Rig Count Rise Weighs on Crude Oil

oil_rig#BakerHughes $BHI reports that the U.S. rig count is up 8 rigs from last week to 885, with oil rigs up 9 to 712, gas rigs down 1 to 172, and miscellaneous rigs unchanged at 1.

The U.S. Rig Count is up 479 rigs from last year’s count of 406, with oil rigs up 394, gas rigs up 85, and miscellaneous rigs unchanged.

The U.S. Offshore Rig Count is up 2 rigs from last week to 21 and down 1 rig year over year.

The Canadian Rig Count is down 2 rigs from last week to 80, with oil rigs up 2 to 29 and gas rigs down 4 to 51. The Canadian Rig Count is up 37 rigs from last year’s count of 43, with oil rigs up 13, gas rigs up 25, and miscellaneous rigs down 1 to 0.

On the news, Crude oil prices (WTI) dropped to $47.35 per barrel before rebounding to its current price of $47.35 per barrel.

#WTI – West Texas Intermediate

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Apple $AAPL Stock Reaches its All Time High on $1000+ iPhone 8

apple-cash#Merrill Lynch and Goldman Sachs upped their price targets on #Apple $AAPL , while reiterating their Buy ratings on the shares, citing the potential for new products and “significant upside” in iPhone Average Selling Price, or ASPs.

NEW CATEGORIES: In a research note to investors, Bank of America Merrill Lynch raised its price target for Apple to $180 from $155. While noting that last year Apple accounted for 10% of global consumer spending, the analyst told investors that he believes the markets that the company currently addresses can be about $550B in 2020 and close adjacencies can be $300B. This excludes potential Total Available Market, or #TAM, from healthcare and automotive, he pointed out. He also noted that given the iPhone maker’s “immense” net cash, Apple can easily enter most markets through M&A.

Moreover, the analyst argued that new products and categories add to its already “significant” growth opportunity in its existing areas, and that ignoring the “shadow TAM” of new product opportunities understates Apple’s true potential. The analyst believes the tech giant still has room to grow and gain share in the traditional areas of smartphones, tablets, wearables and desktops/laptops, while new areas to explore include game consoles/handheld games, cameras/camcorders, DVD players/Blu-ray players, set-top boxes, streaming audio and video services, wearables, TVs/HDTVs and Virtual Reality.

HIGHER IPHONE PRICES: Meanwhile, Goldman Sachs was also bullish on Apple this morning, raising her price target on the shares to $170 from $164 ahead of the upcoming iPhone 8 product cycle. The analyst told investors in a research note of her own that she sees “significant upside” in iPhone ASPs, expecting the 128GB model to be priced at $999 and the 256GB at $1,099. Given the analyst iPhone SKU analysis, the analyst believes the iPhone 8 will drive well over 50% of total new iPhone shipments in the first four quarters.

Based on the higher mix and ASP of the iPhone 8, the analyst also estimates blended iPhone ASPs to be up 16% year over year in FY18, and sees a relatively modest 40bp headwind to iPhone gross margins in 2018 as additions to the bill of materials and higher memory costs are largely offset by the expected $130 ASP increase in the iPhone 8.

PRICE ACTION: Since start of the month, shares of Apple more than $11. They last traded at $156.10. Earlier in the session the stock hit an all time high of $156.42 per share.

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Retail Sales Rebound in April

retailsalesU.S. #retail sales rose in April, slightly beat estimates with a 0.4% April bounce and a 0.3% ex-auto increase that followed upward revisions versus the last reported March levels and prior levels through February revealed with annual revisions on April 26.

Analysts saw April retail sales boosts from gains of 0.7% for auto dealers, 1.2% for building materials, and 0.2% for gasoline after big upward revisions. Analysts saw a likely March and April sales lift from big tax refund delays from February.

Analysts left Q2 GDP growth estimates at 3.2%, though analysts now expect a 3.7% (was 3.6%) Q2 pace for real consumption. Analysts still expect a Q1 GDP growth boost to 0.9% from 0.7% with no consumption revision from 0.3% growth.

Analysts now assume a 0.6% (was 0.5%) April #PCE rise in nominal terms with a 0.4% (was 0.3%) rise in “real” terms, alongside a 0.2% PCE chain price rise that tracks today’s CPI gain.

The savings rate should slip to 5.8% from 5.9% in March.

The business inventory report later this morning will reveal a flat March sales figure after a 0.2% February increase. Today’s retail sales data are consistent with a 0.4% business sales rise in next month’s April report.

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Abercrombie & Fitch $ANF is for Sale

anfAfter #Abercrombie & Fitch $ANF confirmed that it had preliminary talks with several parties regarding a potential deal, RBC Capital analyst says there is less than a 25% chance of a deal occurring.

Among the hurdles are the large declines in the stocks of a number of companies that have bought retailers recently, Abercrombie & Fitch’s high overseas exposure, and its “still struggling adult brand,” according to the analyst. However, he says there is some strategic rationale for a deal between #AmericanEagle $AEO and Abercrombie & Fitch.

Such a transaction would give the combined company “landlord clout and real estate rationalization control; and “promotional and positioning control over three teen/young adult brands,” according to the analyst.

He thinks the combined company could generate EPS of about $1.50 by fiscal 2019, but warns that the deal would be dilutive to Abercrombie & Fitch in the nearer term and could erode value as other recent deals in the sector have done.

The analyst keeps an Underperform rating on Abercrombie & Fitch and an Outperform rating on American Eagle.

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The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.