CHICAGO, Aug. 6, 2013 /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 The Goldman Sachs Group, Inc. (NYSE:GS-Free Report), JPMorgan Chase & Co. (NYSE:JPM-Free Report), Morgan Stanley (NYSE:MS-Free Report), Molson Coors Brewing Company (NYSE:TAP-Free Report) and Sherwin-Williams Company (NYSE:SHW-Free Report).
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Here are highlights from Monday's Analyst Blog:
Goldman Sued for Hoarding Aluminum
The Goldman Sachs Group, Inc. (NYSE:GS-Free Report) along with The London Metal Exchange (LME) – a subsidiary of Hong Kong Exchanges and Clearing Limited – was recently sued in a class-action lawsuit. The suit was filed in the U.S. District Court for the Eastern District of Michigan, over aluminum warehousing. The main plaintiff in the lawsuit was a Mich.-based aluminum extrusion company, Superior Extrusion Inc.
The plaintiffs accused Goldman of anti-competitive and monopolistic actions in the warehousing business. The suit also imputed Goldman and LME of hoarding approximately 1.5 million tons of aluminum at warehouses in Detroit in order to take advantage of inflating prices.
Additionally, consumers and the U.S. regulators have accused Goldman and other warehouse owners of artificially increasing waiting times to facilitate lease payment and raise metal prices.
The lawsuit comes in the wake of criticism of banks that own commodity assets and trade raw materials. Notably, in July, the Federal Reserve stated that it was reviewing its 2003 decision of allowing banks to pursue trading in the physical commodity market.
Further, following complaints of banks and traders manipulating supplies and prices, the Commodities Futures and Trading Commission has initiated an inquiry on the banks' role in the metals warehousing operation. This had resulted in JPMorgan Chase & Co. (NYSE:JPM-Free Report) announcing its plans to exit the physical commodity business, including stakes of commodities assets and physical trading operations.
Since Mar 2013, Goldman has also been trying to sell its warehousing business – Metro International Trade Services LLC, while Morgan Stanley (NYSE:MS-Free Report) has been trying to find a buyer for its oil pipeline and terminals business – TransMontaigne – for more than a year now.
Notably, rising aluminum prices have hit numerous industries, including the beverage sector. Customers have to pay more for canned drinks each time the cost of the metal creeps up. Molson Coors Brewing Company (NYSE:TAP-Free Report) said that the inflated price of the metal was costing consumers around $3 billion annually.
Therefore, lawmakers are concerned about the risks from banks' ownership of warehouses and plants. They believe that banks' holdings of these assets tend to concentrate market power and increase bank profits, thereby affecting consumers.
Goldman currently carries a Zacks Rank #2 (Buy).
Sherwin-Williams Downgraded to Strong Sell
On Aug 3, Zacks Investment Research downgraded The Sherwin-Williams Company (NYSE:SHW-Free Report) to a Zacks Rank #5 (Strong Sell).
Why the Downgrade?
Sherwin-Williams missed estimates in the second quarter of 2013, reported on Jul 18. The company's adjusted earnings of $2.56 per share missed the Zacks Consensus Estimate of $2.58 but exceeded the prior-year quarter's earnings of $2.17 per share. Its net sales of $2.71 billion in the quarter, represented a 5.5% year over year rise. It, however, missed the Zacks Consensus Estimate of $2.78 billion.
Sherwin-Williams is exposed to currency headwinds, volatility in raw material pricing and uncertainty surrounding Comex takeover.
Sherwin-Williams' consumer and paint stores businesses still remains impacted by the U.S. economic weakness. Sales of architectural paint to the commercial market also remained weak, as did industrial coatings. Although demand in these end markets improved recently, it remains weak. A material near-term recovery in the housing and construction markets seems difficult.
Sherwin-Williams' Latin American operations is facing weak end-market demand and unfavorable currency translation (stemming from a stronger U.S. dollar). Currency translation impacted the company's Latin American operations and Global Finishes Group in the second quarter. Sherwin-Williams is expected to continue to face currency headwinds in 2013, particularly in its Latin American markets.
Sherwin-Williams continues to face volatility in raw material costs, primarily for acrylic latex, propylene and titanium dioxide (a key paint pigment). While the acquisition of Comex should bring significant opportunity for Sherwin-Williams, near term uncertainty surrounding the takeover following the recent rejection of the deal by Mexican regulators may weigh on the stock.
The Zacks Consensus Estimate for 2013 for Sherwin-Williams has gone down 5.1% to $7.66 per share as most estimates were revised lower over the last 30 days. Similarly, the Zacks Consensus Estimate for 2014 has also decreased 5.9% to $9.24 per share.
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