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Farrell: I Had Better Sit Down For This

Wednesday, 29 Jul 2009 | 11:05 AM ET

Will wonders never cease? The 20 city Case Shiller Home Priceactually increased .5% in May versus the prior month. To be sure the numbers were still 17.1% below last years' but that is an improvement over the -18.1% of April and better than the consensus guess of a negative 17.9%.

But it is the fourth month in a row of slightly better year over year comparisons. Soleil's Anna Torma warns not to read too much into this. While 15 of the 20 cities surveyed showed flat to slightly up readings, the recent years have seen a weakening in the September to December time period. Additional foreclosures are also sure to come onto the market but the .5% increase is the first monthly gain in something like 3 years so let's celebrate a little. Recent data on the housing market show very clearly, to me at least, we are forming a bottom. But forming a bottom is the key phrase. With very high excess inventories weighing on the market, success will be more in the way of less bad news than outright jump up and down good news.

The Conference Board's measure of consumer confidencestunk. It showed a second in a row monthly decline to 46.6 and hopes were for a reading of 49. It was 49.3 last month. While still a lot better than the depths of February when it hit 25.3, we are a long way from the multi year average (leave out the last few years ) of 95. I figure rising joblessness and gas prices had a lot to do with the report.

The two year Treasury auction of $42 billion in new debt was a "B" at best. The bid to cover ratio was 2.75 times. That is close enough for government work to the 2.86 average of the last four auctions, but below the 3.19 of last month's two year deal. 33% went indirect as opposed to the 41% average recently. We all were hoping that with the huge amount of paper coming this week that this would be more universally embraced. It makes the 5 and 7 year auctions tomorrow and Thursday more interesting.

Jeff Stein of Soleil/Stein Research likes Big Lots (BIG/Buy rated; last sale around $23.80; 52 week range $32-$13.) The company sells discounted stuff and is attracting a lot more vendors that see this as a more than viable distribution outlet. Sharpie, Crayola, Paper Mate, and Thermos are recent vendor additions. BIG is offering a Gateway Computer, for example, at $499 and Jeff can't find it anywhere else below $528. The company is on January year and Jeff sees $1.97 for Jan 2010, and $2.15 for the following year. His price target is $32 which would be 16.2 times this coming estimate. The ten year moving average P/E is 17.5 times so the target is by no means heroic. BIG also trades at a 20% discount to its group which Jeff feels is unwarranted.

On a more cautious note, Dan Cummins of Soleil/Limerock Research feels Salesforce.comdeserves a hold rating (last sale about $43.40; 52 week range $72-$21). The stock has doubled off its low and is up 29% this month alone. But Dan is cutting his 2011 estimate and feels the competitive landscape is heating up. Clients are renewing but for fewer seats and at lower prices. Deferred revenues, a proxy for contract bookings, are likely to be below Street expectations which are for flat comparisons and Dan sees them down 3% .

Read what other contributors are saying now on CNBC.com

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