Five Big Bulls To Know For Friday May 30

Texas Oil Still The Big Bull In The Pen
With oil prices at all time highs, and looking like they will be staying there, it is no surprise that the largest gain in this week's bull pen is an oil refiner. Western Refining, an independent refiner and marketer in El Paso, Texas, impressed shareholders this week with gains over 25%.

But, with oil and gas prices so high, we are now in the middle of what the media is calling "America's Oil Crisis". This "crisis" of high prices, causing inflationary prices on a recessionary economy is scaring investors silly, as can be seen by the increase in volatility that has been seen in the U.S. Stock markets (as measured by the S&P 500). Since this time last year, the S&P 500 has seen a standard deviation of monthly returns of 3.27%, almost full percent higher, than the standard deviation of monthly returns over the past five years of 2.45%. (For further reading, be sure to check out Peak Oil: Problems And Possibilities.)

So, with all the hoopla in the financial media about recession and stagflation, why do we keep seeing retailers surprise investors by beating expectations? Are consumers coming back, to help steer us clear of this "crisis" we are all being told to fear? (Many factors can contribute to a slowing economy. Learn more in our article Examining Stagflation.)

Return Of The Consumer
Share of Elizabeth Arden rose this week as the company announced a licensing agreement for Liz Claiborne's (NYSE:LIZ) fragrance business. This agreement gives Elizabeth Arden the rights to exclusively manufacture, distribute, and market Liz Claiborne's fragrances. Arden management expects this deal to contribute to growth of sales and earnings in fiscal 2009 as the company enjoys an increased market share, and gains in productivity, and supply chain efficiencies.

This deal, which should increase revenue and profits, comes on top of already increasing profits. Annual data will not be released until the end of its fiscal year (Jun 30, 2008); however, we can speculated that both sales and profits will have increased. Last year, the company produced a net income of $37.3 million on revenues of $1.1 billion. The first three quarters of fiscal 2008 have produced a total net income of $30.3 million just $7 million shy of fiscal 2007's whole-year number. With another quarter still to come, I like the odds that Arden will beat last year's results. Revenue for the past three quarters is at $904.8 million, just $195.2 million short of the last full-year number. In the last four quarters, Arden hasn't seen total revenue less than $210 million, so I do not expect the company to show a decrease in both revenue and profits when it releases its fiscal 2008 financials.

In a slowing economy, I like to see companies that are able to increase revenue and earnings year over year, and that are actively seeking out new opportunities to increase those revenues even further, all while creating new efficiencies in business to help the bottom line. As consumers continue to spend, even when being told by the media to stop, I see Elizabeth Arden continuing to impress its shareholders.

Add Your Two Cents
What do you think will happen with Elizabeth Arden going forward? Will the almighty consumer continue to purchase its products, helping out Arden's revenue? Will its new deal with Liz Claiborne help increase earnings even further? Be sure to join me (aytonmm) in the FREE Stock Picking Community to share your thoughts and see what other investors are saying.

Learn more on analyzing a companies financial position in What Are Fundamentals? and our tutorial Introduction To Fundamental Analysis.