Your Source for Up-To-Date News and Research on the Collision Repair Industry
click here to subscribe to the FREE INSIGHT Editor's Desk News Alert Email
SUBSCRIBERS-ONLY
Today's News
INSIGHT This Month
INSIGHT Archives
Survey Center
Letter to the Editor
Business Tools
Subscription Information
CSI Reporting
Financial Analysis
IRS Audit Guide
Management/
Technical Info
1999 Market Watch Rates
INSIGHT Inside this month's issue...
Feedback
Letter to the Editor
This article originally appeared in the November 2000 Issue of INSIGHT
November 2000 Investment Update
Even stocks such as ADP, with a multi-year history of continuously increased sales and earnings, have taken a hit.
Morgan Stanley lowered its recommendation from Strong Buy to Outperform while at the same time ADP reported a 17 percent growth in both sales and profits.
Apparently the investment community feels that the PE multiple of 46 is too high, and perhaps it is, but ADP has a track record of proven growth. Well, if this week’s Market drop continues, that PE ratio will quickly drop.
On Tuesday, October 17th, as this is being written, none of the stocks that we follow has escaped the wrath of the bears as the Dow tumbles 149 points.
On a percentage basis, the worst hit today was First Priority Group which, while being a stock about which we have little good to say, has, according to comments in the Yahoo message page covering First Priority Group, completed a successful test of its new Driversshield Program with Shelter Insurance in the Indianapolis market.
No detail has been released by either First Priority or Shelter but, if the reports are true, this should have an impact on the stock price, which closed at 75 cents per share this afternoon.
One can ask, "Just what is driving this Market down?" and the answer is: uncertainty. The Market hates uncertainty. Will the price of oil rise above the $33 level, where it is now? Well, if it does, kiss goodbye to earning projections of the paint suppliers. Will interest rates go up? If so, insurers will be hit hard.
How about peace in the Middle East? If the current level of hostility continues, it is doubtful that much new offshore investment money will flow into the Market. Both individual investors and money managers will take a "wait and see" stance.
Are there any "rays of sunshine?" Well, retail sales are strong, employment is steady, housing stats are steady on a seasonally adjusted basis, and most pricing seems to be holding firm, although my favorite deli across the street just raised the price of hamburgers by 13 percent! Perhaps this is an inflation omen, as the owner told me that his main food supplier was putting a fuel surcharge on his delivery bills.
Airlines are trying to raise prices as their profit margins are also impacted by fuel prices.
Keystone may get a shot in the arm, given Farmers' and Nationwide's move to reintroduce aftermarket sheet metal. (See article in this month's Industry Update.)
Is the Market signaling an overall shift in the economy? In my opinion, no. Industrial orders are still strong, car sales overall are steady, and consumer confidence is high.
If the "Chicken Little"s and the "Henny Penny"s in the popular press and TV start running around, however, saying, "The sky is falling!" - it just might. In the short term as was said last month - Prudence is the word.
-Charles Baker-
Feedback
Have a comment about this article? Send Email to Charles Baker, INSIGHT's Publisher
©2000 Collision Repair Industry INSIGHT
All Rights Reserved
FEATURED
LINKS:
