Zacks Bull and Bear of the Day Highlights: Meritage Homes, NASDAQ OMX Group, Dean Foods, WhiteWave Foods and JPMorgan Chase
Zacks Equity Research
For Immediate Release
Chicago, IL – May 29, 2013 – Zacks Equity Research highlights Meritage Homes (MTH) as the Bull of the Day and NASDAQ OMX Group (NDAQ) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Dean Foods Company (DF), WhiteWave Foods Co. (WWAV) and JPMorgan Chase & Company (JPM).
One of the biggest stories so far in 2013 is the continued surge of the housing market. Prices, construction, and sales of homes are all doing quite well, suggesting to many that this important corner of the economy is back on track.
This is confirmed by recent Case-Shiller Home Price Index data for April, which further suggested bullishness in the housing market. Non-seasonally adjusted data for the 20 city index showed a 10.9% increase in home prices, compared to a prior reading of 9.3%, and a consensus forecast of 10.2%.
Additionally, the double digit increase is the first since before the bubble burst (the last was in May 2006), while the 1.1% monthly increase was the first such four month streak since 2005, according to Bloomberg. Clearly, housing still has plenty of room to run so investors may still have time to make a play on homebuilders for solid gains this summer.
While there a number of companies that target homebuilders, one that has probably flown under your radar is Meritage Homes (MTH). This is a relatively small company—market cap under $2 billion—which is engaged in the designing and building of single-family homes. The main business of MTH is largely in the Southwest, and West, though it also has some reach in the South as well.
Given the company’s focus on single family homes, it is a prime target to benefit from the incredible run in the housing sector. Analysts have begun to take note of this trend too, boosting their earnings expectations for the company in the near term.
The outlook for many financial companies is quite strong as we approach the second half of the year. Firms have been especially strong in the consumer and lending markets, though there is some weakness developing in one corner of the sector, the securities exchanges industry.
This segment has seen a low level of growth, while competition is heating up among the few major players left. The trend is starting to take its toll on a few companies in the space, despite the overall bullishness for financials, and especially so on the outlook for NASDAQ OMX Group (NDAQ).
NASDAQ is a well known exchange that has specialized in listing high flying technology companies. Among the companies listed on its flagship U.S. exchange include Apple, Google, Microsoft, Intel and Facebook, just to name a few.
Clearly, NASDAQ has developed an impressive lineup of companies that trade on its exchange, suggesting a pretty wide moat. However, some cracks have begun to build in NASDAQ’s solid story, as evidenced by recent earnings estimate trends.
Dallas-based leading food and beverage company, Dean Foods Company (DF) recently announced the completion of its previously stated allocation of a portion of its remaining stake in The WhiteWave Foods Co. (WWAV) to its shareholders.
Dean Foods distributed 47,686,000 Class A shares and 67,914,000 Class B shares of WhiteWave on a pro rata basis on May 23 to shareholders of record as of May 17. Consequently, the company now has a minority stake in WhiteWave. Dean Foods, which currently carries a Zacks Rank #3 (Hold), appointed JPMorgan Chase & Company (JPM) as the financial advisor for this transaction, which had deemed it eligible as a tax-free distribution.
On the basis of Dean Foods’ outstanding number of shares as of May 17, its shareholders got 0.25544448 and 0.36380189 shares of WhiteWave’s Class A and Class B, respectively, for every share of the parent company held by them.
However, Dean Foods has not distributed the fractional shares of WhiteWave and has decided to sell them in the open market. The net proceeds from this transaction will later be distributed to shareholders of the company who were eligible for WhiteWave fractional shares.
Dean Foods continues to retain the remaining 34,400,000 Class A shares or approximately 19.9% stake in WhiteWave, which will likely be distributed within the next 18 months in one or more tax-free transactions.
Formerly, WhiteWave was a wholly-owned subsidiary of Dean Foods. Last year, however, the latter opted for an Initial Public Offering (:IPO) to separate the maker of Silk soy products and Horizon Organic dairy products. Following the completion of the IPO, Dean Foods held 80% controlling interest in WhiteWave.
We believe that these strategic moves will boost the company’s shareholder value and present growth opportunities for both Dean Foods and WhiteWave.
Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.
About the Analyst Blog
Updated throughout every trading day, the Analyst Blog provides analysis from Zacks Equity Research about the latest news and events impacting stocks and the financial markets.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD from MIT Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment
Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=4582.
Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.
