Why Monsanto, Jack in the Box, and Weight Watchers International Jumped Today
Thursday's closing numbers from the Dow and S&P 500 might make it seem as though the day was a quiet one. But even though both indexes finished within 0.05% of a flat-line performance, the little-changed close belied a volatile day in which the Dow moved in a 150-point range.
Technology stocks weighed on the market, and concerns about the state of the retail industry also put pressure on investors. Yet many stocks climbed sharply, and among the best performers were Monsanto (NYSE: MON) , Jack in the Box (NASDAQ: JACK) , and Weight Watchers International (NYSE: WTW) .
Monsanto grew 8% after reports surfaced speculating that the agricultural specialist might be a potential target in a takeover deal. After Monsanto has spent several years trying to find a partner that it could buy, some now believe that conglomerates like BASF or Bayer might be interested in making a bid for the company.
The reason that the agricultural chemicals and seeds industry has turned toward consolidation is, in part, that a downturn in the farming community has reduced demand for yield-enhancing products. A potential combination of Monsanto and one of the two competing German companies in the space could create a new leader in the global market, but many analysts are skeptical that a deal will ever get done.
Jack in the Box finished up 15% in the wake of the fast-food company's report of its fiscal second-quarter results Wednesday afternoon. The company's namesake stores had relatively tepid performance, with comparable-restaurant sales coming in flat compared to year-ago levels.
However, the Qdoba Mexican-food franchise likely benefited from the woes of one of its major competitors in the fast-casual space, and comps climbed 3.1% for company-owned Qdoba stores during the quarter. From a longer-term perspective, the fact that Jack in the Box has successfully worked to cut overhead costs and other expenses will have a lot of value in generating healthier growth down the road for the fast-food chain.
Finally, Weight Watchers International climbed 5%. Late Wednesday, the weight-loss specialist emerged victorious in a securities-fraud lawsuit.
The suit alleged that the company misled shareholders by downplaying or misstating the extent to which certain factors were putting pressure on its financial results, including the fact that its enrollment numbers were down, and that weight-loss apps on mobile devices were eating into its business. A federal judge said that the class-action plaintiffs hadn't proven that the company had taken deliberate action to exaggerate its potential for success, and the court accepted the idea that being optimistic was not, in itself, baseless given other considerations.