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Why Mead Johnson Nutrition, Outerwall, and Terex Jumped Today

By Dan Caplinger – Mar 15, 2016 at 7:03PM

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These stocks stood out on another relatively calm day for the market. Find out why.

Image: Outerwall.

Tuesday continued the stock market's waiting game, and investors seemed content to allow broader market benchmarks to trade in a narrow range even as the Federal Reserve began its two-day monetary policy meeting this morning. Oil prices fell again, putting pressure on the energy and materials sectors of the stock market, and ongoing concerns about the capacity for the global economy to withstand all the macroeconomic pressures it's facing held the market back from further gains. Yet some stocks managed to overcome those concerns, and among the top performers on the day were Mead Johnson Nutrition (MJN), Outerwall (OUTR), and Terex (TEX -2.80%).

Mead Johnson Nutrition jumped 11% after rumors surfaced that the maker of infant formula and other nutritional products might gain the attention of larger European rivals seeking to make acquisitions. Mead Johnson itself acknowledged the rumors as such and chose not to comment, and competitors Nestle and Danone also declined to add anything to substantiate the speculation among market participants. Mead Johnson hasn't done as well as its competitors in pushing into the potentially huge Chinese market for infant formula, although the company has worked to enhance its ability to serve customers in China with recent strategic moves. A merger would potentially resolve those issues by combining forces with an industry player that already has more presence in China, but until the companies reveal more, investors can't be sure whether there's any substance to the rumors.

Outerwall gained 9% in the wake of its announcement of two key measures to enhance shareholder value. First, the company behind Redbox video-rental kiosks and Coinstar coin-counting machines said that it would double its dividend to $0.60 per share on a quarterly basis. The move will raise Outerwall's dividend yield to around 6.5%, making it even more attractive to income investors. In addition, the company said that it would explore what it called "strategic and financial alternatives" for its business, which investors took to include a potential sale of all or part of Outerwall's operations as well as strategic partnerships with other companies in the industry. Even with the jump, though, the stock remains down by more than half from its levels in mid-2015.

Finally, Terex climbed 7%. The crane-maker has been looking to complete a merger with Finland peer Konecranes, but Chinese conglomerate Zoomlion has stepped into the mix with a bid of its own. Reports surfaced Tuesday that Zoomlion chose to raise its bid for Terex, adding a special dividend of $1 per share to its previous offer of $30 per share in cash to Terex shareholders. For its part, Terex is reportedly prepared to accept a counteroffer of $32.75 per share in cash. In the end, a Zoomlion deal could include somewhat more complicated provisions rather than an all-cash merger, but until the parties reveal whether these reports are in fact true, shareholders will have to wait and see whether any of the purported new deal proposals actually pan out.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Terex. 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.

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Stocks Mentioned

Outerwall Inc. Stock Quote
Outerwall Inc.
Terex Stock Quote
$44.48 (-2.80%) $-1.28
Mead Johnson Nutrition Company Stock Quote
Mead Johnson Nutrition Company

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