Market Overview

PreMarket Prep Stock Of The Day: Taubman Centers Inc.

PreMarket Prep Stock Of The Day: Taubman Centers Inc.

Benzinga's PreMarket Prep airs every morning from 8-9:00 a.m. EST. During that fast-paced highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

For those who don't have the time to tune in live or listen to a recording, Benzinga will highlight a stock of the day that was featured on the show.

Stock Of The Day: Taubman Centers

It's not out of the ordinary for some consolidation in the REIT space. Before Monday's open, Simon Property Group (NYSE: SPG) purchased 80% in Taubman Center Inc. (NYSE: TCO) for $52.50 per share in cash and a 50% premium to Friday's closing price of $34.67.

It's easy to identify the synergies between the companies and there's no doubt the combination of the two companies operations will bring down expenses immediately. "We are very pleased to announce this transaction, which will be immediately accretive to Simon's FFO," Simon's CEO said in a statement.

Timing Is Everything

Anyone familiar with investing knows how crucial timing the entry into an issue can be. If either chasing high-flying momentum stocks or being patient for a value or growth stock waiting for a pullback, getting in too early or too late can seriously affect one's return.

One thing that may alter a long-term investment idea is that a potential catalyst for the issue may come about before a desirable price-entry point is reached.

In the case of this deal, there was absolutely no potential catalyst to purchasing shares of Taubman Centers. In fact, the issue has been in a prolonged downturn since it peaked in January 2015 at $85.26. Also, it has had a horrible relative performance since January 2018, when it reached an intermediate peak at $66.61.

In view of the long-term term trend and increasing pressure being applied by Amazon Inc. (NASDAQ: AMZN) and other online retailers, one would think large shopping malls may be a thing of the past.

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Technicals Couldn't Be Any Worse

If not purchasing the issue for fundamental reasons last week, there was certainly no reason to purchase the issue based on technical analysis. With the issue sitting at a 10-year low as of last Friday ($26.42) and no potential catalysts lower prices were certainly on the horizon, why buy?

Starting last Monday, the issue embarked on one of its best rallies in years, moving from the previous Friday's close of $26.42 to $34.67, or mind-boggling 31% increase. It should be noted the gigantic rally took place on much, much higher than average volume. Over the last few years, there were days when only 200,000 shares changed hands; as of late the issue usually traded between 500,000 and 1 million shares.

Last week, its lowest volume day was 1.95 million and for the week, the average daily volume was just shy of 4 million.

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