January 12, 2010
An odd combination and not one your dentist is likely to favor. On the NYSE today aluminum was headed down while chocolate was on the rise. This is the week when companies begin reporting their 4th quarter 2009 earnings. The first big name to do so was Alcoa, which announced late yesterday their best quarter in over a year. But since Alcoa missed the target that Wall Street had expected, the shares were punished: down 11% at today's close. Alcoa is still down about 70% from where it traded in 2007 and is not, in my opinion, on its way out of business.
Much sweeter news came from Hershey today. America's best-known confectioner had been in talks with Italian candy maker Ferrero to bid for Cadbury, but they appear to have broken off talks. Hershey shares surged on the news with shareholders taking comfort that Hershey would not be taking on the significant debt required to buy the much-larger Cadbury. Meanwhile Kraft, the only company with an offer on the table for Cadbury, also surged as potential competitive bidders appeared to be dropping out. My most secure prediction of the year is that regardless of the outcome of this chocolate-merger frenzy you will still be able to get Hershey and Cadbury bars in the checkout line at Wegman's. My favorite: Reese's Peanut Butter cups.
George T. Conboy
(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp. The author's opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).