Stock Futures Higher, as Fed Lifts Risk Appetite. Stocks to Watch: AAPL, BAC, CAT, NFLX, POT, SBUX, TWC, UA

Published on Thursday, 26 January 2012 07:38 Written by Christopher Lynn

New York, January 26^th  (TradersHuddle.com) – Stock futures were pointing to higher open, as Wall Street seems poised to extend yesterday’s jump after the Fed pledged to keep interest rates near zero until late in 2014. The Fed weighed on the Dollar and spurred investor appetite for riskier assets, amid a flurry of earnings reports and ahead of economic data.

In Asia, stocks gained following the Fed’s pledge to maintain interest rates at a low level for a longer than expected period of time, as it said that it expects low interest rates levels until late in 2014. Participants also reacted positively after Chairman Ben Bernanke hinted of additional action if the economic conditions deteriorate. Hong Kong shares started the Year of the Dragon stronger and Korea hit a six-month high after a three-day Lunar New Year holiday. Meanwhile, in Japan the Nikkei slipped 0.4%, pulling back from a 3-month high.

In Europe, equity markets were moving to the upside, with miners along with other cyclical stocks were leading the charge on the back of the pledge from the Fed to keep interest rates near zero until late in 2014 and after the central bank also hinted of additional action if economic growth sputters. Nagging jitters over a messy Greek default continued, limiting gains.

The euro was gaining 0.4% against the Dollar, trading above the $1.31 level. Crude oil was climbing 0.60% to $100 per barrel. Gold was gaining 0.95% to $1716.20 an ounce and silver was adding 0.80% to $33.385 an ounce. Meanwhile, copper was jumping 2%.

On economic news at 8:30 am, the Labor Department will release its Weekly Jobless Claims report, with economists expecting 375,000 initial claims for unemployment benefits. At the same time the government will release December Durable Orders data. At 10 am, homebuilders will be in focus after New Home Sales for December are released. Also at 10 am, December Leading Economic Indicators will be available.

Today’s Stocks to watch: Apple (NASDAQ: AAPL), Bank of America (NYSE: BAC), Caterpillar (NYSE: CAT), Netflix (NASDAQ: NFLX), Potash Corp. (NYSE: POT), Starbucks (NASDAQ: SBUX), Time Warner Cable (NYSE: TWC), and Under Armour (NYSE: UA).

Apple (NASDAQ: AAPL), the maker of iPads and iPhones, was gaining 0.37% to $448.31 in pre-market after the stock posted an all-time high of $454.45 in the prior session on the back of record shattering quarterly results. After the company stunned Wall Street doubling its profit on revenue that surged 73% year over year, more and more participants weighed in on what Apple will do with its massive cash balance of $98 billion. Yesterday numerous firms raised their target price on the stock, including Ticonderoga lifting its target to $666, Barclays bumping its target price to $630 from $555, and Citigroup raising it to $600 from $500. Beside its record shipments of 37 million iPhones and 15 million iPads, the cash balance was a hot topic, with many predicting a dividend on fiscal 2012, while some saying that since at least $62 billion is parked outside the U.S., the company might better use the cash to fund an acquisition.

Bank of America (NYSE: BAC) was jumping 1.09% to $7.43 in pre-market, trading above its calculated resistance at $7.37. BofA continued to add to its impressive gains year to date, after the Fed pledge to maintain a stimulus stance for a longer period than expected, coupled with the hint of additional action if the economy needed is being seen as good for economic sensitive stocks and to leveraged plays in the housing space. Even though details from President Obama proposed refinancing program are thin, so far investors have been reacting positively to the news, despite some analyst concern that this plan could very well be bearish for bank stocks. The Charlotte, NC based bank announced that it plans to pay more of investment bankers’ year-end bonuses in stock.

Netflix (NASDAQ: NFLX), the online video rental subscription service, was surging 18.3% to $112.44 in pre-market after participants cheered the company’s earnings report for the fourth quarter and news that it signed more U.S. subscribers than expected in the quarter. Netflix posted better than expected earnings on revenues that were above consensus, while it provided inline EPS guidance for the quarter and reaffirmed its fiscal 2012 net loss projection. The company posted earnings of $0.73 per share, $0.18 better than consensus, on revenues that jumped 47% year over year to $876 million versus consensus of $857.27 million. Netflix said Domestic Streaming subscribers were 21.67 million, above its prior guidance of 20.0 to 21.5 million; Domestic DVD subscribers of 11.17 million, also above guidance; while International subscribers close at 1.86 million, within its guidance range. Adding to the bullishness Citigroup upgraded the stock to a Buy from a Neutral, while Barclays raised its target price on Netflix to $115 from $105. However on yesterday’s Fast Money program, Tony Wible from Janney Montgomery Scott said that it still remains bearish and maintains its Sell rating, citing margin compression due to higher content costs for its streaming business.

Caterpillar (NYSE: CAT), the world’s largest earthmoving equipment maker, was jumping 1.79% to $111 after the company released its quarterly results. Caterpillar said that it earned $2.34 per share versus consensus of $1.77 on revenues of $17.24 billion versus consensus of $16.02 billion. The company also issued upside earnings and revenue guidance for fiscal 2012, as it now sees EPS at $9.25 and revenues at a range of $68 to $72 billion. Last week, Robert W. Baird raised its target price on the stock to $135 from $114.

Potash Corp. (NYSE: POT), the largest fertilizer company in the world, was losing 2.48% to $44.11 in pre-market on initial reaction to an earnings miss. The company posted a profit of $0.78 per share, $0.10 worse than consensus, on revenues that climbed 2.9% year over year to $1.87 billion versus consensus of $2.08 billion. Potash also provided downside EPS guidance for the current quarter, while issuing inline EPS guidance for the year. The company said dealer purchasing slowed in the fourth quarter. Restocking of distributor inventories ahead of major application seasons has yet to begin in earnest; in North America, the current cautious approach of dealers managing their potash inventories is expected to keep shipments for the first quarter below those of the opening quarter of 2011. But given supportive crop economics and the prospect of record corn and soybean plantings, we anticipate demand will strengthen as the year progresses.

Starbucks (NASDAQ: SBUX), the largest coffee shop chain in the world, will be in foucs in the session with participants adjusting position ahead of its scheduled quarterly earnings release after the closing bell. On average analyst expect a profit of $0.48 per share on revenues of $3.25 billion. Last quarter, the company posted a 2.8% upside earnings surprise, as it earned $0.37 per share. Yesterday, Starbucks was upgraded to Outperform from Perform at Oppenheimer.

Time Warner Cable (NYSE: TWC), the cable television provider, will likely see an upside bias, as participants will react to its better than expected earnings report and news that the company increased its quarterly dividend by 17% to $0.56 per share and announced a $4 billion share buyback program. Time Warner Cable said it earned $1.75 per share, $0.54 better than consensus, on revenues that climbed 4% year over year to $4.99 billion.

Under Armour (NYSE: UA), the performance apparel, footwear and accessories maker, was tumbling 4.5% to $74 on initial reaction to its quarterly results. The company posted earnings that were better than expected on revenues that were inline with consensus, but it lowered its revenue guidance below consensus for 2012, while it reaffirmed its operating income guidance for the year. Under Armour said it earned $0.63 per share, $0.02 better than consensus, on revenues that jumped 33.9% year over year to $403 million.