Stocks in the News: F, AA, JCP

Posted: Apr 10, 2013 12:01 AM

Welcome to John Ransom’s Stocks In The News, where the headline meets the trendline.   

Stock number one is:        

Ford Motor Company, (SYMBOL: F) and the headline says:

Ford Focus Tops Global Car Sales     

The Ford Focus, manufactured by Ford Motor Company, topped 2012 auto sales as the world looks for smaller passenger cars.  Runners-up were the Toyota Corolla and the Ford F-Series pick-up trucks.  Ford CEO Alan Mulally is the driver behind the company’s effort to compete more effectively around the world.         

Earnings per share fell in 2012, and are expected to be down a fraction again in 2013, due to economic woes in Europe, a glut on the car market in South America, and margin pressures in China.          

Ford stock has been trading sideways for three years.   

Our Ransom Note trendline says: STAY ON THE SIDELINES.    

F Chart

F data by YCharts

Stock number two is:        

ALCOA Inc., (SYMBOL: AA) and the headline says:          

Alcoa Handily Beats First Quarter Earnings Estimates       

Alcoa Inc., the largest U.S. aluminum producer, beat Wall Street estimates today with their first quarter earnings.  Analysts expected 8 cents per share, and Alcoa delivered 11 cents per share, excluding one-time gains.  The company has shifted its manufacturing focus toward more profitable products and solutions, filling an increased demand from  the aerospace and auto industries. 

Despite sales of $23 billion in 2012, the company earned a meager $191 million net income after a 50% tax rate and weak aluminum pricing.  Earnings per share are expected to climb 21%, 60% and 8% over the next three years.  The PE is 15.7.             

However, the stock price is near ten-year lows and shows no sign of recuperating in the near future.       

Our Ransom Note trendline says: AVOID ALCOA.           

AA Chart

AA data by YCharts

Stock number three is:     

J.C. Penney Co., (SYMBOL: JCP) and the headline says:

J.C. Penney Makes Disappointing CEO Change          

J.C. Penney Co. has fired problematic Silicon Valley superstar and current CEO Ron J.C. Penney Co. has fired problematic Silicon Valley superstar and current CEO Ron Johnson, replacing him with the lackluster former CEO Myron Ullman.  We told you to sell this stock on Feb 28th and then again on March 5th. Investors responded to the news of the CEO dump by dumping shares today.  While Ron Johnson’s marketing strategies worked miracles for Apple Inc., J.C. Penney shoppers did not welcome his approach, which consisted of minimizing sales promotions in favor of higher-priced style. 

Penney’s board of directors will now have to decide whether to return to a heavy promotional environment, while also considering selling or breaking up the company.  

The company is expected to continue losing money for the next three years. 

Our Ransom Note trendline says: SELL J.C. PENNEY.

JCP Chart

JCP data by YCharts

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