A humorous look at the companies that caught our eye, for better or worse, this week
L Brands (STAR)
In a world gone mad, sometimes you just have to light some eucalyptus mint candles and pour yourself a lavender vanilla bubble bath. Shareholders of L Brands enjoyed the soothing experience of watching their shares rise after the company said sales at Bath & Body Works – which sells these and other fine products – are expected to soar 10 per cent in the second quarter, even as many of its stores were temporarily shut because of the pandemic. With L Brands also announcing US$400-million of cost cuts and 250 store closings at struggling Victoria’s Secret – which L Brands plans to split off as a separate company – investors are suddenly feeling much more relaxed.
Stuart Olson (DOG)
Normally, when a company receives a takeover offer, its shares rise. Unfortunately for shareholders of Stuart Olson, its battered stock headed even lower. Bird Construction announced the acquisition of the Calgary-based construction services company for $96.5-million in cash and shares. But given what Stuart Olson’s CEO called the company’s “balance sheet and leverage metrics challenges,” almost all of the money will go to Stuart Olson’s lenders, with just $4-million ending up in the pockets of shareholders. So much for a takeover premium.
Procter & Gamble (STAR)
Upside of staying home during the coronavirus pandemic: More time to clean your house, do your laundry and practise good dental hygiene. Shares of Procter & Gamble – whose brands include Tide laundry detergent, Mr. Clean household cleaners and Crest toothpaste – jumped after the consumer products giant posted net sales growth of 4 per cent to US$17.7-billion for the three months to June 30, as earnings of US$2.8-billion or US$1.07 a share topped expectations. Investors are cleaning up.
Eastman Kodak (STAR)
Two things you may not know about Eastman Kodak: 1) The company still exists; 2) It’s about to get into the drug business. Shares of the company – which filed for bankruptcy protection in 2012 and largely got out of consumer photography to focus on corporate digital imaging – soared after the Trump administration awarded Kodak a US$765-million loan to start producing generic pharmaceutical ingredients under the Defense Production Act. Why pick a failed camera company to do the job instead of a generic drug maker? Good question. “We are puzzled by the Trump administration’s decision,” SVB Leerink analysts said in a note.
You say Cam-ee-co, I say Cam-e-co, let’s call the whole thing off. Some Cameco investors were calling it quits after the uranium producer posted a bigger-than-expected quarterly loss of $53-million, including $37-million in costs tied to the shutdown of operations and increased reliance on spot uranium purchases during the coronavirus pandemic. Cameco said it has “the tools we need to deal with the current uncertain environment,” including $878-million in cash and short-term assets and a $1-billion untapped credit facility. But with the stock struggling for years, some investors are evidently getting impatient.
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