Diamonds and Dogs

6/16/16

Today's diamond is quite Logical. QLogic (QLGC) is jumping 9% after agreeing to be bought by Cavium. The networking infrastructure solutions provider agreed to be bought by chip maker Cavium (CAVM) for $15.50 in cash and stock for a total value of $1.36 billion in a deal valued at $1.36 billion. Good news for QLogic shareholders as the company has struggled to generate significant growth. Cavium shareholders don't seem too happy as their stock is down 17% to a new 52 week low.

The airlines have been grounded. The airlines have been making money hand over fist, but investors don't seem so interested. American Airlines (AAL) is the dog of the day down 4% to a new 52 week low following a downgrade at Bank of America/Merrill Lynch to a "underperform" from "neutral." The rating reflects recent terrorist attacks, higher fuel prices and the upcoming Brexit vote. The downgraded also mentioned a decrease in its average estimates for earnings per share for the industry to 7% in 2016 and 13% in 2017. The stock is currently trading for 5 times earnings. Time for some insider buying, a share buyback or a dividend hike.