John Ransom

Welcome to stocks in the news where the headline meets the trendline.

Today’s a big day in the market, so we’ll talk big stocks, big gainers that is and one big loser.

Stock Number One: Veeva Systems (SYMBOL: VEEV)

And the headline says: Veeva Systems IPO Pops For Cloud Software Company-Investor's Business Daily

“Veeva stock was up more than 80% in midday trading in the stock market,” says IBD, “after pricing late Tuesday at $20 a share, above its expected range of $16-$18. That range had been raised from earlier expectations of $12-$14.Veeva is among several IPOs this year of companies that deliver their business software through the Internet cloud, which can be cheaper and less expensive for customers as opposed to maintaining the software on in-house hardware systems.”

The company had traded as high $39.64

For the stock market overall this is very good news: IT MEANS that capital formation is relatively healthy in this market. The lifeblood of the stock market is the primary and secondary offering markets where companies raise capital in order to expand their businesses. If companies can do that, they grow.

That said we’re going to continue our caution that we always have on popular initial public offerings.

It’s not how much you make, it’s how much keep.

Keep your fingers off of this one.

Our Ransom Notes Trendline says: Avoid Veeva Systems

VEEV Chart

VEEV data by YCharts

Stock number two: Advance Auto (SYMBOL: AAP)

And the headline says: Advance Auto expands repair shop business with $2 billion buy- Reuters

“Advance Auto Parts Inc (AAP) will buy 1,418 outlets of the Carquest chain to boost its auto repair operations to complement its car parts business,” reports Reuters “sending its shares up as much as 20 percent to a record high. Advance Auto, which sells products such as batteries, air fresheners and engine parts, said it would buy General Parts International Inc for just over $2 billion, creating the largest North American retailer of auto parts.”

The company is trading right now at 19 times trailing earnings and 16 times it’s forward earnings although those earning will go under revision on account of the purchase

The company is enjoyed aggressive growth of about 19% annually over the past five years. This acquisition could help sustain earnings growth over the next five years. However the company’s stock chart has flatlined over the last six months.

Our Ransom Note Trendline says: Hold Advanced Auto

AAP Chart

AAP data by YCharts

Stock Number Three: JC Penny (SYMBOL: JCP)

And the headline says: Here's Proof That J.C. Penney Has Lost All Credibility- Motley Fool

“J.C. Penney (NYSE: JCP) stock had yet another nasty fall on Tuesday,” says Motley Fool, “dropping nearly 9% to $7.17 -- a level not seen since the 1980s. There was no important news from the company, which has left people wondering what could have caused this big drop. Some retail-watchers pointed to a Wall Street Journal report that Burberry CEO Angela Ahrendts -- who was just announced as Apple's new senior vice president of retail and online stores -- was a top candidate for the chief executive post at J.C. Penney.”

If ever there was a definition of trying to catch a falling knife, J.C. Penney is it. The chart says this company is going into bankruptcy. The critical level before doomsday is between seven dollars and five dollars. Yep, at five dollars new margin requirements come into play meaning anybody’s owning the company on margin has to pony up more equity, that is cash. That’s one the free fall really starts and company goes under.

While I can’t predict the future, the chart says that J.C. Penney is done.

Our Ransom Note Trendline says: Sell J.C. Penny.

JCP Chart

JCP data by YCharts


John Ransom

John Ransom is the Finance Editor for Townhall Finance, host of Ransom Notes Radio and you can catch more of the best money advice and monetary commentary by him daily 10am PT, 1pm ET at WealthEd.com or on Comcast Cable