In today’s daily we have covered stock research on ARB Corp. To view 3 Undervalued Stocks to Buy click here

S&P 500 was up by 7.01 points or 0.37% to 1877.86 on Friday. U.S. stocks closed higher on Friday in a late rebound as small-cap names edged up after recent weakness and consumer discretionary shares rose. Rackspace Hosting shares were up 18.22 percent into the close to $36.26 on confirmation of approach by potential buyers and partners.

Nordstrom Inc. jumped 15 percent as the luxury department-store chain reported quarterly results that exceeded estimates. Fed policy makers said on Friday that the economy is showing signs of picking up and the job market is improving. Interest rates will probably remain low until mid-2015. A report on Friday indicated the pace of U.S. home construction jumped in April to its highest level since November.



S&P 500 Daily Chart   (Source – Thomson Reuters)

S&P ASX 200 was down by 31.8 points or 0.58% on Friday and closed at 5479.0 points. There is speculation that RIO might be finalizing the stalled $US20 billion Simandou iron ore project in Guinea. UGL’s sale of its property services arm, DTZ  is close to collapse with just one fully funded offer. The battle between Aurizon and its Queensland workforce continues with Aurizon’s main competitor Pacific National signing a deal with Rail, Tram and Bus Union.

Iron Orewas down 2.04% to $US 100.70 a tonne its lowest price since September 2012. Nickel prices have steadied after falling for the past 2 days. IOOF, one of the biggest financial services group in Australia has announced a merger with the Shadforth Financial Group on Friday.



S&P ASX 200 Daily Chart (Source – Thomson Reuters)

The top gainers on ASX 200 were:- 




Stock of the Day – ARB Corp (ARP)
 
ARB Corporation manufactures, distributes and sells four wheel drive or 4WD, vehicle accessories and light metal engineering works with manufacturing plants in Victoria, Australia and Rayong, Thailand. ARB has a warehouse and sales centre located in Australia, Thailand and the United States as well as distributors in more than 100 countries worldwide.

ARB Corporation provided a market update with an optimistic outlook. Despite continued weakness in original equipment manufacturing or OEM sales as a result of the downturn in mining, management believes that this segment appears to have bottomed. For the nine months to 31^st March 2014, OEM sales fell 36%, offsetting a 19% sales increase in non US exports and 16% sales increase in US exports.


Overall sales growth was flat. However based on the current order book, the board expects a solid fourth quarter fiscal 2014. Longer term the company has identified opportunities to extend its reach through rolling out more stores in Australia and growing sales overseas to take advantage of its highly regarded product suite. Despite low barriers to entry and easily replicable products , the company has established significant brand equity in the niche 4WD accessories market.



ARP Daily Chart  (Source - Thomson Reuters)

ARB has consistently produced new products through strong in house research and development enabling the company to generate excess returns on capital. This has coincided with weak competition in Australia as importers and Domestic manufacturers have under invested in product innovation and brand building, enabling ARB to emerge as the clear leader in the 4 WD accessories market. We believe the stock is slightly overvalued at its current price and would review the stock at a later date.
  

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