Stocks rose today as markets adjusted to the Fed’s hawkish comments on Friday thanks to a muted PCE deflator.
The S&P 500 rose 0.5% to 2,180.38 today, while the Dow Jones Industrial Average gained107.59 points, or 0.6%, to 18,502.99. The Nasdaq Composite advanced 0.3% to 5,232.33.
The folks at Bespoke Investment Group say beware September:
Market bullsnever like when our September seasonalityreport comes around, because
it has historically been theworst month of the year for stocks…over the last 100years, the Dow has averaged a declineof 0.96% in September withpositive returns just 42% of the time.No other month of the year has evenaveraged a decline over the last 100years, and September has averaged adecline of nearly 1%…If itsany consolation, September has not been the worst month of the year over the last 20 years. Augusthas actually been worse with an average decline of 1.30%.
Hot Railroad Stocks To Invest In Right Now: L Brands, Inc.(LB)
L Brands, Inc. operates as a specialty retailer of womens intimate and other apparel, beauty and personal care products, and accessories. The company operates in three segments: Victorias Secret, Bath & Body Works, and Victoria’s Secret and Bath & Body Works International. Its products include loungewear, bras, panties, swimwear, athletic attire, fragrances, shower gels and lotions, aromatherapy, soaps and sanitizers, home fragrances, handbags, jewelry, and personal care accessories. The company offers its products under the Victorias Secret, Pink, Bath & Body Works, La Senza, Henri Bendel, C.O. Bigelow, White Barn Candle Company, and other brand names. L Brands, Inc. sells its merchandise through company-owned specialty retail stores in the United States, Canada, and the United Kingdom, which are primarily mall-based; through its Websites; and through franchises, licenses, and wholesale partners. As of January 31, 2016, the company operated 2,721 retail stores in the United States; 270 retail stores in Canada; and 14 retail stores in the United Kingdom. It also operated 221 La Senza stores in 29 countries; 125 Bath & Body Works stores in 30 countries; 19 Victoria’s Secret stores in 7 Middle Eastern countries; and 373 Victorias Secret Beauty and Accessories stores, and various small-format locations in approximately 75 countries. The company was formerly known as Limited Brands, Inc. and changed its name to L Brands, Inc. in March 2013. L Brands, Inc. was founded in 1963 and is headquartered in Columbus, Ohio.
- [By Ben Levisohn]
L Brands (LB) has risen 1.2% to $78.71 after getting up graded to Buy from Neutral at Goldman Sachs, while Urban Outfitters (URBN) has dropped 1.1% to $37.38 after Goldman cut it to Neutral from Buy.
Hot Railroad Stocks To Invest In Right Now: Corrections Corporation of America(CXW)
Corrections Corporation of America, together with its subsidiaries, owns and operates privatized correctional and detention facilities in the United States. It owns, operates, and manages prisons and other correctional facilities; and provides inmate residential and prisoner transportation services for governmental agencies. The company also offers various rehabilitation and educational programs, including basic education, religious services, life skills and employment training, and substance abuse treatment, as well as food services, work and recreational programs, and healthcare services, such as medical, dental, and mental health services. In addition, it leases its facilities to third-party operators. The company serves federal, state, and local correctional and detention authorities. As of December 31, 2012, the company owned and managed 47 correctional and detention facilities; and managed 20 correctional and detention f acilities, which it did not own. Corrections Corporation of America was founded in 1983 and is based in Nashville, Tennessee.
- [By Ben Levisohn]
Yesterday, Corrections Corp of America (CXW) and GEO Group (GEO) lost more than a third of their values after the Department of Justice said it would seek to wind down the use of private prisons. SunTrust Robinson Humphrey’s Tobey Sommer and Kwan Kim call the selloff “overdone.” They explain why:
Todd Meier for the Wall Street Journal
If the Bureau of Prisons (BOP) in-sources its business over time, that could represent 10%-12% of EBITDA at CXW and 13%-15% of EBITDA at GEO. Our sense is that the BOP will evaluate each facility at the time of its contract renewal date, taking into account the quality of each facility and the agencys overall needs. This means the business is unlikely to be turned off overnight, but rather potentially be at risk over 5 years.
Currently, we believe the BOPs total inmate population to be 193,000, with 157,000 in their own facilities. Occupancy in BOP facilities is 117% vs. 140% several years ago. In-sourcing by increasing overcrowding in BOP facilities is an economically viable choice, but not one consistent with a desire to deliver superior quality to those inmates, in our view.
The BOP canceled the CAR 16 procurement for 10,800 beds in the Southwest and is set to issue a substitute procurement for just 3,600 beds only in Texas. Of the three facilities operated by private firms in TX, we believe GEOs Big Spring facility (3,600 beds) is the highest-rated facility.
Paradoxically, we believe the BOP may also renewing contracts for certain facilities. We believe that the Department of Justice surprised the corrections space with its announcement.
As far as ICE and U.S. Marshals businesses are concerned, we see them as more secure from in-sourcing risk since neither agency maintains its own network of facilities. Other risks exist, such as the family detention business in the news recently, but the risk of in-sourcing is relatively low, in our view.
Sommer and Kim h
- [By Ben Levisohn]
Shares of Corrections Corp of America (CXW) and GEO Group (GEO) have lost half their value after reports that the Justice Department plans to end the use of private prisons. The Washington Post’s Matt Zapotosky has the details:
Bryan Anselm for The Wall Street Journal
The Justice Department plans to end its use of private prisons after officials concluded the facilities are both less safe and less effective at providing correctional services than those run by the government.
Deputy Attorney General Sally Yates announced the decision on Thursday in a memo that instructs officials to either decline to renew the contracts for private prison operators when they expire or substantially reduce the contracts scope. The goal, Yates wrote, is reducing and ultimately ending our use of privately operated prisons.
It’s not as if these stocks weren’t without their problems before their announcement. In a report released on Aug. 14, Canccord’s Ryan Meliker and Michael Kodesch discussed the headwinds facing Corrections Corp of America and GEO Group:
The prison sector has faced headwinds as of late, as BOP reductions, family detention dynamics, and general sentencing reform dialogue have weighed on the two prison REIT names. We continue to believe the sector offers a unique blend of stable fundamentals and the potential for accretive external growth, though we also acknowledge CXW’s current risk associated with the renegotiation of a material contract, which we believe to be one-off in nature. Additionally, it is our view that while headline risk is a concern from a stock performance perspective, these are unwarranted concerns from an operating perspective. We continue to prefer GEO shares to those of CXW, driven by GEO’s lower risk to family detention, higher and safer dividend yield (8.0% vs. CXW’s 7.9%) and
diversified business model.
But it sure looks like their probl
Top Energy Stocks For 2016: ePlus Inc.(PLUS)
ePlus inc., through its subsidiaries, engages in selling, leasing, financing, and managing information technology (IT) and other assets in the United States. Its Technology Sales segment involves in the direct marketing of IT equipment and third-party software solutions of Cisco Systems, HP, VMWare, NetApp, IBM, and Microsoft; and the provision of proprietary software for enterprise supply management, including order-entry and order-management, procurement, spend management, asset management, document management, distribution, and electronic catalog content management software and services. This segment also provides professional technology services in the areas of data center, storage, security, cloud enablement, and IT infrastructure that cover Internet telephony and communications, collaboration, cloud computing, virtual desktop infrastructure, network design and implementation, storage, security, virtualization, business continuity, visual communications, audio/visual technologies, maintenance, and implementation services. The company?s Financing segment offers a range of leasing and financing options for IT and capital assets, such as computers, associated accessories and software, communication-related equipment, medical equipment, industrial machinery and equipment, office furniture and general office equipment, transportation equipment, and other general business equipment. It also leases and finances equipment, as well as supplies software and services directly and through relationships with vendors and equipment manufacturers. ePlus sells its products primarily through direct sales force, inside sales representatives, and business development associates to commercial customers; federal, state, and local governments; K-12 schools; and higher education institutions. The company was formerly known as MLC Holdings, Inc. and changed its name to ePlus inc. in 1999. ePlus was founded in 1990 and is headquartered in Herndon, Virginia.
- [By Monica Gerson]
ePlus Inc. (NASDAQ: PLUS) is estimated to post its quarterly earnings at $1.21 per share on revenue of $284.62 million.
Tilly’s Inc (NYSE: TLYS) is expected to post a quarterly loss at $0.07 per share on revenue of $119.93 million.
Hot Railroad Stocks To Invest In Right Now: Lumber Liquidators Holdings, Inc(LL)
Lumber Liquidators Holdings, Inc. (Lumber Liquidators), incorporated in November 12, 2009, is a multi-channel specialty retailer of hardwood flooring, and hardwood flooring enhancements and accessories. The Company offers an assortment of exotic and domestic hardwood species, engineered hardwood, laminate and resilient vinyl flooring direct to the consumer. The Company also features the renewable flooring products, bamboo and cork, and provides a selection of flooring enhancements and accessories, including moldings, noise-reducing underlay, adhesives and flooring tools. The Company also provides in-home delivery and installation services to certain of its customers. The Company’s product categories include Solid and Engineered Hardwood; Laminate; Bamboo, Cork and Vinyl Plank, and Moldings and Accessories. The Company sells its products primarily to homeowners or to contractors on behalf of homeowners. Lumber Liquidators operates over 375 stores located in over 50 states a nd Canada. In addition to its stores in Ontario, Canada, the Company has over 370 the United States stores in operation.
The Company operates in a holding company structure with Lumber Liquidators Holdings, Inc. serving as its parent company and certain direct and indirect subsidiaries, including Lumber Liquidators, Inc., Lumber Liquidators Services, LLC, Lumber Liquidators Production, LLC, and Lumber Liquidators Canada Inc., conducting its operations. The Company offers wood flooring under over 20 brand names, led by its flagship Bellawood. The Company’s hardwood flooring products are available in various widths and lengths. It offers over 400 different flooring product stock-keeping units. In addition to the store locations, the Company’s products may be ordered, and customer questions/concerns addressed, through both its call center in Toano, Virginia, and its Website, www.lumberliquidators.com. The Company finishes the majority of the Bellawood products on i ts finishing lines in Toano, Virginia.
- [By Monica Gerson]
Lumber Liquidators Holdings Inc (NYSE: LL) is projected to report a quarterly loss at $0.24 per share on revenue of $237.44 million.
Fossil Group Inc (NASDAQ: FOSL) is estimated to post its quarterly earnings at $0.15 per share on revenue of $666.60 million.