Schaeffer's Midday Options Update Features Wal-Mart Stores, Kohl's, J.C. Penney, CVS Corp., and Johnson & Johnson

Business Wire, Jan 5, 2006

CINCINNATI -- Today's Schaeffer's Midday Options Update features Wal-Mart Stores (NYSE:WMT), Kohl's (NYSE:KSS), J.C. Penney (NYSE:JCP), CVS Corp (NYSE:CVS), and Johnson & Johnson (NYSE:JNJ). The Midday Options Update contains a brief commentary on the day's most notable activity and a table listing the most-active calls and puts for the day. The Midday Options Update is published every day at www.SchaeffersResearch.com - the home of Bernie Schaeffer and Schaeffer's Investment Research. For additional information about this report or to have it delivered to you free via email every day click on the following link. http://www.schaeffersresearch.com/redirect.aspx?CODE=PRMOU12M&PAGE=1 .

Options Update: Investment Strategies for Johnson & Johnson

Leading off today's economic news is the Labor Department, which announced that initial jobless claims dropped by 35,000 last week. This larger-than-expected plunge brings the seasonally adjusted number of claims to 291,000. The Department did caution that the data is very volatile this time of year thanks to the holidays and large swings expected in seasonal employment. The distortion-smoothing four-week moving average of new claims dropped to 316,750, a fall of 9,750.

The weekly crude inventory numbers were delayed one day thanks to Monday's New Year holiday. Today, the Energy Department reported a smaller-than-expected decline of one million barrels in black gold stockpiles during the past week. The current inventory of crude stands at 321.6 million barrels, 12.5-percent higher than last year's inventory. The American Petroleum Institute (API) reported a decline of 1.8 million barrels, bringing its current tally of crude to 321.7 million. After an initial drop, per-barrel crude prices have chugged a bit higher, only to drop 67 cents at last check. The big move in the energy realm has come from natural gas, which has dropped as much as eight percent to its lowest level in more than five months. The Energy Department reported that natural-gas stocks increased one billion cubic feet for the week ended December 30. Experts had expected declines anywhere between 30 billion and 80 billion.

Lower Prices, Every Quarter?

Okay, it seems that I haven't been able to write retail news lately without mentioning Wal-Mart Stores (NYSE:WMT), so why would today be any different? I am one of those people that believes Christmas season starts after Thanksgiving, so WMT's November 1 kickoff to the holiday season irked me a bit. However, the company announced today that total sales during the holidays climbed 6.3 percent to $40.83 billion. The discount retailer also noted that same-store sales rose 2.2 percent (the predicted range was for growth between two and four percent). WMT noted that, while the number of shoppers diminished, the amount spent per trip increased, which could be seen as a positive development. The home of the smiley face also greeted investors with news that fourth-quarter results will come in at the low end of its predicted range between 82 and 86 cents per share. The consensus expects WMT to post a profit of 84 cents per share.

The KSS of Death?

Wisconsin-based Kohl's (NYSE:KSS) lowered its fourth-quarter profit forecast. The retailer stated that same-store sales increased 4.6 percent in December, while total sales logged a 16-percent increase to $2.48 billion compared to the same period last year. KSS stated that it was "pleased" with its sales in December, but the duo of November and December disappointed by missing the company's target for growth in the mid-single-digit realm. Thanks to the lower performance, KSS lowered its fourth-quarter earnings to $1.06 to $1.07 per share. Previously, the company expected earnings between $1.10 and $1.14 per share, with the Street calling for earnings of $1.12 per share.

See a Penney, Pick it Up

J.C. Penney (NYSE:JCP) lifted its fourth-quarter profit forecast today, following a 2.2-percent increase in December same-store sales. The company now expects to bring in $1.60 per share for the quarter, following the strong sales performance. Previously, JCP expected earnings of $1.58 per share. Of course, if you are looking for a major move into positive territory for JCP, you may have to wait for a while. The consensus has set the bar for JCP's fourth-quarter at $1.60 per share.

Ending the Year on a Good Note

Earlier, CVS Corp. (NYSE:CVS) announced a 6.7-percent increase in same-store sales for the fourth quarter. These sales were bolstered by an increase of 7.3 percent in same-store sales and an increase of 9.8 percent in quarterly sales. For the quarter, CVS posted an increase of 9.1 percent in sales to $9.7 billion.

Most-Active Options Update

At 1:30 p.m. eastern time, the Dow Jones Industrial Average (DJIA - 10,874.9) has dropped 0.05 percent. The S&P 500 Index (SPX - 1,272.82) is 0.05 percent lower, and the Nasdaq Composite (COMP - 2,275.7) has added on 0.54 percent. At 1:31 p.m. Eastern time, 2,700,746 calls have changed hands compared to 1,513,566 puts, equaling a single-day put/call volume ratio of 0.56. The CBOE's equity put/call volume ratio weighed in at 0.55.