What a difference a month makes. December was one of the worst months for the stock market in history, with December 24, 2018 the worst Christmas Eve on record. Flip the calendar forward, and 2019 kicked off with the best January performance in 30 years. The triple headwinds of the Fed, the trade war, and the economy dissipated and then shifted to provide a decent tailwind. Most notably, Fed Chair Powell pledged to be patient about future rate hikes on Wednesday triggering a powerful rally that accounted for all of the S&P 500’s 1.6% gain for the week. Trade talks between China and U.S. proceeded as planned with additional meetings set for late February, although no specific breakthroughs were reached in the recent sessions. Meanwhile the U.S. economic data showed solid job growth and a better than expected manufacturing ISM, with subdued inflation as the cherry on top. Corporate earnings were better than expected, even though overall guidance for the first quarter of 2019 was reduced. The Energy sector continued to be the top performer of 2019 as crude oil prices rallied to reach its highest level in 2 months. The yield on the Ten-Year Treasury remained unchanged at 2.70%. It’s worth noting that the Japan Ten-Year is still at a negative yield, Germany at a 0.16%, France at a 0.57%, Spain at 1.22%, and Italy (with all their budget issues) at 2.72%.
Punxsutawney Phil didn’t see his shadow, which I think means either it will be an early spring or perhaps the recent rally will continue into spring. Either way, February will certainly be interesting.
The New England Patriots won the Super Bowl on Sunday, which suggests that the market will decline, but of course that “predictor” has been debunked. In any event, the wrong NFC team was playing so it really shouldn’t count anyway (Bears or Saints were rightful champions).
Earnings season will continue, but will most likely effect individual companies rather than the market as a whole. Mainland Chinese markets will be closed for the Lunar New Year holiday. President Trump will be giving his State of the Union address on Tuesday night. His tone on trade and immigration issues might influence the market, particularly if he suggests another government shut-down or embraces the previously outlined (ill-advised) plan of raising tariffs to 25% on $250 billion of Chinese goods. The economic calendar is light with no market moving releases scheduled.
Stocks on the Move:
Advanced Micro Devices, Inc. (AMD) +11.4%: The chip maker said that results would improve in the second quarter as new p2roducts hit. Advanced Micro Devices designs and produces microprocessors and low-power processor solutions for the computer and consumer electronics industries. The majority of the firm’s sales are in the computer market via CPUs and GPUs. AMD acquired graphics processor and chipset maker ATI in 2006 in an effort to improve its positioning in the PC food chain. AMD is a 2.89% holding in the North Star Opportunity Fund.
Alaska Communications Systems Group, Inc. (ALSK) – 12.7%: There was no news to account for the drop in the share price. Alaska Communications Systems Group Inc is a US-based fiber broadband and managed information technology services provider. The company is focused primarily on business and wholesale customers in and out of Alaska. It provides local, long-distance, and wireless telephone services, Internet access, and data services to residential and business customers. ALSK is a 0.16% holding in the North Star Micro Cap Fund and a 2.23% holding in the North Star Opportunity Fund.
BG Staffing, Inc. (BGSF) +12.4%: There was no news to account for the rise in the share price.BG Staffing is a US-based temporary staffing services provider. It principally offers on-demand or short-term staffing assignments, contract staffing, and on-site management administration to its clients who are seeking to match their workforce requirements as per their business needs. The company has structured its business under three segments, Commercial, Multifamily, and Professional. The majority of the revenue is derived from the Professional and Commercial segments across the United States. BGSF is a 2.98% holding in the North Star Dividend Fund.
Build-A-Bear Workshop, Inc. (BBW) -11.1%: There was no news to account for the share price decline. Build-A-Bear Workshop is a U.S.-based specialty retailer of customized stuffed animals and related products. The company operates through three segments. The direct-to-consumer segment runs the company-owned stores, primarily in North America and Europe, and also runs its e-commerce sites and temporary stores. The international franchising segment manages the company’s licensing activities and franchising arrangements. The commercial segment markets the company’s naming and branding rights to third parties. The direct-to-consumer segment generates the majority of the company’s total revenue. Most of the company’s stores are located in North America, which contributes the majority of its total revenue. The company also has business in Europe and other areas. BBW is a 2.0% holding in the North Star Micro Cap Fund.
1-800 Flowers.com, Inc. (FLWS) + 22.5%: The Company reported fiscal second-quarter revenue that beat expectations and gave upbeat fiscal 2019 guidance. Net income totaled $68.6 million, or $1.04 per share, down from $70.7 million, or $1.06 per share, last year. Revenue totaled $571.3 million, up from $526.1 million. Chief Executive Chris McCann attributed the revenue increase to the Harry & David business. 1-800-Flowers expects fiscal 2019 revenue growth of 7% to 8% versus the prior year total of $1.15 billion, and EPS in the range of 44 cents to 46 cents per year. 1-800 Flowers.com is a United-States-based provider of gourmet food & gift baskets, consumer floral, and BloomNet wire service. Gourmet food & gift baskets and consumer floral jointly account for the majority of the company’s total revenue. The company provides a broad range of merchandise, including fresh flowers, premium, fruits, popcorn, specialty treats, cookies and baked gifts, premium chocolates, confectionery, gift baskets, premium English muffins, steaks and chops, and others. The company offers products through omnichannel and multiple brands, such as Harry & David, The Popcorn Factory, Cheryl’s, Fannie May, 1-800-Baskets.com, Wolferman’s, Fruit Bouquets by 1800Flowers.com, and Stock Yards. The company’s BloomNet Wire Service provides products and services for florists. FLWS is a 4.26% holding in the North Star Micro Cap Fund.
NTN Buzztime, Inc. (NTN) +11.8%: Another double digit move for this low-priced thinly traded stock without any company specific news. In the background the Company has announced that it is exploring its strategic alternatives. NTN Buzztime delivers interactive entertainment and innovative dining technology to bars and restaurants in North America. It licenses its customizable solution that offers guests trivia, card, sports and single player games, nationwide competitions, and by offering self-service dining features including dynamic menus, touchscreen ordering, and secure payment. The company offers Buzztime Entertainment On Demand (BEOND), a tablet platform. NTN is a 0.41% holding in the North Star Micro Cap Fund.
Portfolio holdings are subject to change and should not be considered investment advice.
North Star Investment Management Corp. is the Advisor for the North Star Family Mutual Funds.