General Electric (GE) +12.72%
Standard & Poor’s finally downgraded GE’s credit rating one-level to AA+ with a “stable” outlook. The one-notch downgrade was less severe than many had feared and will not trigger any additional collateral postings for outstanding GE debt. This calmed investors’ previous fears of a downgrade below AA- (three notches below AAA), which would have required GE to post additional collateral.
The main reason that S&P only modestly lowered the rating is that GE’s cash-generation capabilities remain strong – something we have preached for quite a while now. While it they weren’t strong enough to support an inflated dividend, GE produces enough cash to support its finance arm and prevent the need to issue more equity that dilutes current shareholders
The GE Capital meeting on March 19 should provide a tremendous level of disclosure, which will hopefully appease concerns rather than aggravate them.
Wal-Mart Stores (WMT) +3.12%
Wal-Mart is pushing to provide fresher produce in an effort to win over more grocery shoppers. This Bloomberg article is an interesting look at an important piece of Wal-Mart’s business.
Groceries account for more than 40 percent of sales at Wal-Mart’s U.S. stores and have outpaced the growth of most other products in the past year. The company claims that grocery gains are helping sell small kitchen appliances, cookware and dining sets as shoppers entertain at home to save money.
Since they have entered into the grocery business, the quality of Wal-Mart’s produce has lagged behind competition. Wal-Mart has been improving its produce departments by expanding its network of local suppliers. Buying produce locally provides the added bonus of lower freight costs and reduced fuel consumption.
The quality of produce is often the main determinant for consumers choosing between grocery stores. Although we can’t expect Wal-Mart to become known for carrying the best produce, it is possible these efforts will boost store traffic and sales.
Pfizer (PFE) +9.62%
Pfizer said cancer drug Sutent, showed “significant benefit” in patients with a form of pancreatic tumor. The drug is already approved for use against kidney and stomach cancer and had $847 million in sales last year.
Pfizer needs new treatments to help make up for the $10 billion it will start losing in 2011, when competitors begin selling generic copies of Lipitor, its top-selling cholesterol pill.
Lockheed Martin (LMT) +4.88%
This Bloomberg story examines Lockheed’s most important program for their long-term growth, the F-35, and how they plan to revolutionize the plane assembly process.
Quick Hits
- Oil Prices Depend More on G20 Leaders Than OPEC
- Is Buffett Wrong? Four Reasons the Recession May Be Easing
- Bank of America Expects to Post Full-Year 2009 Profit
- Stimulus Spending by State
Peter Lazaroff, Junior Analyst
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