The earnings reports that have been released this week have for the most part been positive with corporate earnings slowly starting to rise coming off of the past two years of declines. The economic numbers that came out this morning also showed that GDP was ticking up. While jobless numbers were still weak, the positive earnings and economic numbers reinforce my view that the market and economy are improving, albeit at a slow pace.
On individual stock news, Etrade reported earnings numbers that were below expectations and the stock is down a big 11% today. This, while incredible overdone, is somewhat understandable because the stock has performed so well over the last month. The main reason for the earnings miss was because overall trading volume was down, not doubt the result of traders and investors not wanting to participate in the markets because of all the uncertainty regarding the European financial crisis. I believe as the economy and earnings continue to improve, and the gradual reallocation out of bonds and into stocks by investors, Etrade's business will drastically improve. All that being said, and especially in light of the stock being sold off so much, the possibility of Etrade being acquired by another company is huge....and as I've said I fully expect such to happen. I have not added to my position in Etrade yet but I will be a buyer if it continues to approach the $8.00 area, where I see a great deal of support. With the stock price being as depressed as it is, the company is a much more attractive to someone looking to acquire the company.
One stock that I'm eyeing as a new investment is Och Ziff Capital Management (OZM). The company is a money management firm and recently had great earning and at $9.85/share, I think the stock will trade up into double digits soon (and they pay a hefty dividend). With respect to mutual funds, I would still not add to any U.S. stocks funds until the market comes down in price more.
The general markets are overall flat so far, and I view this as a good thing as I'd like to see some consolidation in stocks before they continue their advance higher.
