You don't have to tell us how hard it is to get back in the saddle after a long holiday weekend (at least we hope it was a good one!). Somebody should have told the markets. The major stock indexes barreled into the close comfortably ahead and quite near their highs for the day. Even gold hit a multiyear high.
So, what's the buzz? We don't like to speculate, but industry insiders tell us it was "buying pressure" (go figure). Tricky as it is to explain it -- and there are as many explanations as there are reindeer -- it's flat-out hard not to buy into the Santa Claus rally. Tomorrow: the January effect.
In today's Motley Fool Take:
- An XM Xmas?
- Quote of Note
- 5 Better Food Bets
- Shameless Plug: TMF Money Advisor
- Gift Cards to the Rescue
- Discussion Board of the Day: Wal-Mart
- More Fool News
- And Finally...
An XM Xmas?
Though many people said there wasn't a must-have item this holiday season, satellite radio caught some shoppers' attention. The Washington Post reported Saturday that satellite radio was a hot item on people's holiday gift lists this year. Though the companies didn't state exact numbers, XM Satellite Radio
So much for mundane gifts like socks, sweaters, or even TVs. It appears some people may have chosen a gift that keeps on giving, all year round. Portable receivers that can float between car, home, and office gave consumers more reason to sign on, and some discounts were in place for subscribers who signed on for more than a year.
For all those who speculated on these stocks despite their lack of profitability, it seems that this holiday season has brought them one step closer to realizing the dream. XM said it is on track to have 1.2 million subscribers by year end, as opposed to 347,000 this time last year.
Despite the good news, profitability remains a long way away, and in XM's case, the stock's been trading near its 52-week high. A November article by Jeff Fischer put things in perspective, pointing out the high value placed on XM subscribers, as compared to other subscriber-based services like TiVo
Still, this is good news for investors who are watching for signs that consumers will pay up for satellite radio. Increasing adoption rates will boost the service's word of mouth, and the buzz is already out there (plus, Jeff made XM a stock to watch in 2004). It's no longer just investors who talk about the cool factor of satellite radio, and with more subscribers, that effect should intensify. It could be time for takeoff.
Quote of Note
"The only way around is through." -- Robert Frost
5 Better Food Bets
The stock symbol for the largest U.S. egg producer may be CALM, but shares of Cal-Maine Foods
Last quarter, the company earned $1.49 per share -- up over 800%. Annualized, the stock trades at just 7 times earnings. But, don't annualize! Egg prices are cyclical. The low-profit business has been consolidating for years, but there were still 64 producers with 1 million or more layers in 2001. Expect capacity to expand quickly and, by 2005, for egg producers to be cackling about overcapacity again -- and low margins.
And with $106 million in total debt and $10 million in cash, Cal-Maine will not be cash-rich overnight -- even with $17.6 million flowing in last quarter. Meanwhile, the price of grain -- the food of the hens -- is rising. Instead of joining the flock, investors might find a safer roost elsewhere.
As evidence, consider the famous Atkins Diet and its author's favorite nut -- the macadamia. Hawaii's largest grower, ML Macadamia OrchardsLP
The point is its food we are talking about! Its history is boom and bust. With that history, why not squirrel-away your assets in better, broader-based, long-term food-related opportunities? Investors looking to do so might start with these:
Beer giant Anheuser-Busch
Why are these better bets? For one thing, these guys are not in the commodity business. For another, if trends change, they're better diversified and will not likely suffer surprise operating losses. More likely, they can tailor their well-known brands to the latest craze.
Finally, they're not up more than 1,000% on the year. Talk all you want about mad cows, but if you ask me, Cal-Maine has really flown the coup.
Shameless Plug: TMF Money Advisor
Every once in a while, we all need a little help from our friends. That gets to heart of what it is to be Foolish, and is a big reason why The Motley Fool exists in the first place. But sometimes a community doesn't quite do it, and we need a little one-on-one. That's where TMF Money Advisor comes in. It can't hurt, and it sure can help. And when you sign up right now, you'll get our Rule Your Retirement online seminar for free.
Gift Cards to the Rescue
The holiday shopping season may be technically over, but that doesn't mean that the flurry of activity at the leading retailers has ended. Between the returns, exchanges, and post-holiday sales, it's not as if your nearest strip mall has been able to catch much of a breather. However, more important for the financial state of this timely sector is the proliferation of gift cards.
As the gifts that keep on giving (until they are bled dry to a balance of nil, of course), they are extending the fiscal punch of the retailing seasonality. Consider the world's largest retailer, for instance. Although Wal-Mart
If you find yourself holding on to a piece of plastic from Borders
Retailers do not account for gift card sales as they are bought, only consumed. That may help explain part of Wal-Mart's healthy 8.6% rise in comps in Jan. 2003. More importantly, it makes one hopeful for another strong showing next month. While the start of the calendar year has been traditionally a time to keep discretionary spending low as holiday debts are tackled, gift cards are helping smooth out that seasonality.
So go ahead and take your holiday decorations down and pour the last of that eggnog down the drain, if you must -- just don't write off the season until the seasonal spending is done.
Discussion Board of the Day: Wal-Mart
How did your holiday shopping go? Will gift card sales really lift Wal-Mart's sales in the coming weeks? What else lies in store in 2004 for the world's leading retailer? All this and more -- in the Wal-Mart discussion board. Only on Fool.com.
More Fool News
- Lilly's Symbyax Gets Green Light
- Christmas Price Index Up 16%
- Sharper Image Looks Sharp
- Critical Path Flatlining?
- Delay of Game
For a list of all our stories from today, see Today's Headlines.
Today on Fool.com, Rex Moore is Valuing a Stock's Sex Appeal. Ooh-la-la.
Bob Bobala, Robert Brokamp, W.D. Crotty, Sam Edwards, Paul Elliott, Mathew Emmert, Jeff Fischer, Jeff Hwang, Tom Jacobs, LouAnn Lofton, Alyce Lomax, Bill Mann, Selena Maranjian, Dave Marino-Nachison, Rex Moore, Rick Munarriz, Reggie Santiago, Dayana Yochim