Diamonds and Dogs

10/26/15

Piedmont shareholders must be pinching themselves. Piedmont Natural Gas (PNY) is our diamond up 36% today to an all-time high thanks to a buyout offer from Duke Energy for $6.7 billion including debt. The buyout price equates to almost 29 times Piedmont's consensus earnings estimates for 2017. Only the highflying tech sector trades for such lofty levels, not a boring utility stock. Duke Energy must think there are some great synergies to make this deal palatable or else Duke's management team will have some explaining to do.

Whole Foods (WFM) is the dog of the day down -4.89% following a second recalling in the last month for products over listeria concerns. Listeria monocytogenes is an organism that can cause fatal health complications in kids or the elderly. Luckily, there have been no reported illnesses, but the company is recalling such products including its curry chicken salad and classic deli pasta salad, which are sold in East Coast stores. Hopefully, this will be a short term problem and a long term buying opportunity.