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Banking industry

Stocks in Focus: Select Comfort, Goldman Sachs, Citigroup, Bank of America, and JA Solar

Strategic Insights

— 2 min read

Select Comfort Corp. (NASDAQ: SCSS) is facing tough sales trends in the mattress industry, which is characterized by a lack of demand for high-quality but expensive bedding. Despite struggling sales, the company is focusing on reducing costs, closing stores, and preserving cash. Meanwhile, the credit markets are beginning to thaw, with the TED spread declining to under 1.0%. While this is a positive development, it's still early to invest in banks like Goldman Sachs (NYSE: GS), Citigroup (NYSE: C), or Bank of America (NYSE: BAC). However, their senior debt could be interesting on dips. JA Solar Holdings Co., Ltd. (NASDAQ: JASO) is well-positioned to become a global leader in solar cell development and manufacturing, but it faces challenges from rising silicon wafer costs and tepid module demand in Europe.

Key Takeaways:

  • Select Comfort Corp. (NASDAQ: SCSS) is struggling with sales trends in the mattress industry, with little demand for high-quality but expensive bedding.
  • The company is focusing on reducing costs, closing stores, and preserving cash to stay afloat.
  • The credit markets are beginning to thaw, with the TED spread declining to under 1.0%, indicating improved bank lending confidence.
  • Goldman Sachs (NYSE: GS), Citigroup (NYSE: C), and Bank of America (NYSE: BAC) are still not investment-ready, but their senior debt could be interesting on dips.
  • JA Solar Holdings Co., Ltd. (NASDAQ: JASO) is well-positioned to become a global leader in solar cell development and manufacturing, but faces challenges from rising silicon wafer costs and tepid module demand in Europe.
  • The company has reduced its revenue guidance for fiscal 2008 and 2009, citing adverse market conditions.
  • Zacks Equity Research maintains a BUY recommendation on JASO with a six-month target price of $5.50, representing 18% upside potential.

Statistics:

  • The TED spread has declined to under 1.0%, indicating improved bank lending confidence.
  • Goldman Sachs (NYSE: GS) long-term debt (due 10/37) is yielding 8.22%, a premium of 5.20% over the 30-year T-bond yield of 3.02%.
  • JA Solar Holdings Co., Ltd. (NASDAQ: JASO) reduced its revenue guidance for fiscal 2008 and 2009 due to adverse market conditions.
  • The company's six-month target price is $5.50, representing 18% upside potential from the current price.

Sources:

  • "Select Comfort Lying Flat" by Zacks Equity Research, no date provided.
  • "Credit Markets Beginning to Thaw" by Zacks Equity Research, no date provided.
  • "JA Solar Strongly Positioned" by Zacks Equity Research, no date provided.
  • Zacks.com press release, no date provided.

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