Wednesday’s Top 3 Headliners: GKM, COP, GSK

GMAC LLC 7.25% Notes (NYSE: GKM)

GMAC LLC (GMAC) is a globally diversified financial services firm, offering financing to General Motors (GM) and Chrysler dealerships and their customers. The Company operates in three lines of business: Global Automotive Finance, which offers a range of financial services and products (directly and indirectly) to retail automotive consumers, automotive dealerships, and other commercial businesses, Mortgage (ResCap), which engages in the origination, purchase, servicing, sale, and securitization of consumer (i.e., residential) mortgage loans and mortgage-related products; and Insurance, which offers vehicle service contracts and underwrites personal automobile insurance coverages, homeowners’ insurance coverage, and selected commercial insurance coverages in the United States, Canada and internationally.

GMAC was founded in 1919.

Share Statistics

(29-Oct-09)

2007

2008

% Chg

Q2 ‘08

Q2 ‘09

% Chg

Symbol

GKM

Net Interest Income, $Mn

6,441

6,525

84%

2,512

1,551

-38.26%

Current price

$17.49

Gross marg.

52wk Range:

3.40-18.37

Oper. margin

5.25%

Avg Vol (3m):

22,275

Net Profit marg.

1.64%

Market Cap.

N/A

Dil. Shares Outst.

N/A

EPS, $

Source: Reuters.com, SEC Filings

Investment Highlights


GMAC and the Treasury Department are reportedly in talks for a third round of capital infusion for the troubled auto lender. According to a Detroit News Washington Bureau report citing sources closed to the deal, “GMAC is likely to receive about $4 billion in additional Treasury money in a deal that should be finalized by next week, but the exact amount has not been determined and could be higher.”

GMAC has received $12.5 billion in U.S. Treasury loans since last December. Following the capital boost, the government secured a 35% stake in GMAC.

With the latest capital infusion, The Wall Street Journal reported late Tuesday that the government’s stake could rise if the new preferred shares were ever converted into common stock. The paper sees another $2.8 billion to $5.6 billion of capital infusion from the government.

Technical Analysis

Moving Average

GKM has been relatively stable recently. This is evidenced by the width of its Bollinger Bands which are tighter than normal. Additionally, GKM is trading within its Bollinger Bands. This is a normal condition and suggests that the stock is neither overbought nor oversold relative to the recent price action.

MACD

GKM’s MACD is indicating a weak bearish signal. Although the indicator is above the critical level of 0, which implies that the underlying moving averages are bullish, the MACD has crossed below its 9day moving average or signal line. This suggests that positive momentum has begun to slow.

Bollinger Band

GKM has been relatively stable recently. This is evidenced by the width of its Bollinger Bands which are tighter than normal. Additionally, GKM is trading within its Bollinger Bands. This is a normal condition and suggests that the stock is neither overbought nor oversold relative to the recent price action.

Source: http://www.scottrade.com


ConocoPhillips (NYSE: COP)

ConocoPhillips (COP) is a global integrated energy company. The Company’s business is organized into six segments: Exploration and Production (E&P), which explores for and produces oil, natural gas and natural gas liquids around the world; Midstream, which gathers, processes, and markets natural gas; and fractionates and markets natural gas liquids in the United States and Trinidad; Refining and Marketing (R&M), which purchases, refines, markets, and transports crude oil and petroleum products, including gasoline, distillates and aviation fuels; LUKOIL Investment, which consists of 20% interest in OAO LUKOIL, an international integrated oil and gas company; Chemicals, which manufactures and markets petrochemicals and plastics.; and Emerging Businesses, which engages in the developments of new technologies and businesses.

As of December 2008, the Company had exploration operations in 18 countries and production in 14 countries; worldwide refining capacity of 2.67 million BPD; and 63 natural gas processing plants and approximately 60,000 miles of gathering lines. As of the same period last year, its 50%-owned Chevron Phillips Chemical Company LLC (CPChem) had five research and technology centers and 35 production facilities in nine countries.

Founded in 1917, COP is based in Houston, Texas, with additional offices in Belle Chasse and Westlake, Louisiana.

Share Statistics

(29-Oct-09)

2007

2008

% Chg

Q2 ‘08

Q2 ‘09

% Chg

Symbol

COP

Revenue, $Mn

194,495

246,182

26.57%

73,353

36,630

-50.06%

Current price

$49.30

Gross marg.

21.28%

18.31%

297 b.p.

18.04%

15.65%

-239 b.p.

52wk Range

34.12-57.44

Oper. margin

-8.95%

-1.43%

6.50%

793 b.p.

Avg Vol (3m):

12,778,000

Net margin

6.11%

-6.90%

-1,301 b.p.

7.41%

3.54%

-387 b.p.

Market Cap.

73.11B

Dil. Shares Outst.

1.48B

EPS, $

8.905

3.579

-59.81%

3.350

0.892

-73.37%

Source: Reuters.com, SEC Filings, FY ending December

Investment Highlights

Shares of COP were driven lower Wednesday after the Company reported a 71% decline in third-quarter profit, attributable to lower commodity prices and declining refining margins. In its earnings report, the Company said it earned $1.5 billion, or $1.00 a share in the third-quarter. Meanwhile, it reported a 5% year to date increase in its E&P production, with international crude oil projects adding approximately 130,000 BOE per day. According to the Company, this partially offset the decline in earnings, along with cost reduction benefits of more than $0.4 billion after-tax across the Company.

“Although we operated well, we were adversely impacted by low North American natural gas prices and worldwide refining margins, which led us to curtail approximately 300 MMCFD of natural gas production starting in late August and reduce refinery runs,” COP CEO Jim Mulva stated in the Company’s press release. “During the quarter, R&M returned to positive earnings, and both R&M and Chemicals continue to benefit from low utility costs. In addition, for the third consecutive quarter, our operating costs were down compared with 2008, and our full-year cost reduction target of $1.4 billion has been achieved.”

Technical Analysis

Bollinger Bands

COP is trading within its Bollinger Bands. This is a normal condition and suggests that the stock is neither overbought nor oversold relative to the recent price action.

MACD

COP’s MACD is indicating a weak bearish signal. Although the indicator is above the critical level of 0, which implies that the underlying moving averages are bullish, the MACD has crossed below its 9day moving average or signal line. This suggests that positive momentum has begun to slow.

Source: http://www.scottrade.com

GlaxoSmithKline plc (ADR) (NYSE: GSK)

GlaxoSmithKline (GSK) is one of the world’s leading research-based pharmaceutical and healthcare companies. Together with its subsidiaries, GSK engages in the creation, discovery, development, manufacture and marketing of pharmaceutical products, over the counter (OTC) medicines, and health related consumer products. Its operations are organized in two segments: Pharmaceutical, which offers prescription medicines in the therapeutic areas, such as respiratory, central nervous system, anti-virals, anti-bacterials, metabolic, vaccines, cardiovascular and urogenital, oncology, emesis and dermatology; and Consumer Healthcare, which offers OTC medicines, such as alli, a weight loss medicine; Panadol, a paracetamol/acetaminophen analgesic; smoking control products under the NicoDerm, NiQuitin CQ, Nicabate, and Nicorette names; and other brands, including Breathe Right nasal strips, Tums, Citrucel, Contac and FiberChoice.

The Company operates in the United States, Europe, Japan, the Asia Pacific, the Middle East, Latin America, Africa and Canada.

Founded in 1935, GSK is based in Brentford, the United Kingdom.

Share Statistics

(29-Oct-09)

2007

2008

% Chg

Q2 ‘08

Q2 ‘09

% Chg

Symbol

GSK

Revenue, $Mn

22,716

24,352

7.20%

5,874

6,747

14.86%

Current price

$40.67

Gross marg.

77.08%

76.28%

-80 b.p.

76.59%

75.97%

-62 b.p.

52wk Range:

27.15-42.18

Oper. margin

27.14%

29.30%

32.50%

320 b.p.

Avg Vol (3m):

1,257,850

Net margin

22.95%

18.90%

-405 b.p.

21.89%

21.27%

-62 b.p.

Market Cap.

115.15B

Dil. Shares Outst.

2.83B

EPS, $

0.990

1.119

13.03%

0.291

0.330

13.40%

Source: Reuters.com, SEC Filings, FY ending December

Investment Highlights

Boosted by strong sales of its flu drug Relenza, GSK reported by an 11% increase in its third quarter earnings. On Wednesday, GSK announced a net profit of 1.44 billion pounds for the quarter, while revenue rose 15% to 6.76 billion pounds. Analysts were looking for a profit of 1.19 billion pounds on sales of 6.76 billion pounds, according to data compiled by Dow Jones Newswires. GSK CEO Andrew Witty stated that the Company’s third-quarter performance reinforces its expectations of an improved performance in the second half of 2009.

Looking forward to Q4, the Company expects to get a further boost from its swine flu vaccines. According Witty, the consensus forecast that the company will make approximately 1 billion pounds in sales of H1N1 vaccines in Q4 is fairly accurate.

“We continue to have government express an interest and signing contracts with us and we anticipated that will continue for some time to come, although the lion’s share is probably passed,” Witty said in a conference call with investors.

Technical Analysis

Moving Average

GSK’s recent volatility has been greater than normal. This is evidenced by the increased distance between the upper and lower Bollinger Bands. These bands measure volatility using standard deviation and a large width is due to high volatility. Additionally, GSK is trading within its Bollinger Bands. This is a normal condition and suggests that the stock is neither overbought nor oversold relative to the recent price action.

MACD

GSK’s MACD is indicating a weak bearish signal. Although the indicator is above the critical level of 0, which implies that the underlying moving averages are bullish, the MACD has crossed below its 9day moving average or signal line. This suggests that positive momentum has begun to slow.

Bollinger Bands

GSK is trading within its Bollinger Bands. This is a normal condition and suggests that the stock is neither overbought nor oversold relative to the recent price action.

Source: http://www.scottrade.com

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