Mounting worries in Portugal and Egypt certainly did their best to drive the broad-based S&P 500 (^GSPC 1.03%) lower by the open, but it wasn't enough to keep the optimist investors down on this trade-shortened day.
It appeared as if we were headed for an almost certain down day, given that public resistance to austerity measures is growing in Portugal (causing a greater than 100 basis-point climb in its 10-year lending rates) and the threat of a military coup and a possible oil export disruption in Egypt is quite real. In fact, West Texas Intermediate topped $100 per barrel for the first time since May 2012. However, improving jobs data helped clinch the move to the upside.
The ADP employment report showed an addition of 188,000 private sector jobs last month, which was much higher than economists had predicted, and a big jump from the 134,000 increase reported last month. Weekly initial jobless claims delivered much of the same news, with a reading of 343,000 seasonally adjusted claims which was down slightly from the previous week. Both figures present a case where the job market is improving, though still at a slow pace.
By the end of the day there were hardly any fireworks, but most investors were glad to see the S&P 500 advance by 1.33 points (0.08%) to close at 1,615.41, given it spent most of the day in negative territory. The following three stocks, though, were far from negative and helped lead the S&P 500's charge back into positive territory.
The head honcho was fresh-Mex restaurant chain Chipotle Mexican Grill (CMG -0.14%), which added 3.5% after receiving an upgrade to "buy" from Argus Research with a $430 price target, implying upside of almost 16% from yesterday's close. The move by Argus comes with the forecast that Chipotle will be able to grow same-store sales by 2.5%. I, however, have a far different view on Chipotle. The company was only able to muster 1% same-store sales growth in the first-quarter while margins fell because of higher food input costs and its unwillingness to raise its menu prices for fear of driving customers to its peers. At 30 times forward earnings this appears to me to be a dangerous and frothy valuation.
Analytic data solutions provider Teradata (TDC 0.99%) jumped 2.7% on this shortened session following positive comments from Paul Meeks of Saturna Capital on CNBC yesterday. Meeks referred to Teradata in his on-air interview as his pick in the big data analytic space. As usual, I would suggest taking analyst comments with a grain of salt because they are often short-term drivers of stock prices. In this case, though, I do agree with Mr. Meeks. Teradata has plenty of cash on hand to continue investing in its products, and it's perfectly positioned to take advantage of the ongoing move into the cloud and big data centers.
Finally, cable operator Time Warner Cable (NYSE: TWC) trudged higher by another 2.7% as ongoing rumors continue to swirl about a potential buyout offer from Charter Communications (CHTR 1.41%). These rumors became even more intriguing when Charter announced yesterday that it had amended credit agreements on $4.8 billion worth of its debt, presumably to give it more room should it decide to make an acquisition. The broadcasting space is certainly ripe for acquisition, but I also wouldn't suggest foolishly chasing names in this space higher on rumors.
