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Why Navistar International, CVS Health, and Eldorado Resorts Jumped Today

By Dan Caplinger – Apr 16, 2018 at 3:33PM

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Find out which of these stocks moved on news of its possible acquisition.

The stock market did well on Monday, with major benchmarks finishing the day with gains of about 1%. Driving sentiment was ongoing good news from the newly opened first-quarter earnings season, and the Trump administration's move to fill vacancies on the Federal Reserve Board also seemed to support the positive mood on Wall Street. As for individual stocks, Navistar International (NAV), CVS Health (CVS -0.54%), and Eldorado Resorts (ERI) were among the best performers on the day. Here's why they did so well.

Navistar could finally get bought out

Shares of Navistar International climbed 10% after reports surfaced that Volkswagen might move to purchase the truck manufacturer in its entirety. The German automaker already holds about a one-sixth stake in Navistar, but many have long believed that a full combination of the two companies is inevitable. Spurring the latest rumors were comments from the CEO of Volkswagen's truck division specifically saying that a purchase of Navistar would be a smart move. With waves of consolidation in several industries, a bid from VW wouldn't be a big departure from prevailing sentiment among investors.

Large black big-rig truck on a highway with background whited out.

Image source: Navistar International.

CVS gets some relief

CVS Health stock rose 4% in the wake of news that suggested that the drugstore chain might not face one major competitive threat in the immediate future. Investors have worried that might choose to get into the pharmaceutical distribution business, going head-to-head against brick-and-mortar retailers and drug distribution companies. But a new report suggests that the e-commerce giant is no longer looking at competing in drug distribution. That would leave the field open for CVS to continue to build market share, and after having seen CVS stock suffer on initial fears about Amazon, it's natural for them to bounce back now that the threat seems to have passed.

Eldorado makes two big deals

Finally, shares of Eldorado Resorts soared 16% after the company announced two major acquisitions today. The first was the purchase of key assets of Tropicana Entertainment in Lake Tahoe, Laughlin, Atlantic City, and the Mississippi Basin in a deal worth $1.85 billion. Eldorado will do a sale-and-leaseback agreement with Gaming and Leisure Properties in order to share the cost, leaving Eldorado to pay $640 million in net cash. Eldorado also agreed to pay $327.5 million to buy the Grand Victoria Casino just northwest of Chicago. With the deals, Eldorado is making a major move to expand its regional gaming operations and become a much larger player in the national casino resort industry.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends AMZN. The Motley Fool recommends CVS Health. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Navistar International Corporation Stock Quote
Navistar International Corporation
CVS Health Corporation Stock Quote
CVS Health Corporation
$97.21 (-0.54%) $0.53
Eldorado Resorts, Inc. Stock Quote
Eldorado Resorts, Inc.

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