Early Financial Fireworks Hit the Markets, Will the U.S. Emerge the Leader in 2nd Half of Year
“Am I part of the cure or am I part of the disease?” – Chris Martin, Coldplay
With all the mixed signals driving uncertainty and worry lately, the consensus has been a foggy windshield with no clear direction. We can’t even tell if one of the largest bear market rallies in history is fizzling or pausing.
On Wall Street, uncertainty is certainly a buzz killer for the irrationally exuberant. If you need a towel to wipe away the fog, take a look at Your Cheat Sheet to the Psychology of Market Cycles. This is a great way to see the forest from the trees.
While contemplating where we’re headed, let’s take a look at some data points which indicate the US has the potential to lead the world out of this recession …
Glimpses of Great American Entrepreneurial Growth
Recession leader Chipotle (NYSE:CMG) is still proving the burrito craze is here to stay for the new decade with affordable, healthy quick food for the American people. Chipotle could be the McDonald’s (NYSE:MCD) of this new decade.
If you are looking for other steady growers, then you should look at Best Buy’s (NYSE:BBY) dark horse competitor Systemax (NYSE: SYX). Electronics retailer Systemax has delivered record sales growth over the past year.
These are just two examples of companies setting the stage for growth. Here are some other reasons I see positive signs on the horizon:
M&A is Heating Up Again while IPOs Climb
This week, the National Venture Capital Association (NVCA) reported some very compelling data illustrating early signs of a gradual recovery process for the U.S. economy. On the M&A front, 92 mergers and acquisitions occurred in the quarter, up 42% over last year. Dow Jones (NASDAQ: NWSA) reported 79 mergers and acquisitions valued at $4.3 billion, vs. 82 deals and $2.9 billion a year ago. The largest M&A deal in the U.S. in the 2nd quarter was Google’s (NASDAQ:GOOG) acquisition of AdMob for $750 million.
According to other reports released this week, the most IPOs were filed in two and a half years in the 2nd quarter of this year. The National Venture Capital Association said the 2nd quarter experienced 17 venture-backed IPOs valued at $1.3 billion. The most largest and most notable IPO of the year came this week from Tesla Motors (NASDAQ:TSLA), a California maker of electric cars, valued at around $200 million dollars.
June Stock Buybacks are Good for Future Stock Prices
Stock buybacks decrease the number of shares outstanding and increase the value of each remaining share. Here are some companies returning value to shareholders:
On June 11th, Netflix (NASDAQ: NFLX) authorized a $300 million stock-buyback program. On June 14th, CVS Caremark (NYSE: CVS) announced a new $2 Billion share repurchase plan. On June 16th, AutoZone (NYSE:AZO) raised its buyback plan to $500 million. On June 17th, Northrop Grumman (NYSE:NOC) announced a $2 Billion share repurchase plan. On June 18th, Genzyme (NASDAQ:GENZ) declared a $1 Billion accelerated stock buyback. On June 21st, Dollar Tree (NASDAQ:DLTR) announced a $500 Million stock buyback. On June 22nd, Adobe Systems (NASDAQ: ADBE) topped earnings and announced a $1.6 Billion stock buyback. On June 24th, Kroger (NYSE: KR) announced a $500 Million stock buyback.
Lastly, on June 30th, the biggest of them all, internet bellwether Yahoo! (NASDAQ:YAHOO) authorized a $3 billion stock-buyback program over the next three years.
Keep your eye out for more stock buybacks because it proves executives are not hoarding cash in fear of a Great Depression.
Happy 4th to the Entrepreneurial Spirit
Here’s a toast to independence, freedom, and the opportunistic pursuit of the American Dream. Think about what you can do to help the U.S. heal faster and recover quicker as you watch the fireworks on this 2010 4th of July weekend. Positivity yields progression, negativity yields regression. Let your 2nd half 2010 ambitions marinate under the fireworks…