Crony Capitalism Goes Full Monty

John Ransom | April 14, 2014 4:06 PM

Welcome to John Ransom’s Stocks in the News where the headlines meet the trendlines.

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Stock number one: Herbalife Ltd

Herbalife Falls on Reports of Federal Probe—Zacks

As per a Financial Times report, the U.S. Department of Justice (DOJ) and the Federal Bureau of Investigation have begun a criminal investigation against Herbalife Ltd. for running a pyramid scheme business model. Herbalife however issued a statement stating that it was unaware of the FBI probe. Shares of this nutrition supplement network marketing firm plunged 13.97% after the news.

Symbol: HLF

Trailing PE: 11; Forward PE: 8

PEG: 0.43

Dividend: 2.3%

Estimate Trend: Flat

Ransom Note Trendline: Avoid Herbal Life

Note: William Ackman has large short position in Herbal Life and has donated over $100,000 to Republican and Democrat politicians and Parties thus far in the election cycle. The New York Times has an outline of the attempts Ackman has taken to get the government to investigate the company.

HLF data by YCharts

Stock number two: WebMD Health Corp.

WebMD Raises Q1, Full-Year Sales, Earnings Targets—Investor's Business Daily

Online health-information provider WebMD on Monday raised its first-quarter and full-year financial guidance, and its temperature rose on the stock market today. WebMD stock was up 20%, near 45, in morning trading. That's still 12% below a nearly three-year high of 51.41 touched on Feb. 19. The New York-based company said that it expects first-quarter and full-year results to exceed the midrange of its previously provided financial guidance. It last updated its financial targets on Feb. 20.

Goodrich Petroleum is moving higher on Monday after announcing it has completed its Blades 33H-1 well in Tangipahoa Parish, Louisiana. By midmorning, shares had surged 28% to $23.56. In a statement, the oiler said the well had achieved a peak 24-hour average production rate to date of 1,270 barrels of oil equivalent (boe) per day, 1,250 barrels of which was oil and 115 Mcf of gas.

Symbol: GDP

Trailing PE: NA; Forward PE: NA

PEG: 1.30

Dividend: NA

Estimate Trend: Mixed

Ransom Note Trendline: Avoid Goodrich Pet.