Welcome to John Ransom's Stocks In The News, where the headline meets the trendline.
Stocks in the News is produced by Ransom Notes Radio and Goodfellow, LLC. Crista Huff manages Goodfellow LLC, a website that recommends outperforming stocks using fundamental and technical analysis.
Stock number one is:
BlackBerry Limited, (SYMBOL: BBRY) and the headline says:
BBRY gets Letter of Intent to Get Acquired at $9/share – Citi Research
On the heels of an earnings loss forecast, slashing a third of its workforce, and a complete change of its future business model, BlackBerry “announced it has signed a letter of intent agreement under which a consortium to be led by Fairfax Financial Holdings has offered to acquire the company subject to due diligence,” reports Citi Research.Whether Fairfax Financial is able to obtain financing remains to be seen, and it’s unlikely that other bidders will step in to buy this distressed company.
We would sell immediately and not bank on a $9 buyout.Short interest is high at about 35%. Shareholders should not mistake a brief upswing from short covering as a sign that the market likes this stock.Any potential deal could easily fall through, driving the share price lower again.
Our Ransom Note trendline says:SELL BLACKBERRY.
Stock number two is:
Applied Materials Inc., (SYMBOL: AMAT) and the headline says:
Applied Materials to Merge With Tokyo Electron -- DealBook
Semiconductor giant Applied Materials plans to merge with Tokyo Electron in a stock deal expected to close in mid-to-late 2014.Applied Materials shareholders will receive one share of the new company for each share they currently own.Gary Dickerson, recently named CEO of Applied Materials, will remain in that position.
The combined company plans to repurchase $3 billion of stock in the first year, and expects earnings to grow after its first fiscal year.