market snapshot

Economically sensitive seems to be a good thing this earnings season as the following companies blew through earnings expectations and dwarfed last year's results:

CN Rail: EPS = $1.13 versus $0.76 last year
UPS: EPS = $0.84 versus $0.44 last year
CAT: EPS = $1.09 versus $0.72 last year
3M: EPS = $1.54 versus $1.20 last year

These stocks are about as dependant on the economy as it gets.  There is a strange feeling in the markets lately.  There seems to be a large divide between how main street is looking and how corporations are performing.  Earnings are looking quite good but yet unemployment remains high, housing is still in the toilet, and consumer confidence is weak.  Costs that companies cut during the financial crisis are probably really paying off now as revenues come back to levels above 2009 but below prior years.  The fact that most analysts and onlookers are worried and bearish is probably a sign that markets will rise from here.  Typically in times like this the market climbs the wall of worry as expectations are low and upside surprise is more common.  As usual it is hard to say where the market will go from here but stocks usually trade in line with earnings and for the time being earnings seem fine. 

I will obviously continue to pick away at stocks that are already part of my portfolio but seem to be trading very cheap.  I've noticed the following opportunities lately:

Walgreen (WAG) - I added on June 29 at $26.50.  The stock has since recovered to $29.41.

Sun Life Financial (SLF) - Dividend investors have taken note recently as the shares traded down to under $26 yesterday resulting in a yield of about 5.5%.