New Trends in Biotech with Allergan Merger

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

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Stock number one: Lexmark International Inc.

Lexmark (LXK) Stock Tumbles as Q2 Guidance Disappoints—The Street.com

Lexmark (LXK_) is sliding on Tuesday as the business hardware developer issued soft second-quarter guidance. By midday, shares had tumbled -11.3% to $41.50.

The company said it expected lower revenue as a result of its exit from its inkjet hardware and supplies division. Management said total revenue is currently expected to decline 2% to 4% compared to the year-ago quarter.

Symbol: LXK

Trailing PE: 10; Forward PE: 10

PEG: 6.20

Dividend: 2.60%

Estimate Trend: Up

Ransom Note Trendline: Avoid Lexmark

LXK data by YCharts

Stock number two: Allergan

Allergan Bid Charts New Territory in Takeovers—New York Times

The $45.6 billion unsolicited offer for Allergan by Valeant Pharmaceuticals and William A. Ackman’s hedge fund is many things, including bold, novel and mega in all ways. It is a new twist in the war between companies and shareholder activists, most likely changing everything and igniting a furious battle not just for Allergan but over the laws governing takeovers and activism.

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Symbol: AGN

Trailing PE: 51; Forward PE: 27

PEG: 2.09

Dividend: 0.10%

Estimate Trend: Up

Ransom Note Trendline: Sell Allergan

AGN data by YCharts

Stock number three: Fastenal Company

What Fastenal and MSC Industrial Earnings Say About the Industrial Economy—Motley Fool

MSC Industrial and Fastenal served notice that the industrial sector is improving, and there are signs that nonresidential construction has started to turn the corner after a weak 2013. For example, Fastenal reported that its sales to manufacturing customers increased by 6.3% in 2013, but improved to 9% in the weather-affected first quarter of 2014 and by a solid 11.5% in March.

Symbol: FAST

Trailing PE: 33; Forward PE: 26

PEG: 1.83

Dividend: 2.00%

Estimate Trend: Up

Ransom Note Trendline: Hold Fastenal

FAST data by YCharts