Stocks in the News: Macy's, Deere, Citigroup

Posted: May 16, 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: 

Macy*s Inc., (SYMBOL: M) and the headline says:

Macy’s Profit Tops Estimates as Stock Buyback Boosted -- Bloomberg

Department store chain Macy’s Inc. reported first quarter earnings per share of 57 cents, vs. analysts’ estimates of 55 cents.  The company increased its dividend by 25%, and added another $1.5 billion to its share buyback program.

Macy’s earnings are expected to grow 13-15% per year for the next three years.  The PE is 12.4.  The new dividend yield is 2.1%.

The stock is up 23% since we started recommending that investors buy Macy’s on Feb. 26.  We would consider any price pullback to be a buying opportunity.

Our Ransom Note trendline says: ACCUMULATE MACY’S AT $45

M Chart

M data by YCharts

Stock number two is: 

Deere & Co., (SYMBOL: DE) and the headline says:

Deere announces record second-quarter earnings of $1.084 billion – Quad Cities Online

Farm equipment manufacturer Deere & Co. reported a solid second quarter today, slightly beating Wall Street’s earnings estimates.  However, the company guided annual revenue projections downward.  The weak global economy is affecting Deere’s construction sales, while farm sales remain strong.

Deere’s earnings growth has been rapid in recent years, and is expected to slow to 3-4% in 2014 & ‘15.  The dividend yield is 2.3%.  The current PE is 10.4.

The stock has been in a trading range for almost three years, and will likely trade between $87 and $95 near-term.  With earnings growth slowing dramatically, ….

Our Ransom Note trendline says: STAY ON THE SIDELINES.

DE Chart

DE data by YCharts

Stock number three is:

Citigroup Inc., (SYMBOL: C) and the headline says:

Citigroup to Sell Brazil Unit for $1.38 Billion -- Morningstar

Citigroup has agreed to sell its Brazilian banking unit to Itau Unibanco, which will bring Citigroup a $300 million after-tax gain.  In April, Morgan Stanley Research said, “Larger asset sales … could drive upside to our price target.” Citigroup is in the midst of a multi-year expense cutting program, with sustainable earnings growth.

Earnings per share are expected to rise 22%, 13% and 13% in the next three years.  The PE is 10.8.  Share buybacks are expected to total $930 million this year, and then $7.4 billion in 2014.

Citigroup stock has been trading repeatedly between $23 and $54 for four years.  The stock appears ready to finally break out of that trading pattern on the upside.

Our Ransom Note trendline says:  BUY CITIGROUP.

C Chart

C data by YCharts