Stocks climbed higher on Monday, rebounding after four straight days of declines. The market managed to shake off early-morning jitters even after President Trump threatened over the weekend to impose new taxes on European cars if the European Union retaliates against his planned steel and aluminum tariffs.
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Industrials stocks helped lead the way higher, with the Industrial Select Sector SPDR Fund (NYSEMKT:XLI) climbing 1.2%. Real estate stocks also jumped: The iShares US Real Estate ETF (NYSEMKT:IYR) gained 1.2% and pared a more-than-9% year-to-date loss, as the market anticipates the Federal Reserve will raise interest rates in the coming months.
As for individual stocks, insurance giant XL Group (NYSE:XL) soared after agreeing to be acquired at a hefty premium, while energy drink specialist Monster Beverage (NASDAQ:MNST) jumped following a notable analyst upgrade.
XL accepts an extra-large offer
Shares of XL Group skyrocketed 29.1% after the property and casualty insurance leader agreed to be acquired by Paris-based AXA (NASDAQOTH:AXAHY) for $57.60 per share -- a 33% premium to XL's closing price on Friday -- for a total consideration of roughly $15.3 billion.
AXA CEO Thomas Buberl called it a "unique strategic opportunity for AXA to shift its business profile" from primarily life and savings products to property and casualty insurance. Assuming the transaction receives the approval of XL Group shareholders and passes regulatory muster, the combined companies will stand tall as the world's largest commercial property and casualty lines insurer based on gross written premiums.
"We are excited at the opportunity to build the scale, geographical footprint, product portfolio, and the unmatched commitment to innovation that relevance in the global insurance industry requires," added XL Group CEO Mike McGavick. "In AXA we have found like-minded partners committed to the absolute necessity to innovate and move this industry forward."
Monster Beverage bounces back
Monster Beverage stock jumped 2.9% after Deutsche Bank analyst Steve Powers upgraded the energy-drink leader from hold to buy. Powers also reiterated his per-share price target of $63, reflecting a premium of more than 16% from Friday's close.
Monster Beverage stock is still reeling after the company posted disappointing fourth-quarter results last week, with top- and bottom-line growth pressured by inventory reductions at certain international distributors. But Powers believes Monster's more-than-14% decline last Thursday was an "overly negative reaction" that creates a buying opportunity for long-term investors. Noting Monster shares still aren't cheap, trading at nearly 30 times this year's expected earnings, Powers also called it a "premium-priced asset" with a "compelling growth story," particularly in a sector where peers are struggling to increase sales.
More specifically -- and echoing comments from Monster Beverage management last week -- Powers believes that growth will be driven by a combination of Monster's entry into new international regions and its introduction of new coffee and athletic drink varieties in the U.S.
Finally, thanks to recent tax reform initiatives in the U.S. that have freed up international cash hoards, he highlighted the increased potential for Coca-Cola to either boost its 18.1% stake in the company, or to acquire a majority or controlling stake.
In any case, with Monster Beverage still trading near a six-month low, it's hardly surprising to see investors bidding shares up again given this encouraging vote of confidence from Wall Street.