9 stocks punished by investors
They have sold off for different reasons and are in overvalued sectors, but they look undervalued now.
The nine stocks I am profiling today were "taken to the woodshed" recently for a variety of reasons:
From earnings misses and lowered guidance to civil charges from the Department of Justice; from weaker demand for cable services to reduced attendance at health clubs; from slower growth in Internet search in China to reduced eating of what should be yummy chicken in China; and, from reduced demand for transportation logistics to the possibility that used video games might not be playable on new Xbox consoles.
The nine companies are in six overvalued sectors, according to www.ValuEngine.com: computer and technology is overvalued by 13.6%, consumer discretionary by 7.8%, consumer staples by 22.6%, finance by 16.8%, retail-wholesale by 11.2% and transportation by 20.9%. The nine stocks profiled are undervalued by 0.8% to 32.6%, however.
Baidu (BIDU) ($98.37) matched EPS estimates on Feb. 4 earning $1.28 per share, but China's Google warned investors about the pace of earnings growth. The stock was testing its 200-day simple moving average at $113.87 on Jan. 29 and traded as low as $95.30 on Feb. 5. BIDU has a buy rating with a neutral weekly chart profile with the five-week modified moving average at $104.32 and the 200-week SMA a key support at $95.21, which held at the low. My monthly value level is $88.02 with a monthly pivot at $100.84 and weekly risky level at $121.26.
CH Robinson Worldwide (CHRW) ($60.50) reported a 2 cents a share miss on EPS earning 68 cents per share on Feb. 6 and the stock fell from $67.01 at the Feb. 5 close to $60.01, just above its 200-day SMA at $59.87. CHRW has been downgraded to hold from buy this morning and has a negative weekly chart profile with the five-week MMA at $63.62 and the 200-week SMA at $63.77. My quarterly value level is $53.20 with an annual pivot at $60.96 and monthly risky level at $62.66. (Also see TheStreet's: 2 stocks prompting great expectations.)
Gamestop (GME) ($25.20) revealed that some used video games sold at the retailer would not work on the new Xbox game console and the stock dropped from a high of $27.01 on Feb. 5 to a low of $23.75 on Feb. 6. GME has been chopping around between $28.35 on Dec. 13 to $22.30 on Jan. 11, so the stock has been extremely volatile. GME has been bouncing off its 200-week SMA in recent weeks at $22.51 with a buy rating and influenced by a monthly value level at $24.16 and a quarterly pivot at $25.98.
Moody's (MCO) ($47.49) fell in sympathy with a Justice Department's civil charges against its ratings rival Standard & Poor's. MCO has not been charged concerning inflated ratings on toxic mortgage securities but the stock fell from a multi-year high at $55.58 on Feb. 1 to $42.71 on Feb. 5 holding its 200-day SMA at $43.15. MCO has a buy rating with my annual value level at $39.68 with a semiannual risky level at $48.54.
Life Time Fitness (LTM) ($41.50) pre-announced weaker than expected preliminary quarterly results on Jan. 31 and the stock plunged from $50.99 to $39.10 on Feb. 1. LTM has a hold rating with a semiannual value level at $40.02, which held at the low, with a weekly risky level at $47.70.
McGraw-Hill (MHP) ($44.61) fell from a multi-year high at $58.62 on Feb. 1 to a low of $43.33 on Feb. 5 on the potential $5 billion charge against their S&P ratings agency on alleged inflated ratings on mortgage-backed securities filed by the Justice Department. MHP has a buy rating after plunging below its 200-day SMA at $50.44. My semiannual value level is $34.97 with an annual pivot at $45.86 and another annual pivot, now a risky level at $55.59.
Constellation Brands (STZ) ($31.37) was flying high with an all-time high at $39.64 on Jan. 29 and plunged to a low of $28.37 on Jan. 31, as the Justice Department considers blocking a beer merger that would have a Bud and Corona under one umbrella. The stock closed that day above its 200-day SMA now at $30.23. STZ has a buy rating with my semiannual value level at $29.94, which held at the low, an annual pivot at $30.65, which is a magnet, and a weekly risky level at $35.08.
Time Warner Cable (TWC) ($88.09) beat EPS estimates by 3 cents a share on Jan. 30 earning $1.57 per share, but the stock fell on weaker than expected forward guidance. TWC closed at $100.70 on Jan. 30 and traded as low as $86.80 on Feb. 1, and is below its 200-day SMA at $89.08. The stock has a buy rating without a value level with a semiannual pivot at 92.08 and weekly risky level at $96.86.
Yum! Brands (YUM) ($62.93) beat EPS estimates by 2 cents a share on Feb. 4 earning 83 cents per share, but repeated warnings about its KFC unit in China, where there is food safety concerns about KFC's chicken. This stock has been taken behind the woodshed three times since setting a multi-year high at $74.75 on Nov. 29. The stock traded as low as $59.68 on Feb. 5 following its latest whipping. The stock is rated a buy with a monthly value level at $61.37, which held around the low, with a weekly risky level at $65.55.
At the time of publication the author held no positions in any of the stocks mentioned.
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