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Monday, November 20, 2006

Sectors Of Interest This Week

Metal Mining
News was out last night that FCX is buying over giant PD. Naohiro Niimura, director at Barclays Capital Japan Ltd said that this kind of big merger could raise the company's ability to take advantage in price negotiations, therefore this should be positive for copper prices.

Steel
Last Fri news from Briefing.com:

U.S. Steel (X): Severstal mulls Russian merger and U.S. Steel bid - Bloomberg (67.80 +3.23) -Update : Bloomberg reports OAO Severstal, Russia's biggest steelmaker by sales, is in talks to merge with local iron miners to create a $20 bln co that could bid to buy US Steel, Kommersant reported, citing and unidentified person familiar with the matter.

U.S. Steel (X): Color on potential takeover (69.61 +5.04) -Update : Matrix, which upgraded X and added it to their Focus List on Wednesday, is telling us they would price a potential X takeover at $85-90, given the co's excess cash per share of $9.

X opened @ $66.4 and closed @ $70.57 last Fri. Still has some room for upside movement if takeover target price is valued @ $85-$90

Airlines
Airline stocks e.g. UAUA, AMR, CAL, JBLU, have been on the rise since LCC proposed merger with Delta last Wed. More news today about possible airlines marriage which could heat up the sector stocks again this week. From Briefing.com:

Barron's reports there has been persistent speculation about a merger of Continental (CAL) and UAL (UAUA). "UAL is still the cheapest of the major carriers and its margins have the most room to improve," says Steve Epstein, a portfolio manager with Defiance Asset Management. Epstein says UAL can earn over $6 a share next year, above Baker's estimate of $4.60. If United nets $6-plus in 2007 or agrees to a merger, its stock could trade above 50. UAL is a plum takeover target because of its large Pacific-route network and strong hubs in San Francisco, Denver and Chicago. The major hitch for a United-Continental merger is that Northwest Airlines (NWACQ.PK) essentially holds veto power over any deal involving Continental through ownership of a "golden share" of Continental. A Continental-United deal could hurt Northwest's competitive position on Pacific routes.



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