Among the biggest winners in Thursday's early trading are Hasbro
(NYSE:
HAS
)
and
Discover Financial Services (NYSE:
DFS
)
.
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|
Top Percentage Gainers -- Thursday, June 24,
2010
|
|
Company Name (Ticker)
|
Intra-Day Price
|
Intra-Day
% Gain
|
52-Week High
|
52-Week Low
|
Discover Financial
(NYSE:
DFS
) |
$14.35 |
+2.4%
|
$17.36 |
$9.00 |
| Hasbro (NYSE:
HAS
) |
$42.06 |
+2.3%
|
$43.39 |
$22.79 |
|
*Table includes companies with minimum market
capitalizations of $200 million and three month trading
volumes of at least 100,000 shares. All percentage returns
are listed as of 11:40AM Eastern Standard Time . Click on
ticker symbols for up-to-the-minute price quotes and
percentage gain data.
|
Hasbro's Cash Flow
Appeal
A leading private equity (
PE
) firm apparently asked to look under the hood at toy and game
maker
Hasbro (NYSE:
HAS
)
, according to
The Wall Street Journal
. Shares were up nearly +10% in pre-market trading. But right after
the market opened, Hasbro issued a statement that it's not for
sale. So shares are settling for a modest +2% gain in Thursday
trading in an otherwise down market.
A
buyout
made sense. PE firms like to buy companies that generate a high
degree of
cash flow
, so they can more easily secure loans to fund the deal. And Hasbro
looks set to become a cash flow machine, as
we noted last month
.
Presumably, any potential buyer would have to pay a sweet price, as
many promising aspects of Hasbro's
business model
have yet to hit the
income statement
. For example, the new children's TV network The Hub, a joint
venture with
Discovery Communications (Nasdaq:
DISCA
)
, has yet to go live, but if it garners solid ratings, would
quickly become a valuable asset. And there is a big slate of motion
pictures that use Hasbro toy and game characters set for release
during the next 24 months.
Action to Take -->
We speculated that shares of Hasbro would eventually trade up to
$60, which is probably what PE buyers would need to offer to snatch
this price. Even absent a buyout, shares have considerable
upside.
-------------------------------------
Consumers Slowly get Better
Shares of
Discover Financial Services (NYSE:
DFS
)
are getting a +2% lift after the credit card issuer posted solid
quarterly results after the market close on Wednesday. Most
important, Discover's clients are starting to get caught up with
their overdue bills, as the number of accounts in delinquency has
started to shrink. Credit card issuers are required to estimate
what percentage of their accounts will become uncollectable. That
metric shrank sequentially from 8.51% to 7.97%, and management
believes it may fall as low as 7.50% in the current quarter. That
number is still too high, but at least it's going in the right
direction.
Just because consumers are increasingly able to pay their bills,
does it mean that they will start spending more? Discover says yes.
Customers charged $23 billion worth of goods and services on the
eponymously-named cards in the most recent quarter, +6% higher than
a year ago. That helped boost
EPS
(excluding charges) to $0.46, more than double the year-ago take,
and well above the $0.09 consensus forecast.
Action to Take -->
Barring a double dip, earnings look set for an upward revision.
2011 profits may come in closer to $2 a share. And that might push
shares up to the $20 mark, more than +30% above current levels.
Shares have been stuck in the $14 to $16 range since last fall, but
a breakout may be due.
-- David Sterman
Staff Writer
StreetAuthority
Disclosure: David Sterman does not own shares of any security
mentioned in this article.