Diamonds and Dogs

June 20th, 2014

Diamond: CarMax, Inc. (KMX)

CarMax, Inc. is on the rise today after reporting very strong earnings. The used-car retailer saw revenues rise 13% and EPS grow 19% year-over-year. Revenues were $3.75 billion compared to an estimate of $3.59 billion, and EPS was recorded at 76 cents a share, 9 cents above the estimate. CarMax hit all-time record levels of quarterly sales and earnings, marking the beginning of some possible growth in the near future. Four new CarMax stores opened in Q1 of this year, reiterating the new approach to long-term expansion. By mid-afternoon, the company's stock price was up 18% to a new yearly high of $53.48, a big jump in a relatively flat stock.

Dog: Targa Resources Partners LP (NGLS)

Today's dog is Targa Resources Partners LP, a developer of energy assets throughout the United States. Their parent company, Targa Resources (TRGP), announced that the discussions regarding a potential business combination with Energy Transfer Equity (ETE) were no longer in process. In a public statement, the company reported that they were not sure if discussions could resume or if any agreement could be entered into in the future. The announcement caused an 11% drop in the stock price of NGLS, a security that had just recently hit a 52-week high. Wunderlich Securities downgraded the company from a buy to a hold soon after the news.

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