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Bank of America made a smart move by purchasing US Trust from Charles Schwab It should take the bank from the nine place to fifth place among all providers of banking to the ultra-rich. The move prompted CIBC World Markets to lift its price target on the bank from $59 to $65.
Avon is up on rumors of a potential buy-out At around $33, the stock may have peaked. Management has done most of what it can to imptove earnings. But, a buy-out would have been more attractive last year when the stock was $10 lower. And, if no one makes an offer, the stock could fall.
As private equity expands its appetite for bigger and bigger deals, the list of companies that could be taken private expands. A Morgan Stanley analyst now say that the list could inclue Gap, Micron Tech, Bed, Bath and Beyond, Nike, Liz Claiboren, EMC, and Costco. Merrill Lynch has Estee Lauder and Kimberly-Clark on its list. And Credit Sights includes Linear Tech, Maxim, Analog Devices, and Altera on its list.
Charles Schwab has a stock picking model that has been working well. Th 20 stocks that are highly recommended by the Schwab Equity Ratings System are Habro, Nordstrom, Conagra, NBTY, Parket Drilling, Grant Predico, Ameriprise, MetLife, Baxter, McKesson, Continental Air, Teleflex, BMC, HP, Grief, Spartech, Alltel, Qwest, AES, and PG&E.
Hepititas C is a dangerous illness that affect 170 million people worldwide. The big winner is likely to be Vertex. But, other companies are in the running to find a cure, including Intermune and Idenix.
Mellon Financial is pushing Dutch semiconductor equipment company to spin off one of its money losing units to improve share holder value. The irony is that Mellon itself has problems with its asset management businesses and some of its shareholders are trying to get this unit sold. One broker now has a $37 target on Mellon which currently trades at $41.
The head of Westcore Select Fund has generated a 17% annualized return over the last 3 years. The fund’s top holdings are Amdocs, CapitalSource, Electronic Arts, Constellation Brands, Genesis Health, Dover, Oshkosh Truck, Temper-Pedic, and Coach.
News that silicon breast implants has been approved by the FDA is driving up shares of Mentor. However, the stock trades at 42.3 times projected profits and there is resistance to the breast implant approval. So investors should be careful.
Douglas A. McIntyre
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