Stocks in the News: Dow Chemical, OfficeMax, DirecTV

Posted: May 08, 2013 12:01 AM

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

Stocks in the News is produced by Ransom Notes Radio and Goodfellow, LLC. Crista Huff manages Goodfellow LLC, a website that recommends outperforming stocks using fundamental and technical analysis.      

Stock number one is:          

Dow Chemical Co., (SYMBOL: DOW) and the headline says:        

Kuwait Proceeds Finally in Hand; Reiterate Buy – Morgan Stanley Research          

A 2013 arbitration award has come to fruition, as Dow Chemical confirmed receipt today of $2.2 billion in cash from Petrochemical Industries Company of Kuwait.  Dow plans to use the cash to pay down debt or preferred stock.  Morgan Stanley commented, “This is very positive … since investors have been skeptical of this settlement given little visibility regarding the timing and form of payment.”         

Earnings at Dow Chemical are projected to grow 18-25% per year for the next three years.  The dividend yield is 3.73% and the PE is 14.4.     

During the week of Feb. 12, we said that Dow Chemical shares were a great value, with strong earnings growth, big dividend and low PE.  The stock appears ready to continue rising in the near-term.  The next price resistance is at $40.       

Our Ransom Note trendline says:  BUY DOW CHEMICAL COMPANY.           

Stock number two is:          

OfficeMax Inc., (SYMBOL:OMX) and the headline says:  

OfficeMax Reports First Quarter Earnings Miss – Citi Research     

Sales and operating margins fell worse than expected in OfficeMax’s first quarter, and full-year numbers will also be down year-over-year.  A special one-time dividend of $1.50 per share, payable July 2, helps to mitigate the disappointing earnings news.        

OfficeMax is in merger talks with Office Depot.  On February 18, we told investors to avoid OfficeMax and OfficeDepot, due to an unfavorable earnings outlook.          

The stock is still very low since the 2008 Financial Meltdown, but has risen from $4 to $11 in the last year.  Shareholders should use stop-loss orders to protect capital gains.  

Our Ransom Note trendline says..... AVOID OFFICEMAX.                                  

Stock number three is:       

DirecTV, (SYMBOL:  DTV) and the headline says:

DirecTV has Strong Start to 2013 – Citi Research    

DirecTV reported much higher than expected first quarter results today, including surprising gains in revenues & earnings in the U.S. and Latin America, and $1.4 billion in share buybacks.   Another $2.6 billion in share buybacks has been authorized.        

Earnings per share were previously expected to grow 8% this year, with quite a few Wall Street firms making recent downward revisions to estimates.  Investors should expect analysts to scurry as they adjust those numbers to conform with DirecTV’s bullish performance.         

The stock has a PE of 12.8.  The share price completed a two-year trading range, and broke out on the upside in March.  Growth stock investors should make an immediate decision on whether to own shares in DirecTV.

Our Ransom Note trendline says....  BUY DIRECTV.