bcs

CSX (NYSE: CSX), a transportation company whose competitors include Burlington Northern Santa Fe (NYSE: BNI), Norfolk Southern Corp. (NYSE: NSC), and Union Pacific Corp. (NYSE: UNP), reported earnings for the third quarter on Tuesday. The results weren't bad, driven in part by a drop in energy costs and an effort to keep costs under control.

Revenues increased 18%, approaching $3 billion. Earnings per share from continuing operations skyrocketed 40% to $0.94. As management pointed out, distributors are exploiting railways to the advantage of their supply chains. This is cool for shareholders of CSX, who obviously are hoping their company can successfully navigate the tough economic landscape that we're all trying to find maps for. And if oil prices continue to fall, then CSX may find it easier to manage its operations.

And there's another positive. According to this source, CSX beat analyst expectations by a penny. Unfortunately, according to that same source, management believes that it will hit the lower end of the spectrum in terms of its previous guidance. CSX is looking to earn between $3.65 and $3.75 per share for the fiscal year.

Taking everything together, I'm not sure I'd want to enter CSX at this time. It is well off the 52-week high, but it's not exactly near the 52-week low, either. Even though the energy picture might be moderating for the company, and even though its business does offer a compelling transportation service, I think a macro slowdown might send shares back toward the low. And according to this source, freight volume declined by over 2%. Problems in the automotive industry are negatively affecting CSX. Heck, problems in many industries will be with us for a while. CSX will see its operations pressured. And, again, that tells me that I'd have to see a big drop in the stock to find it attractive at this point.

Disclosure: I don't own any company mentioned; positions can change at any time.

Okay, here is an absolutely brilliant idea. And no, I'm not being sarcastic. According to this blurb at The Hollywood Reporter, News Corp. (NYSE: NWS) is interested in doing a sequel to the classic 1987 film Wall Street.

Some of you younger investors out there might not be familiar with the movie, but perhaps you're familiar with the now-famous quote "Greed, for lack of a better word, is good." It was uttered by the loathsome Gordon Gekko, whose alliterative name almost oozes corporate scandal and villainy. That character was played by Michael Douglas. Wall Street was directed by Oliver Stone and it portrayed the evil side of capitalism, replete with insider trading and share-price manipulation. It's considered a classic, iconic fictional snapshot of the current zeitgeist at the time: the only thing that mattered was upward mobility and accumulation of as much net worth as conceivable without consideration for the little guy. It came out around the time of the '87 market crash, so it had that going for it.

This is why News Corp. needs to fast-track the project. According to this source from May of last year, a sequel to Wall Street was already in the works. Obviously, the fact that The Hollywood Reporter mentioned the project this week means that execs at Fox feel that the timing for a sequel is approaching an optimal point. In fact, they really should try to get it out into the marketplace as quickly as they can, and hopefully with Michael Douglas reprising his role as Gekko (Douglas' return is not set in stone at this point). Not only could the movie gross a decent amount at the box office, but think of the synergy potential here.

News Corp. is fighting a battle with General Electric's (NYSE: GE) CNBC as we speak. The Fox Business Channel wants to take away as many viewers as possible from the stock-market network. Problem is, CNBC is a very powerful brand in its arena. Of course, that doesn't deter the pit bulls at Fox. If you had to describe the media company with only one word, that word would, by necessity, be a hyphenate: ultra-competitive. In fact, Fox Business Channel recently slammed BloggingStocks' own Jim Cramer in a recent promo (see a piece on this subject by Zac Bissonnette).

Supervalu (NYSE: SVU), whose competitors include Kroger (NYSE: KR), Safeway (NYSE: SWY), and Wal-Mart (NYSE: WMT), reported results for its fiscal second quarter. Net sales unfortunately didn't budge much at all. They came in essentially flat at $10.2 billion. Earnings per share on an adjusted basis were $0.61. According to this article, the expectations were for $0.69 per share. So, as can be seen, Supervalu lost the analyst-expectations game by a wide margin. Last year's adjusted earnings were $0.64 per share. Not only are those numbers disappointing, but comps saw a decrease of over 1%. And the gross margin suffered as well.

So, we have an earnings miss, flat revenue growth, and a decline in the bottom line. What does all that add up to in terms of market reaction? The stock sees a bid. At the time I began writing this piece, it was up 2.5%. As I found with Kroger, the market may be looking at supermarket businesses as defensive plays. Of course, at the time I covered Kroger, that company's numbers were a lot better than Supervalu's.

However, last time I checked the stock before sending this piece in, it was becoming more volatile along with the market, moving from green to red in quick succession. Given the weak data, I can't say that I'd be considering Supervalu right now. It is true that people will continue to shop at supermarkets even during economic downturns, but I'd rather look at something the supermarket sells as opposed to the supermarket itself to get defensive. I'd rather align my portfolio with the stronger brand equity of perhaps a Kraft (NYSE: KFT) or a Procter & Gamble (NYSE: PG) than a Supervalu.

Disclosure: I don't own any company mentioned; positions can change at any time.

Waste Management (NYSE: WMI) really rocketed on Monday. Its shares closed up nearly 18% to a final price of $30.39. Volume was heavy. No doubt the company's preliminary earnings report helped get things going for the company that makes its money off ridding the world of trash.

For the third quarter, Waste Management is forecasting an increase in its top line of 3.6%. It should book revenues of $3.5 billion. For the bottom line, the company should do at least $0.62 per share, which is two pennies above Wall Street estimates. Even better, this represents a 15% improvement over last year's earning's performance. Not bad, I suppose, but was the 18% gain in the stock price truly reflective of an organic breakout? Keep in mind that the Dow rallied almost 1000 points on Monday. That obviously had a lot to do with the fantastic price appreciation. In addition, Tom Taulli covered how Waste Management dropped its bid for competitor Republic Services (NYSE: RSG). As Tom pointed out, Waste Management probably didn't want to rock the boat as far as its credit rating was concerned. So the traders probably also took this into consideration when placing their bids.

But why would I want to buy the stock now after its stellar one-day performance? I'd much rather take a look at the company after it pulls back. I'm just not convinced that all of the action in the stock was due to strong conviction on the part of investors. I'd have to watch how the price behaves over the next few days before making a decision. All of these bounces that we're going to inevitably see after suffering many days of hellish declines in the major indexes are to be approached with caution if you're looking for quick trading gains. Long-term investors can obviously have a different attitude going into certain stocks. In the case of Waste Management, I will give credit for its attractive yield. But you'll need to perform more due diligence beyond the yield to see if this is one you should look at or not.

Disclosure: I don't own any company mentioned; positions can change at any time.

Famed online auction platform eBay (NASDAQ: EBAY), whose Internet colleagues include Amazon (NASDAQ: AMZN), Google (NASDAQ: GOOG), and Yahoo! (NASDAQ: YHOO), will be reporting earnings for the third quarter on Wednesday after the market closes up shop. What should shareholders expect from the company?

Well, according to data posted by Trey Thoelcke, shareholders shouldn't expect much. While the top line is expected to rise by double digits (around 13%) to $2.1 billion, nothing is really cooking in terms of the bottom line. The call is for $0.41 per share. eBay booked $0.41 per share in the year earlier period. As you can see, that's a 0% growth rate, and that's never good (well, unless you're a financial company, in which case that's actually great). However, there is one silver lining to the earnings story for shareholders. If you take a look at past earnings data, you'll notice that eBay has a snazzy reputation for beating estimates issued by analysts. So, I'd be willing to bet we'll see an easy beat this week.

As to whether or not this particular stock will rally upon such news, that's difficult to say. If Monday's rallying sentiment makes another visit on Wednesday, then I'd say eBay could be an interesting earnings trade, mostly because it isn't far from its 52-week low. Unfortunately, I think any rally that we get in the market right now is not to be trusted. It just can't be. Profit-taking is always going to be waiting to sap the power out of any rally, simply because we know the economy isn't going to be great for many months to come. So, even though I like the technical set-up to some degree vis a vis eBay's earnings-beating history, I personally wouldn't be buying. For me to trust any rally, I'd need to see some confirmations and additional up days.

General Electric Company's (NYSE: GE) NBC Universal needs all the help it can get if it wants to remain part of the famous Dow component. After all, how many times have we heard in the last several years that the huge industrial conglomerate should get rid of the media asset? Well, maybe a little glitzy dose of DreamWorks will increase the perceived value of the movie/TV division in the eyes of a management in the midst of financial-crisis turmoil.

After wondering whether it would be Universal, The Walt Disney Company (NYSE: DIS), News Corp. (NYSE: NWS), or Time Warner, Inc. (NYSE: TWX), the new DreamWorks has decided to strike a distribution deal with Universal after it became a free agent following its split from Viacom (NYSE: VIA). This is according to The Hollywood Reporter. The transaction reportedly means that Universal will be releasing six films per year from DreamWorks starting sometime in '09.

Of course, we don't know all the details yet, but since DreamWorks is being funded by Indian media-investment entity Reliance Big Entertainment, Universal will probably only end up with a modest distribution fee. Still, any studio would have loved to have had bragging rights in terms of the famous director. It was never meant to be a fair competition, though, since the move to Universal was pretty much set in stone. Spielberg has had a special relationship with the company for a long time, and it was considered a given that DreamWorks would end up with a pact at the classic studio.

PepsiCo (NYSE: PEP), which competes with Coca-Cola (NYSE: KO) for worldwide supremacy of carbonated sugar water, is set to report earnings for the third quarter on Tuesday, October 14. What kind of growth are we looking at?

Well, according to Earnings.com, we're looking at roughly 10% appreciation for the bottom line. That is, of course, if analyst expectations are met. The call is for $1.08 per share. While 10% isn't stunning growth in some respects, it's a solid amount for a mature consumer company such as PepsiCo, and it's going to look attractive to investors searching for safe havens in the economic tempest. That's a given. However, with a beverage company, earnings aren't the only thing that matters, that I can promise you. More telling will be the case-volume metric. Wall Street always studies case-volume growth, and if that is weak, then the stock could see some pressure. I own shares of Coke, and I can tell you that I follow case volume closely. With a global slowdown going on, I'd have to imagine that PepsiCo's case-volume performance won't be the best it's ever reported. The other thing I follow with Coke is the cash-flow characteristics. Investors will want to see how free cash flow is faring with PepsiCo. A strong cash-flow statement would also be indicative of how resilient PepsiCo's stock might be over the coming months. If a lot of cash is coming in, then management will have more flexibility with share buybacks, although I'm sure managements everywhere are becoming conservative on that count, for obvious reasons.

Well, I have to hand it to The Walt Disney Company (NYSE: DIS). The company is doing well with Beverly Hills Chihuahua. Early estimates for the three-day box-office weekend at domestic theaters place the movie at the top spot (according to Boxofficemojo). Believe it or not, the talking-canine project has been in first place for two weekends in a row. I guess I got my answer in terms of the playing power of the Disney pooch. It took in about $17 million as of this writing, and it has grossed over $50 million thus far.

With Halloween approaching, you just knew Sony Corporation's (NYSE: SNE) Quarantine picture was going to do decently. It came in second, with about $14 million to its celluloid credit. Body of Lies from Time Warner, Inc. (NYSE: TWX) was third, and Eagle Eye from Viacom (NYSE: VIA) came in fourth. The latter is doing moderately well, not a huge hit, but not quite a disappointment, either, considering the box-office time period we're in. It currently has $70 million in cumulative grosses. I thought Eye was going to be a much bigger hit, but the market apparently is telling me that I was wrong on that count. The Express, by the way, bombed. It was released by General Electric Company's (NYSE: GE) Universal, and it grossed about $4.7 million, meaning it may be in either sixth or seventh place after final numbers are tallied. Not good at all for the football feature's debut weekend.

Disney's movie division will hopefully be able to maximize the profit potential of Chihuahua. I'm sure the powers that be are already at work on turning this concept into a franchise. That's what Disney likes best: not just one picture, but a whole string of them that can drive merchandise sales and theme-park rides. Who knows what will happen, but as an aside, I can honestly say that the stocks mentioned above are looking pretty interesting in terms of the price-cuts they've been given by the slashing claws of all the bears out on Wall Street. Long-term investors looking for exposure to the media sector should give them some due diligence (but always remember the context of the current volatile market, where anything cheap can suddenly get cheaper still).

Disclosure: I own Disney and GE; positions can change at any time.

Alas, I had to say good-bye to an old friend Nuance Communications (NASDAQ: NUAN). This is a technology company that specializes in speech-recognition software and digital-document solutions, and it competes with the likes of IBM (NYSE: IBM) and Microsoft (NASDAQ: MSFT). It's a cool business, although it grows by acquisition, so you do have to watch that part a bit (i.e., checking the GAAP vs. the non-GAAP numbers, cash flows, etc.). The 52-week high on the stock is $22.55; the 52-week low is $9.31. I remember thinking when the stock hit the high that maybe it was time to sell out. I wish I had. But I had confidence in its long-term future. I still do.

As we all know, though, everything has changed. The financial crisis is bringing everything down to irrational price levels. Shorting is one of the only ways to make money. And capital preservation is now on the top of everyone's agenda. That's what my sale of Nuance was about. It's one of the few stocks I owned that still showed a profit. I bought in well below $10 per share. I sold my shares on Friday for $10.13. I can always buy them back when things settle down. I should have sold a lot earlier during the downtrend; I could have generated more proceeds.

And that's one of the reasons why I'm writing this post. I want to tell you why I didn't try to raise some cash by selling Nuance at a better time period. I want to help you not be the idiot that I was. Okay, ready? Here goes. I didn't sell earlier because I held Nuance in a taxable account and didn't want to deal with paying the capital-gains taxes in '09. Like they say, if you get too cute about avoiding taxes, don't worry, you won't owe them because you'll have no profit. And that's a great way to get rich, of course (big sarcasm there, in case you didn't notice).

There are some who say that video games will be just fine during the economic crisis. Of course, you have to consider who's spouting this idea when evaluating it. According to this article, gaming giants Microsoft (NASDAQ: MSFT) and Sony (NYSE: SNE) believe that the upcoming holiday season won't be so tough on their PlayStation 3 and Xbox 360 consoles. They agree with some pundits who think that people will look to drop several hundred dollars on a system as opposed to spending even more on bigger-ticket items such as a vacation. If people cocoon in their homes during this terrible time period to save cash, then they may want to play video games. That's one dimension of the argument.

The other is that consumers may turn to escapist fantasies and casual diversions to take their minds off their problems. In this sense, video games are no different than the movie industry, which is supposed to be resistant to recessions. Again, companies like Disney (NYSE: DIS) and Time Warner (NYSE: TWX) make content that can immerse you in worlds that are different (and more fun) than the one you currently exist in.

Both arguments make sense. Many video games are like movies these days, so comparing them to the film industry is important. And video games definitely are cheaper than a trip to Walt Disney World. However, there are a few things to keep in mind when thinking about these concepts and making an investment decision. First, we are arguably in an environment that we've never seen before. The variables are so different these days. Who's to say how recession-proof movies are going to be, let alone video games? An Xbox 360 can be had for $200. So what if it's less than a trip to Mickey Mouse's castle? Consumers will still be aching. At the very least, if parents don't cut back in terms of buying Johnny a system for Christmas (and they may not, since parents oftentimes refuse to disappoint their kids during the season of Santa), then surely the households who already have one system installed will think twice about installing a second system (yes, many households have multiple systems).

I remember when Rocky Mountain Chocolate Factory (NASDAQ: RMCF) was a cool stock. Unfortunately, that was then and this is now. The economy is horrible, and it's getting worse. Rocky Mountain is not the company with which to ride the storm out.

The third-quarter earnings report, issued on Thursday, showed terrible data. Revenues declined well over 16% to $6.3 million. Earnings per diluted share took a big drop of 30%, coming in at $0.14. And it doesn't stop there. Comps for franchised outlets dipped over 2%. Same-store pounds of products bought by franchisees dropped 10%. Let's face it, people are cutting back on Rocky Mountain's confections. I'm sure they're delicious, but it just doesn't matter. Rocky Mountain is going to continue to struggle as we make our way through this macro mess. Management points out that the stock does pay a dividend of $0.10 per quarter. That gives a yield, as of Thursday's closing price, of just about 6%.

That's not bad, and I suppose if you're a long-term value investor who has extremely solid patience, you might want to take a look at Rocky Mountain's shares. I mean, we all know that equities are pretty irrationally priced these days. But, would I step in and buy the stock as any sort of defensive position for my portfolio? No way. I think it's headed lower. And besides, if I wanted to step in and buy something related to confectionery pleasures, I'd probably consider Hershey (NYSE: HSY) first. Not only am I a big fan of the Reese's peanut butter cup, but I perceive the portfolio controlled by Hershey to be a lot more valuable in these troubled times than Rocky Mountain's line of products. Let's hope all the Halloween trick-or-treaters out there are gearing up to help out the confection industry at the end of this month by demanding a whole lot of treats. Goodness knows, the market has already had its share of tricks this year.

Disclosure: I don't own any company mentioned; positions can change at any time.

There's no question that Johnson & Johnson (NYSE: JNJ), whose corporate colleagues include Merck (NYSE: MRK), Pfizer (NYSE: PFE), and Procter & Gamble (NYSE: PG), is a respected institution on Wall Street. It's a proud member of the Dow, and we all know the company's products: Band-Aid, Listerine, etc. J&J also makes diagnostic equipment and pharmaceuticals. It's truly a respected icon, as Steven Halpern found out.

Investors will be digging through J&J's third-quarter numbers next Tuesday, looking not only for signs about the economy but for signs about J&J itself. After all, everyone wants a defensive stock in their portfolios. A lot of companies aren't looking so defensive these days. Could J&J be the one?

According to Earnings.com, you shouldn't get too excited in terms of growth. The call for the bottom line is $1.11 per share. That would only represent low single-digit percentage growth. Of course, these days, that might be exciting enough. As to whether or not the bottom line will beat the analysts, I suppose the game is completely changed at this point, but I figure J&J will pull through on that count. It all depends on how much we can trust history given the brave new economic world we are suddenly faced with. According to this earnings analysis source at AOL Finance, J&J beat estimates the last four times at bat. Due to this strong recent trend, I'll assume J&J will deliver the goods.

So, let's assume J&J does please the Wall Street analysts. What then? Well, it's really going to be the outlook that's going to tell the ultimate tale. We'll have to see if management is going to give some positive thoughts during the conference call. What does management think about commodity costs and margins? What about the cash flows? Then there's the dividend and the share-repurchase program, two things which investors of J&J count on for long-term value. Management had a few things to say about these issues the last time around (please see the following transcript of the Q2 conference call). I think management is going to be cautious, but I don't feel that there will be any disastrous notes struck during the discussion with analysts.

What an interesting time, my friends. Seriously, we're going to look back on this period and laugh about it (maybe, depends on how much you lost, I guess). Not only has the government become one huge hedge fund as the new cliche goes, but perhaps the oddest thing about this entire episode was the ban on short-sellers.

Well, they weren't totally banned. There was a list of stocks that couldn't be shorted, and they were tied to financial businesses. For instance, General Electric (NYSE: GE), a stock I own, was on the list. Why? You see, even though it makes everything from movies to healthcare equipment, a large chunk of the conglomerate deals with financial transactions. Now, the short-selling ban is gone, and financial stocks are once again subject to the whim of the trading technique.

I hated, absolutely hated, the restriction on short-sellers. It never made any sense (check out Tom Taulli's perspective on this subject).

Look, I can understand and appreciate the fact that the government had to get into the business of capitalism. At some point, there was no choice. If we all could choose, we would choose capitalism over helping a bunch of Wall Street goofballs who became intoxicated on noxious greed and who are laughing at us right now for being bleeding-heart enough to do it. We would. But, there was no choice, sad to say.

Costco (NASDAQ: COST), the shopping club that competes with BJ's (NYSE: BJ) and Wal-Mart (NYSE: WMT), reported earnings for the fourth quarter on Wednesday. Sales did well, rising 13% to $22.6 billion. On an adjusted basis, excluding a litigation charge, the bottom line came in at $0.92 per share, and according to this source, that is one penny below expectations. Excluding the effect of gasoline inflation, comparable sales increased 6%.

For the most part, I think Costco held up well during the quarter. Yes, the warehouse club didn't wow the Wall Street analysts this time around. But comps were pretty decent for the quarter, and the top-line performance was acceptable, all things considered. Membership-fee revenue went up by 22%, which was cool.

This doesn't mean that Costco won't have a tough time going forward. As the economy worsens (and it will), Costco is going to face intense competition for the attention of the consumer's cash and credit cards. Keep in mind, though, that Costco has some good brand equity when it comes to discount shopping. The company's image is of a place where people can buy in bulk and get great deals. In a bad market environment, consumers may flock to Costco to save money. So the company might do okay (on a very relative basis) during the crisis.

It's being reported that Playboy's (NYSE: PLA) Hugh Hefner's relationship with Holly Madison is over. Madison, as you probably know, was Hefner's head girlfriend, but he has two others as well: Kendra Wilkinson and Bridget Marquadt. The four of them star in a reality show called The Girls Next Door, which runs on the E! channel. It's a pretty fun show, although it does make me maddeningly envious of Hef's lifestyle. That aside, it seems to be a decent brand ambassador for the Playboy image. Unfortunately, the popularity of the show hasn't been enough to offset losses at the media company. Playboy's stock currently sits below $3 a share. It is the exact opposite of one of Hef's playmates: downright depressingly ugly.

Well, I can't really comment as to how the Hefner/Madison affair will turn out. Will she go back with him? Is this just a publicity stunt? I simply don't know. However, I would imagine that, with Playboy's stock in the dumps, a breakup might be an event that could be exploited to help out the company. Let's face it: the whole three-girlfriend thing is pretty much an orchestrated machine anyway. So, if Madison truly does feel like she's ready to move on with her career, I think Hef should clean house and get rid of the other two girls as well. Then, he could go on a search for three new girls next door (or maybe he should search for more, why stop at just three?). It could be an integrated media campaign spanning the magazine, the website, and a new reality show.