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Thursday, September 07, 2006

Paperstand

The WSJ's "Heard on the Street" column discusses Hershey (HSY), saying that for the co, the 2H06 mightn't be so sweet. The nation's largest chocolate maker by mkt share indicated just a few weeks ago that it expected a strong end of the year, helping drive annual net sales growth "somewhat above" its long-term range of 3-4%. But some preliminary data from checkout-counter scanners suggest Hershey's sales may be weakening as the co faces tough competition from, among others, closely held Mars. The data prompted JP Morgan analyst Pablo Zuanic to cut his recommendation on Hershey's stock to Hold from Buy Tuesday, pushing the stock down more than 4% that day. Mr. Zuanic calculates that the co has lost 2 percentage points of chocolate mkt share during the past 2 months, a scary prospect with the approach of the important Halloween candy-selling season. He doesn't expect to see improved trends until April of next year.

Barron's Online highlights favorably Black & Decker (BDK), saying that the co still has juice. With home-builder stocks down more than 30% so far this year, it's no surprise that B&D got dragged into the basement. Yet with less than 1/5 of its sales dependent on weak new housing construction in the US, the co could be a nice stock for an investor's tool box. Down 22% since hitting a record high April 28, the stock has been hammered by dimming earnings forecasts, investors' anxieties over the housing mkt, rising raw-materials costs and fewer orders from retailers and other distributors. But with its P/E multiple bouncing off 5y ows, new products, and strong cash flow funding a mammoth stock repurchase, B&D has room to move. "The valuation looks cheap and the free cash flow is strong," says John Hintz, of Thrivent Mid-Cap Core Fund. "It looks like a decent risk reward."

According to the "Inside Scoop" section, the Chmn of Starwood Hotels (HOT) is checking in on his co's shares after a selloff knocked 15% off the stock's price in 3 months. In transactions on Aug. 29 and 30, Bruce Duncan spent a total of $2.6m to purchase 51K shares for prices from $51.35 to $52.89 each. Ben Silverman, of InsiderScore.com, says that Duncan's purchase is especially notable b/c he was selling as recently as May.

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