Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
The broad-based S&P 500 (SNPINDEX:^GSPC) started the trading day off a bit shaky, but ended decisively higher for a fifth time in six trading sessions following what appears to be mixed economic data.
If you recall, earlier in the week, I warned that Thursday and Friday were going to be particularly busy with regard to economic data, and today certainly lived up to its billing with fresh data on January's retail sales figures, and our weekly look into initial jobless claims.
No one was particularly expecting the retail sales data to be strong given that exceptionally cold weather has blanketed much of the country for the past couple of weeks. Excluding auto sales, which were notably weak in January because of the weather, retail sales were flat, which is ever-so-slightly below expectations on the Street, and clearly lower than the 0.3% expansion noted in December. Investors appear more than willing to give retailers a reprieve today based on the weather, but a continuation of this pattern into February and March could be cause for a reassessment.
Similarly, initial weekly jobless claims came in a bit higher than expected at a seasonally adjusted annual rate of 339,000, up 8,000 from the prior week. Lower figures are always more favorable, but any figure below 350,000 would, in my opinion, be conducive to a falling unemployment rate.
By day's end, investors decided this data might be weak enough to temper the Fed's economic stimulus taper, and helped push the S&P 500 higher by 10.57 points (0.58%) to close at 1,829.83.
Topping the charts, and leading all stocks to the upside today, is clinical-stage biopharmaceutical company Retrophin (NASDAQ:RTRX), which advanced 49.8% after announcing the $62.5 million purchase of privately held Manchester Pharmaceuticals. Under the terms of the deal, Retrophin will pay $29.5 million upfront with the remaining due based on royalties from product sales. The purchase is significant because Manchester has two FDA-approved drugs already on the market, Chenodal and Vecamyl, which will allow Retrophin to generate revenue, and hopefully reduce its cash burn rate, so it can instead focus on its rare disease drug development. Looking ahead, Retrophin anticipates revenue of $10 million-$12 million this year, and $19 million-$21 million in 2015. While the purchase looks strategically smart, I'd suggest that investors stick to the sidelines and wait a couple of quarters to reassess Retrophin following today's huge spike.
Online travel company Orbitz Worldwide (UNKNOWN:OWW.DL) took flight today, gaining 28.8%, after the company reported better-than-expected fourth-quarter results. For the quarter, Orbitz's revenue rose modestly by 4%, to $197.4 million, as the company delivered a $0.05 per-share profit. Helping Orbitz was an 18% increase in hotel bookings, while airline booking revenue dipped 11%. Overall, this is OK, because hotel margins are significantly higher than airline booking margins.
By comparison, Wall Street had expected Orbitz to report a breakeven quarter on an EPS basis with just $191.2 million in revenue. Looking ahead, Orbitz anticipates revenue growth in low-to-mid single digits this year, and is forecasting $202 million-$207 million in revenue for the first-quarter, which, at the midpoint, misses the current consensus of $207 million. Orbitz certainly has a history of being inconsistent around earnings season, but if you must dabble with this stock, I strongly suggest you keep your eyes on its hotel bookings, as that's what will cause its margins to expand or contract.
Finally, footwear company Skechers (NYSE:SKX) jumped by 19.3% after the company delivered a surprisingly strong fourth-quarter report. In total, Skechers revenue rose 14%, to $450.7 million, over the year-ago period as EPS more than tripled to $0.28 from $0.08 in the year-ago period. Skechers noted that strong organic growth in all of its demographic segments led to double-digit growth in its men's, women's, and kid's segments, while its e-commerce and international segment rose by single digits. Comparatively speaking, Wall Street had only been looking for a $0.16 per-share profit from Skechers, with $449 million in revenue. Similar to Orbitz, the earnings history of Skechers has been quite inconstant; but its rapid organic growth here also can't be ignored. It's a company I'd suggest adding to your watchlist, and researching more thoroughly on any major dip.
Sean Williams has no material interest in any 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.
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