The Zacks Analyst Blog Highlights: Costco, Staples, DreamWorks Animation, First Solar and St. Jude

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Mar 01, 2012, 09:30 ET

CHICAGO, March 1, 2012 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Costco (Nasdaq: COST), Staples (Nasdaq: SPLS), DreamWorks Animation (Nasdaq: DWA), First Solar (Nasdaq: FSLR) and St. Jude (NYSE: STJ).

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Here are highlights from Wednesday's Analyst Blog:

Good News on GDP, ECB

In its second read on the fourth quarter of 2011, the commerce department reported that the U.S. economy expanded at a better-than-expected 3% pace in the last quarter of 2011, up from the 2.8% in the first read a month ago. This compares to the third quarter's 1.8% growth rate. The positive revision primarily reflected increased consumer spending, though contribution from non-residential fixed investment and net exports also improved.

Personal consumption expenditures (PCE), or consumer spending, which accounts for close to 70% of the economy, increased by 2.1%, up from the first read's 2% estimate. This was an increase from the 1.7% increase in the third quarter and the 0.7% growth in the second quarter.

The consumer spending increase is particularly welcome given the relatively weak internals of the original fourth quarter GDP report that had substantial contributions from the less-desirable inventory component. Given the recent improvement in the labor market, one could reasonably expect favorable momentum on the household spending front.

Also helpful to the spending picture should be the growing evidence of increased bank lending. While we don't want another debt-driven consumption binge in the economy, it is nevertheless an improving trend.

The ECB injected huge amounts into the Euro-zone banking system through its second round of Long-Term Refinancing Operation (LTRO). The central bank paid out €529 billion in three-year loans to 800 banks, up from €489 billion injected through the same program in December. The program was particularly successful the first time around as it helped ease liquidity concerns about the banking system. It also had a positive impact on the government bond markets of Italy and Spain, where bond yields have been on a downtrend ever since the December LTRO.

Many in the market view the LTRO program as the ECB's backdoor quantitative program, though it's not clear the extent of actual bond purchases that the banks undertook with the extra money.

In corporate news, we have better-than-expected results from Costco (Nasdaq: COST) and Staples (Nasdaq: SPLS), while DreamWorks Animation (Nasdaq: DWA) and First Solar (Nasdaq: FSLR) came out with weak results after the close on Tuesday.

St. Jude Beefs Up Dividend

Medical technology major St. Jude (NYSE: STJ) has bumped up its quarterly dividend to 23 cents a share from 21 cents, representing a 10% hike. This lifts the annual dividend to 92 cents per share from the current payout of 84 cents and equates to a dividend yield of roughly 2.2%. The revised quarterly dividend is payable on April 30, 2012, to shareholders of record as on March 30, 2012.

St. Jude's Board, in February 2011, approved the commencement of a regular quarterly cash dividend. The company paid the initial quarterly dividend (of 21 cents a share) on April 29, 2011.

Moreover, the Minnesota-based company's Board, in December 2011, authorized a new share buyback program, allowing it to repurchase up to $300 million of its common stock. St. Jude completed, during third-quarter 2011, the $500 million repurchase program announced in August 2011.

St. Jude remains confident that it has reached a level where it can return value to investors in the form of dividends while continuing to invest in growth programs along with share repurchases and acquisitions.

St. Jude's revenues and earnings for fourth-quarter fiscal 2011 beat the Zacks Consensus Estimates. Revenues rose 4% in the quarter, fueled by double-digit growth across the company's Cardiovascular, Atrial Fibrillation and Neuromodulation franchises.

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