The softer side of shotgun weddings
Was it just a case of pity applause when shares of both Sears (NYSE:S) and Kmart (NASDAQ:KMRT) rose nicely when it was announced that the two struggling retailers would merge? Far removed from the department store glory years, it's unlikely that the two troubled chains will combine into one thriving entity, though the move will create an empire with 3,400 stores generating $55 billion in sales. The merged stores are also expected to shave $550 million in redundant overhead. That will clearly help the bottom line, though the new company still needs to formulate a plan to win back shoppers and get the top line booming too. And, yes, replacing all of its signs with the word Wal-Mart (NYSE:WMT) would be illegal.
Curiously strong or curiously wrong?
Emptying out your candy stash in the weeks after Halloween isn't always easy. That's why you have to admire Kraft (NYSE:KFT) for selling its Altoids and Life Savers confection lines to Wrigley (NYSE:WWY) for $1.5 billion. Kraft can certainly use the money to trim down some of its debt, but what's in it for Wrigley? Sure, it's getting two great brands that diversify the company's chewing gum core nicely. However, Wrigley is telling investors that the deal may be dilutive in the near term yet accretive in the long run. In other words, it thinks that it will find ways to grow each brand's earnings potential. Color me skeptical. I thought both brands had peaked already. I can't recall the last time I saw someone with a roll of Life Savers, and Altoids had a great run before everyone else stocked the impulse item shelf with similar hearty mint products. Wrigley knows the business. I trust it has a plan to reinvigorate both brands. Still, I'm tempted to wait on the sidelines until it proves me wrong.
Serious gains for Sirius again
It was another action-packed trading week for satellite radio upstart Sirius (NASDAQ:SIRI). The stock has risen by roughly 50% since I proposed that Sirius was worthy of being considered for our new Rule Breakers growth stock newsletter. The week started off with our "Sirius Highs" article being mentioned on Howard Stern's radio show. Then Stern went on The Late Show With David Letterman on Thursday and was allowed to pitch the merits of Sirius -- something he has been told not to do during his actual radio show. That same night it was announced that former Viacom (NYSE:VIA) COO Mel Karmazin would become CEO at Sirius. It was a week of exposure and credibility for the company. While it is trailing XM Satellite Radio (NASDAQ:XMSR) in subscribers, the gap may start closing soon, and the two companies will combine to attract a million new listeners this quarter alone.
Bleeding orange in a sea of sawdust
Are we ready to believe in Home Depot (NYSE:HD) again? The company produced respectable quarterly results this past week. Sales were up 13%, while earnings shot up by 20%. Same-store sales came in at a healthy 4.5% improvement. While rival Lowe's (NYSE:LOW) may have seen its top line grow by 16% and its comps march 5.2% higher, Big Orange was able to grow its bottom line at a healthier clip. In sum, it paints a solid picture of the home improvement market. While many feared that rising interest rates may cool the sector down, both chains are growing just fine. So you can lay to rest all of the catchy gloomy headlines like "Home Depot Gets Hammered" or "Home Depot Gets Nailed" -- the hardware giant knows exactly what it is building.
Longtime Fool contributor Rick Munarriz has never put on an orange apron, but that doesn't mean he doesn't think that it's a sweet look. He does not own shares in any of the companies mentioned in this story. He is a member of the Rule Breakers analytical team, seeking out tomorrow's great growth stocks today.
