Market focus shifts to Q1 earnings
The following 6 companies -- including 3 Dow components -- are reporting on Tuesday.
First-quarter earnings season shifts into a higher gear this week. Today I profile six companies that report quarterly results Tuesday, three premarket and three after the close.
Three of the stocks are components of the Dow Jones Industrial Average ($INDU), which set new all-time closing and intraday highs last Thursday at 14,865.14 and 14,887.51. This week's risky level is 14,993.
I will continue to handicap earnings Tuesday and again on Wednesday to cover a total of 19 companies that investors should focus on both before and after they report quarterly results. At www.ValuEngine.com, we show that 58.6% of all stocks are overvalued and that 15 of 16 sectors are overvalued, 11 by double-digit percentages.
Given this fundamental setup, stocks that miss earnings estimates or offer cautious guidance are at risk of being taken behind to the woodshed for a share price cut.
Last Thursday, we learned that the four-week moving average for initial jobless claims remains greater than the recessionary threshold of 350,000. On Friday the stock market took in stride data showing that retail sales fell 0.4% in March with PPI down 0.6%. There was also a surprise decline in Michigan consumer sentiment to a reading of 72.3 for April when 78.5 was expected. This index remains less than the neutral 90-to-110 range.
Reading the Table
OV/UN Valued: The stocks with a red number are undervalued by this percentage. Those with a black number are overvalued by that percentage, according to ValuEngine.
VE Rating: A "1-Engine" rating is a strong sell, a "2-Engine" rating is a sell, a "3-Engine" rating is a hold, a "4-Engine" rating is a buy and a "5-Engine" rating is a strong buy.
Last 12-Month Return (%): Stocks with a red number declined by that percentage over the last 12 months. Stocks with a black number increased by that percentage.
Forecast One-Year Return: Stocks with a red number are projected to decline by that percentage over the next 12 months. Stocks with a black number in the table are projected to move higher by that percentage over the next 12 months.
Value Level is the price at which to enter a GTC limit order to buy on weakness. The letters mean: W-Weekly, M-Monthly, Q-Quarterly, S-Semiannual and A- Annual.
Pivot: A level between a value level and risky level that should be a magnet during the time frame noted.
Risky Level is the price at which to enter a GTC limit order to sell on strength. The six companies I cover today represent five overvalued sectors.
Reporting premarket on Tuesday:
Goldman Sachs (GS) ($149.12) is a "hold"-rated stock in the finance sector, which is 16.5% overvalued. The stock has been moving sideways to down since setting a 52-week high of $159.00 on Feb. 19. GS tested its 50-day simple moving average (SMA) at $150.26 last week. The weekly chart profile is neutral with the stock above its five-week modified moving average (MMA) at $147.64 and its 200-week SMA at $138.21. My weekly value level is $144.59 and my monthly risky level is at $161.11.
Coca-Cola (KO) ($41.08) is a "buy"-rated Dow component in the consumer staples sector which is 18.0% overvalued. The stock set a multiyear high at $41.41 last Thursday vs. its all time high of $44.47 set in July 1998. The weekly chart profile is positive but overbought with the five-week MMA at $39.60. My monthly value level is $36.15 with a quarterly pivot at 41.53 and semiannual risky level at $42.26.
Johnson & Johnson (JNJ) ($82.74) is a "hold"-rated stock in the medical sector, which is 10.5% overvalued. JNJ set an all-time high at $82.96 last Thursday, which could become a double-top vs. the prior high at $82.95 set on April 3. The weekly chart profile is positive with extremely overbought momentum and the five-week MMA at $79.44. My monthly value level is $77.46 with a quarterly pivot at $81.06 and weekly risky level at $83.64.
Reporting after the close on Tuesday:
CSX (CSX) ($24.51) is a "sell"-rated transportation stock in a sector that's 20.0% overvalued. I describe this sector as "avoid as source of funds" with 78.5% of all transportation stocks rated sell or strong sell. The daily chart shows a potential double-top with year-to-date highs at $24.69 on April 1 and Friday's high at $24.64. The stock's all-time high is $27.06 set back on July 7, 2011. The weekly chart is positive but extremely overbought with the five-week MMA at $23.57. My monthly value level is $20.93 with a weekly risky level at $24.85.
Intel (INTC) ($21.67) is a "buy"-rated stock in the computer and technology sector that is 11.6% overvalued. Last week Intel traded up to but stayed below its 200-day SMA at $22.52. The weekly chart profile is positive with the five-week MMA at $21.33 and the 200-week SMA at $21.97. My semiannual value level is $19.80 with a weekly pivot at $21.52 and quarterly risky level at $26.37.
Yahoo (YHOO) ($24.69) is a "hold"-rated stock in the computer and technology sector. The stock traded to a new multiyear high at $24.80 last Friday. The weekly chart profile is positive but overbought with the five-week MMA at $22.75. My monthly value level is $22.85 with an annual pivot at $23.56 and weekly risky level at $25.11.
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The company plans to close stores and lay off employees, and says it needs to make some deeper changes.
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