US HOT STOCKS: Ralcorp, Alcoa, California Pizza Kitchen, US Steel

21st Jun 2010 15:33

U.S. stocks traded higher Monday, with the Dow Jones Industrial Average up 1.1% to 10569, the Standard & Poor's 500 climbing 1% to 1129 and the Nasdaq Composite ahead 1% to 2333. Among the companies whose shares are actively trading in the session are Ralcorp Holdings Inc. (RAH), Alcoa Inc. (AA) and California Pizza Kitchen Inc. (CPKI). Ralcorp agreed to buy American Italian Pasta Co. (AIPC, $52.55, +$10.82, +25.93%) for $1.2 billion and has closed on two small Canadian-based cracker makers. Separately, Ralcorp projected fiscal third-quarter earnings below analysts' average estimate. The downbeat forecast was attributed to cereal trends including lower returns on promotional spending and the impact of branded competition. Material stocks, particularly those most closely tied to the world-wide economy, climbed aggressively as the Chinese government announced plans to allow more flexibility into the exchange-rate on its currency, alleviating fears that a tightening there would clamp down on demand. Aluminum giant Alcoa ($11.88, +$0.77, +6.93%) was among the biggest gainers of the day, while its smaller rival Century Aluminum Corp. (CENX, $11.07, +$1.03, +10.26%) also climbed. For miners, Cliffs Natural Resources Inc. (CLF, $59.45, +$3.23, +5.75%) and Freeport-McMoran Copper & Gold Inc. (FCX, $69.74, +$3.84, +5.83%) rose, while specialty metals companies Titanium Metals Corp. (TIE, $21.22, +$1.22, +6.10%) and Allegheny Technologies Inc. (ATI, $54.90, +$2.83, +5.43%) also gained. California Pizza Kitchen Inc. (CPKI, $17.37, -$1.52, -8.05%) lowered its second-quarter expectations as results in recent months came in worse than expected. The company on Monday cut its second-quarter earnings projection to 10 cents to 15 cents a share from May's target of 24 cents to 26 cents, above analysts' then-expectations. Worries about an economic slowdown in China, debt problems in Europe and the potential for a double-dip recession in the U.S. have pounded steel stocks in recent months, according to a report in Barron's. But the correction appears to have run its course, leaving the shares of U.S. Steel Corp. (X, $46.22, +$2.81, +6.47%), Nucor Corp. (NUE, $42.81, +$1.32, +3.18%), Steel Dynamics Inc. (STLD, $14.62, +$0.65, +4.65%) and AK Steel Holding Corp. (AKS, $14.81, +$0.91, +6.55%) at depressed--and attractive--levels. Assuming that steel demand doesn't collapse, shares could rise 40% to 70% in a year, Barron's said. BP PLC's (BP, $30.61, -$1.15, -3.63%) U.S. shares fell following a statement late Friday indicating its partner in the leaking Gulf of Mexico oil well, Anadarko Petroleum Corp. (APC, $42.89, +$0.32, +0.75%), plans to refuse paying its share of escalating clean-up costs. Also weighing on the shares, BP said costs for the Gulf spill response reached $2 billion as it continues work to contain the leak and to pay claims for damages. Affymax Inc. (AFFY, $8.26, -$14.75, -64.10%) gave study results for its Hematide treatment of anemia in chronic renal failure patients, saying primary efficacy endpoints were met in each of four Phase-3 studies. But shares sunk as the company said a subgroup of non-dialysis patients saw higher frequency of CSE events--which can include death, stroke, congestive heart failure and other problems--in the group given Hematide than in a comparator. The issues with Affymax's secondary endpoints are viewed as good news for competitor Amgen Inc. (AMGN, $57.17, +$1.97, +3.57%). Hematide aims to be a longer-lasting alternative to Amgen's anemia drugs Aranesp and Epogen. U.S.-based Valeant Pharmaceuticals International (VRX, $46.83, +$0.96, +2.09%) and Canada's Biovail Corp. (BVF, $16.45, +$1.85, +12.67%) Monday said they plan to merge to create a specialty pharmaceuticals group focusing on neurological products, dermatology and generic medicines in Canada and emerging markets. Biotechnology company Exelixis Inc. (EXEL, $4.31, -$0.28, -6.00%) and Bristol-Myers Squibb Co. (BMY, $25.74, -$0.04, -0.16%) were unable to align on the scope, breadth and pace of ongoing clinical development on the cancer drug XL184, on which the two companies had been collaborating since 2008. As a result, biopharmaceutical giant Bristol-Myers returned XL184 to Exelixis and will make a $17 million payment to the company. Other Stocks In Focus: Biopharmaceutical company Aeterna Zentaris Inc. (AEZS, $1.20, +$0.02, +1.69%) announced "positive" study data for its treatment used to stimulate the secretion of growth hormones. Andersons Inc. (ANDE, $35.47, +$1.32, +3.87%) will show a meaningful benefit in its second quarter because of its wheat position, while ethanol profitability and rail costs should also improve, said BB&T analysts in upgrading the stock to buy from hold. The agribusiness company should trade at a higher multiple than its competitors, the analysts argue, putting a $41 price target on it. BioSante Pharmaceuticals Inc. (BPAX, $1.97, -$0.12, -5.66%) said it has gotten commitments from several institutional investors, including Deerfield Management Co., to buy $15 million of stock and warrants. CNB Financial Corp. (CCNE, $11.52, -$0.23, -1.96%) said it would sell 3.37 million shares at $10.25 each, a 13% discount to Friday's closing price. The bank-holding company said it would use proceeds for general purposes, including expanding its business and investments in its subsidiary. Cypress Bioscience Inc. (CYPB, $4.04, -$0.30, -6.91%) entered an exclusive license to develop and commercialize BioLineRx Ltd.'s (BLRX.TV) treatment candidate for schizophrenia in North America as the antipsychotic proceeds toward U.S. regulatory approval. Citigroup upgraded its stock-investment rating on lodging-focused real estate company DiamondRock Hospitality Co. (DRH, $9.39, +$0.42, +4.68%) to buy from hold, noting the share price underperformance has brought relative valuation to a level it views as attractive. The company, it added, is well positioned to benefit as lodging fundamentals continue to recover. (MORE TO FOLLOW) Dow Jones Newswires June 21, 2010 10:33 ET (14:33 GMT)