Stocks in the News:
Stock Number One: Yahoo (Symbol: YHOO)
And the headline says: Yahoo: The Valuations Support Being Bullish- Seeking Alpha
“Overall, the strategic analysis of core Yahoo! is bearish for the valuations of the firm because of limited growth opportunities,” writes Bottom Up Investing on the pages of seeking Alpha. “That said, Yahoo! could be a great investment near term. Part of that belief stems from the upcoming Alibaba IPO.”
I was bullish on Yahoo when it was trading at $16. But today it’s trading over $34.
Analysts estimate that going forward over the next five years Yahoo’s earnings will grow at about 12% per year.
The industry as a whole enjoys about 16% average annual growth.
The stock is made a spectacular move, but I would be looking at fundamentals at this point.
Our Ransom Note Trendline says: Sell Yahoo
Stock number two: General Electric (GE)-
And the headline says: GE to Provide Close to $600 Million in Turbomachinery Equipment for Russia’s Yamal LNG Megaproject- Briefing.com
“GE (GE) has received a contract to provide key turbomachinery equipment for the Yamal liquefied natural gas (LNG) “megaproject” that is being developed on the Yamal Peninsula in Russia’s northern Siberia region. The LNG produced at the site will be used to help meet the growing energy needs, primarily of Asia and Pacific Region countries,” says GE’s press office.
GE has taken flak recently for being an Obama hack, realigning their business to take advantage of increased government spending.
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Equation the company currently pays a dividend around 3.2%, and is trading around 18 times earnings. Analysts estimate that earnings will grow by about 10% per year or the next five years.
That’s subpar.
Our Ransom Note Trendline says: Avoid GE
Stock Number Three: Burlington Stores (SYMBOL: BURL)-
And the headline says: Burlington Shares Pop on IPO- 24/7 Wall Street.
“In an initial public offering (IPO) on Wednesday morning, Burlington Stores Inc. (BURL) sold 13.3 million shares at an IPO price of $17 a share and quickly jumped 38% to trade around $23.45. The expected price range had been $14 to $16. Net proceeds from the offering total approximately $206 million. The underwriters have a 30-day option on 2 million additional shares,” says Paul Ausick of 24/7 Wall Street.
And yes, if I were the underwriters I’d be exercising those options.
That said, rule number one is to always avoid buying into a stock when it initially trades in the IPO market.
There’s no reason to avoid that rule here.
Our Ransom Note Trendline says: Avoid Burlington Stores
Burlington ONE DAY Chart
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