan, the CEO of Avago, "The core PLX PCIe silicon business fits very well with the Avago business model and broadens Avago's portfolio serving the enterprise storage and networking end markets."

Based on the press release that sent PLX higher by 9.1% on the day, Avago anticipates that the deal will be earning accretive immediately, which is good news for both parties involved. But I do have to cringe at the terminology Avago used in its press release with regard to "driving the PLX business model to a level consistent with Avago's long term business model," as it implies that Avago is dealing with an inferior or inefficient product develop. Overall, though, and to make it a perfect three-for-three today, I believe investors are getting a fair deal on both ends.

These 3 stocks may have soared today, but keeping pace with this top stock over the long run might prove impossible!
Give us five minutes and we'll show how you could own the best stock for 2014. Every year, The Motley Fool's chief investment officer hand-picks one stock with outstanding potential. But it's not just any run-of-the-mill company. It's a stock perfectly positioned to cash in on one of the upcoming year's most lucrative trends. Last year his pick skyrocketed 134%. And previous top picks have gained upwards of 908%, 1,252% and 1,303% over the subsequent years! Believe me, you don't want to miss what could be his biggest winner yet! Just click here to download your free copy of "The Motley Fool's Top Stock for 2014" today.

Sean Williams owns shares of Thompson Creek Metals as well as Jan. 17 2015 $2 calls, but has no material interest in any other companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

The Motley Fool recommends Wisconsin Energy. 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.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information