Special Bulletin: Chemtura (CHMT) and Carnival (CCL) September 26, 2016
Chemtura (CHMT) is Up 15% on Buyout Offer
It was announced this morning that the board of directors of chemical company Chemtura Corp. (CHMT) has unanimously agreed for the company to be bought by Lanxess AG in a deal valued at $2.5 billion. Chemtura shareholders will receive $33.50 per share of common stock, upon the close of the deal in mid-2017. The stock closed at 28.18 on September 23, and is trading near 33 this morning. I always recommend that investors who own takeover stocks sell the stock, rather than wait many months for the deal to go through. That’s because CHMT’s share price will barely move between today and the close of the deal, so there’s very little money to be made by continuing to hold CHMT vs. reinvesting your capital into another growth stock. Sell CHMT today.
Carnival (CCL) Reports Earnings Beat
Cruise vacation company Carnival Corp. (CCL) reported record third-quarter earnings this morning. The company achieved $1.93 earnings per share (EPS) when the market was expecting $1.88. Revenue came in on-target at $5.1 billion, which was 4.4% higher than a year ago (November year-end). Carnival increased its full-year earnings expectation by about 8 cents per share to a range of $3.33-$3.37. The company also repurchased $700 million of stock during the quarter, with a fiscal year-to-date total repurchase of $2.5 billion. I’m increasing my recommendation on CCL from Buy to Strong Buy. Because it’s a down day in the market, CCL did not rise significantly on this good news. I recommend that you take advantage of the lagging share price and buy CCL today. The stock is undervalued with a 2.9% dividend yield. It might not rise quickly, though, so CCL is probably not appropriate for investors with a timeframe of two months or less. Strong Buy.