The S&P Should Beat These Stocks Today
Jul 25th 2012 8:47AM
Updated Jul 25th 2012 8:56AM
LONDON -- European equity markets have managed to claw back some gains today, bolstered after a policymaker in the European Central Bank said there was an argument to give the European Stability Mechanism a banking license, in effect allowing it to borrow limitlessly from the ECB to expand funds as needed.
These gains have been slightly muted, however, after U.K. GDP numbers showed that the country continues to be in a double-dip recession. In addition, sentiment is tainted after Apple reported disappointing earnings results yesterday. U.S. indexes are seeing similar action to their European counterparts, with early premarket trade indicating that the S&P 500 (INDEX: ^GSPC) will open 0.3% higher.
Even with limited traction, there are a number of individual firms the S&P will easily outperform. Here are three American depositary receipts the S&P should beat today.
BT Group (NYS: BT)
The U.K. telecom operator is down 4.5% in London after reporting worse-than-expected results this morning: Sales fell 5.9% to 4.48 billion pounds in the last quarter. The company said its global-services business, which provides networking facilities to businesses, suffered the hardest, with sales falling 9.2% year on year.
BT said that most of its corporate customers, many of whom are in the financial-services industry, have been cutting spending and deferring orders in the current environment, leaving the future outlook uncertain until European economies start to pick up.
Deutsche Bank (NYS: DB)
DB is down 3% in Frankfurt today after it reported weaker-than-expected preliminary results, with net income falling from 1.2 billion euros last year to 700 million euros. The company said it will now reduce risk to meet its 2013 capital-ratio target.
This also comes ahead of a report by German regulator Bafin on DB's involvement in the LIBOR-fixing scandal that was due to be previewed in a German newspaper today. The paper, Sueddeutsche Zeitung, said the bank has demoted four employees, with a further two having left on the back of the scandal. The Bafin report is expected to focus on the involvement or knowledge of their superiors.
GlaxoSmithKline (NYS: GSK)
The pharmaceutical major is down more than 2% this morning after rival firm Almirall won U.S. approval to develop its drug for people with chronic lung disease. The drug is now in direct competition with Glaxo's Advair, a once-a-day treatment it is co-developing with California firm Theravance.
As usual, this morning's European trading saw some stocks lose ground -- and perhaps provide some European buying opportunities. Indeed, legendary investor Warren Buffett has recently spent more than $1 billion buying a European large-cap stock that's currently trading well below its 2012 high.
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