Stock number one is:
Agilent Technologies Inc., (SYMBOL: A) and the headline says: Agilent Technologies to Separate Into Two Public Companies -- Reuters
Agilent Technologies plans to spin-off its electronic measurement business from its life sciences & diagnostic business in 2014. Both companies have “strong balance sheets and investment-grade profiles,” reports Reuters. Morgan Stanley said, “Agilent has a multi-year margin [expansion] opportunity that is largely insensitive to economic conditions.”
Earnings are expected to fall 9% this year, then rise 11 and 13% in the next two years.
We told traders to buy Agilent in mid-August. The share price could pause at medium-term resistance at $55. Traders who jump out at $54 will have made 15% profit. Everybody else should hold their shares for the prospect that the spin-off will contribute to additional capital gains.
Our Ransom Note trendline says: HOLD AGILENT TECHNOLOGIES.
Stock number two is:
Oracle Corp., (SYMBOL: ORCL) and the headline says: Oracle's First Quarter Earnings Beat; Revenues Miss -- Zacks
Database software leader Oracle reported a mixed first quarter and a weaker outlook for its second quarter, and the market shrugged it off. Oracle is achieving software growth from cloud computing solutions; focusing on recurring revenue and closing deals; and expects declining hardware sales to stabilize. Morgan Stanley thinks the market is underestimating both potential revenue and earnings growth going forward.
Earnings growth is moderate, the PE is low at 11, the dividend yield is 1.4%, and there’s a $12 billion repurchase plan in place. Shares are trading at a record 25% discount to the S&P.
Value investors and traders could buy on a dip to $32, but expect the stock to trade between $32 and $36 for the time being. We wouldn’t jump in at the current price.