Why PetSmart, Lorillard, and PACCAR Jumped Today

The Dow topped 17,000 to set another new record, and these three stocks managed to post even stronger gains. Find out more about what made them soar.

Jul 3, 2014 at 2:15PM

The stock market roared ahead to new record levels Thursday, taking advantage of a strong employment report to post substantial gains in the half-day pre-holiday session. Signs of faster economic growth came as a welcome relief to investors after the difficult winter season, and with the Dow Jones Industrials managing to climb above the 17,000 mark, momentum could continue to carry stocks upward. PetSmart (NASDAQ:PETM), Lorillard (NYSE:LO), and PACCAR (NASDAQ:PCAR) were among the top performers on the day, adding to the general enthusiasm in the market Thursday.

Source: PetSmart.

PetSmart soared 12.5% as the big-box pet-products retailer got a push from activist investors at the JANA Partners hedge fund to jump onto the M&A bandwagon. This morning, JANA Partners revealed that it had taken an almost 10% stake in PetSmart, saying that the hedge fund will discuss possible value-enhancing strategies with the pet retailer's top executives. Specifically, JANA would like to see if PetSmart could return more capital to shareholders in the form of buybacks or dividends, as well as potentially pursuing an outright sale of the company. In response, PetSmart issued a release saying it welcomes open communications, and also wants to create shareholder value for its investors. JANA has a track record of similar efforts in the past, and PetSmart shareholders clearly believe that its efforts could be successful.


Source: Lorillard.

Elsewhere in the M&A world, Lorillard rose 5% as speculation once more arose that the tobacco company will combine with peer Reynolds American to create a giant in the industry. Reports today suggested that the companies could avoid potential antitrust problems by arranging to sell some of its assets to third-party players in the tobacco industry, with two U.K.-based tobacco companies among those possibly in the running. Investors have considered the possibility of a potential merger for months, but they continue to bid shares up as a possible endgame to the process becomes apparent.

PACCAR gained more than 5% on similar speculation that the truck maker might also be the target of an acquisition bid. For its part, Volkswagen denied any interest in acquiring PACCAR, countering comments from a top executive at one of its German auto-industry peers suggesting that a VW-PACCAR merger was talked about frequently within the industry. Nevertheless, PACCAR stock didn't give up its gains after the VW denial, and many investors seem to think that a combination would give VW greater exposure to the U.S. market, as well as some potential trade advantages.

Today's big gainers show just how sensitive stocks are across the market to takeover rumors. While some worry that the market is getting ahead of itself, there's likely more room for smart combinations among high-quality stocks for investors to seek.

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Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Paccar and PetSmart. The Motley Fool owns shares of Paccar. 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.

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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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