Stocks Remain Lower In Early Afternoon; Centene Plunges - Investors Business Daily Stocks Remain Lower In Early Afternoon; Centene Plunges - Investors Business Daily

Monday, June 11, 2012

Stocks Remain Lower In Early Afternoon; Centene Plunges - Investors Business Daily

Stocks Remain Lower In Early Afternoon; Centene Plunges - Investors Business Daily
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Markets Update

Mon, Jun 11 2012 00:00:00 E 00_WEB

Stocks remained marginally lower in early afternoon trading Monday on disappointment over Europe's rescue package for Spain's banks and worries about Greek elections this weekend.

The Nasdaq was down 0.2% while the S&P 500 and the Dow Jones industrial average were each down less than 0.1%. Volume was up 3% on both the Nasdaq and the NYSE compared with the same time Friday.

Eurozone leaders agreed on a $125 billion bailout for Spain's banks over the weekend, but investors fear it may not be enough to get Europe's No. 4 economy out of financial trouble. Meanwhile, investors continue to fret that Greece could leave the eurozone depending on the outcome of June 17 elections.

Centene (CNC) plunged 25% in massive volume after the Medicaid insurer said it would slash its 2012 profit outlook due to rising claims.

The stock holds a lowly 42 Relative Price Strength Rating. The Composite Rating is a middling 51.

The Fresh Market (TFM) fell 3% in strong trade after company insiders sold some $525 million worth of shares in the grocery chain. The stock is now back below a 55.07 buy point in a square-box base.

Mellanox Technologies (MLNX) climbed 5% after the company said it won a contract from Intel (INTC) to produce chip equipment for servers. The stock is trying to break out of a seven-week cup-without-handle base.

Intel was down less than 1% in quiet turnover.

Athletic apparel retailer Under Armour (UA) hit a new high, rising more than 2% in heavy volume. The stock is 3% above a 102.96 buy point from a flat base.

Francesca's Holdings (FRAN) jumped 6% in heavy turnover, after the women's fashions retailer last Friday jumped back above its 50-day moving average.

Questcor Pharmaceuticals (QCOR) rose more than 3% in strong trade. The stock briefly cleared a 46.05 buy point in a five-month cup base at the start of May, but pulled back to its 10-week line and has been forming a new base.

Elsewhere, Spirit Airlines (SAVE) plunged 8% in huge volume, approaching its 200-day moving average. The stock is now 28% off its recent high.

W.W. Grainger (GWW) sank 4%, falling back below its 200-day line, after reporting a 13% increase in same-store sales in May. The company said 5% of the increase was due to acquisitions.

See Also
  • Stocks Execute Negative Reversal As Volume Rises
  • Apple Reveals New MacBooks, Maps, Siri Uses
  • Intel chooses Mellanox's tech
  • Carriers worried about Europe
  • Under Armour
More Markets Update Articles:
  • Stocks Fall As Spain Deal Fails To Ease Fears
  • Stock Losses Mount In Afternoon; Under Armour Off High
  • Stocks Turn Down At Midday After Spain Bank Bailout
  • Stocks Mixed In Higher Volume; Questcor, Mellanox Gain
  • Leading Stocks Lean Higher; Centene Plunges

Japan Stocks Fall as Optimism Fades on Spain Bank Bailout - Bloomberg

June 12 (Bloomberg) -- Japanese stocks fell, paring yesterday’s gains, as surging Spanish and Italian bond yields stoked concern Europe’s latest bailout won’t ease the region’s debt crisis.

Nippon Sheet Glass Co. (5202), which gets 39 percent of its sales in Europe, lost 3.6 percent. Mitsubishi UFJ Financial Group Inc. (8306), Japan’s largest-listed lender, led banks lower. JFE Holdings Inc. led losses among steelmakers after China’s Baoshan Iron & Steel Co. cut prices on slumping demand. Nissei Build Kogyo Co., a builder of houses and parking lots, surged 13 percent on a share buyback plan.

The Nikkei 225 Stock Average (NKY) dropped 1.3 percent to 8,514.76 as of the 11:30 a.m. trading break in Tokyo, retreating from yesterday’s 2 percent advance, the biggest gain since April 18. The broader Topix Index lost 1.4 percent to 719.98 today with all but one of its 33 industries declining.

“Today, the market is choosing to see things are worse than expected about Spain, causing a sell-off,” said Akihiro Tsunoda, a senior investment manager at Sompo Japan Nipponkoa Asset Management Co., which manages about $63 billion in assets. “Officials are saying the same things about Spain, but it’s just that the market’s view is changing. This is an issue about market sentiment rather than a political one.”

To contact the reporter on this story: Yoshiaki Nohara in Tokyo at

To contact the editor responsible for this story: Nick Gentle at

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It seems that for the second summer in a row, the stock market is going to be at the mercy of the European debt crisis.

As I see it, there are three ways this could play out. First, politicians could come together, swallow their pride, and agree to help one another -- making their fates even more interdependent.

Second, the stronger European countries, tired of propping up the weaker ones, could kick habitual offenders out of the eurozone, essentially causing a couple of countries to default.

Or, most likely, the problem could be kicked down the road to be dealt with in the summer of 2013.

Make no mistake about it: If you have the power of foresight, you could end up being a big winner based in Europe. Just last week, fellow Fool Alex Dumortier made a compelling case for Spanish Banco Santander (NYSE: STD  ) , arguing that it was a cut above the rest of Spanish banks. Should Europe solve its fiscal problems together, Alex's call will likely be a successful one.

But for investors who want exposure to emerging markets without the risk that comes with Europe, there are solid alternatives. Today we'll look to Latin America and examine three companies that deserve your attention. Read to the end, and I'll offer up a special free report on our top stock for 2012.

Arcos Dorados (NYSE: ARCO  )
With a name that's Spanish for "Golden Arches," this company has the exclusive right to own and operate franchises of McDonald's in Latin America and the Caribbean. Currently, the company has 1,800 stores situated in 20 countries. If the company can operate even half as efficiently as its parent to the north, there's an enormous opportunity here.

Currently, the stock is trading about 50% off the highs it hit last September. This is largely due to the fact that its Caribbean and northern regions are struggling to earn a profit. It's concerning to see the Caribbean division losing money after years of operating profits -- but I think much of the downside is already priced into the stock.

Over the past three years, revenues have grown at a 12% clip. Same-store sales in Brazil, the company's largest market, were up 9.3% last year. Even more encouraging, sales in other South American countries were up a whopping 30% in 2011. At today's prices, shares trade hands for about 21 times estimated 2012 earnings.

PriceSmart (Nasdaq: PSMT  )
I called out this company, essentially the Costco of Latin America, as one of my core holdings last summer. Having lived in Costa Rica for close to a year, I got to see firsthand how crowded the parking lots were with both locals and gringos alike. The warehouse club is one of the only places to get certain goods in Latin America, and its business model isn't nearly as common there as it is in America.

Since last year, the company has returned 31%, handily beating the market by more than 26 percentage points. Comparable-store sales picked up as predicted last month, showing a 13.2% increase.

There are two key concepts to keep in mind with PriceSmart. First, the company is intentionally pushing down margins to drive traffic. Based on the comparable-store sales mentioned above, that strategy is working. Second, the company is slowly expanding into South America, a move that could open it to huge markets in the future.

MercadoLibre (Nasdaq: MELI  )
Finally, in MercadoLibre, investors have exposure to the eBay (Nasdaq: EBAY  ) , PayPal, Amazon, and Craigslist of Latin America -- all wrapped into one. In fact, eBay tried to break into the Latin American market years ago but was unsuccessful in breaking MercadoLibre's stranglehold. Instead of trying to beat the company, eBay joined forces with it: As of the end of 2011, eBay owned 18.4% of MercadoLibre.

Last quarter, revenue increased a whopping 36% for the company, while net income grew 40%. Perhaps more importantly for the long-term growth of the company, MercadoPago -- the company's version of PayPal -- had an 88% uptick in transactions.

Despite this, Wall Street was disappointed with the results and sent shares lower. That's good news for you. Even though shares trade hands at a hefty 38 times earnings, the company's market cap of just $3.2 billion reflects the fact that there's still plenty of room to grow.

Only our very best ideas
I'm confident enough that these three companies will outperform the market that I'm making bullish CAPScalls on all three in my All-Star CAPS portfolio. But if you want to know which of these three is the very best, then you need to check out "The Motley Fool's Top Stock for 2012." Inside this special free report, you'll see which of these three earned the honors and why. Get your copy of the report today, absolutely free!

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Fool contributor Brian Stoffel owns shares of MercadoLibre, PriceSmart, and Amazon. You can follow him on Twitter, where he goes by TMFStoffel.

The Motley Fool owns shares of Arcos Dorados Holdings, MercadoLibre, Costco, and Motley Fool newsletter services have recommended buying shares of PriceSmart, McDonald's, eBay, Costco,, and MercadoLibre. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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