Stocks in the News: Google, Hess, Cisco Systems

Posted: May 17, 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

Google Inc., (SYMBOL:  GOOG) and the headline says:

Google I/O 2013 Is All About Cleaning Up the Mess and Filling In the Gaps– Time Tech

Google Inc. reported a variety of product improvements and tools for developers at its Google I/O 2013 Conference yesterday, solving problems with the Google Wallet checkout process, and introducing a new vector-mapping service in Google Maps.  “The biggest new product launch was arguably Google Play Music All Access, a competitor to subscription services like Spotify,” reports Time Tech.  The music service is being launched today in the U.S.

Google’s earnings are expected to grow 15-18% per year for the next three years.  The PE is 19.9.  Google has $48 billion in cash-on-hand.

The stock broke past long-term resistance in September, and continues to reach new highs.  We wouldn’t chase the stock after its big run-up this month.

Our Ransom Note trendline says:  BUY ON A PULLBACK TO $850.

GOOG Chart

GOOG data by YCharts

Stock number two is

Hess Corp., (SYMBOL: HES) and the headline says:

Hess to Strip CEO of Chairman’s Role After Annual Meeting-- Bloomberg

Oil company Hess Corporation, with $38 billion in annual revenues, plans to replace John B. Hess as Chairman and give the position to former GE CEO John Krenicki at next week’s board meeting. The company is in a proxy battle with Elliott Management Corp. over management of Hess.

The industry has been rife with bad governance.  In recent weeks, Occidental Petroleum, Chesapeake Energy, and Transocean Ltd. have each seen shareholder activists force top-level management changes in order to improve operations.

Earnings at Hess are projected to rise 6% this year, then fall 5% and 4% in the next two years.  Hess shares have been trading between $66 and $75 this year, but there’s no catalyst to launch them higher.

Our Ransom Note trendline says: STAY ON THE SIDELINES.

HES Chart

HES data by YCharts

Stock number three is:

Cisco Systems, Inc., (SYMBOL: CSCO) and the headline says:

We Expected Sequestration but Got Solid Execution– Citi Research

Cisco Systems, the biggest maker of networking equipment, reported third quarter profit of 51 cents per share, vs. analysts’ estimated 49 cents.  Revenues and gross margins also beat expectations.  Sales are up from new products, price-cutting on traditional products, and upgrades of data traffic networks to accommodate smartphones and tablets.

In addition, strategic acquisitions, job cuts, and sales of non-performing business units are enhancing Cisco’s earnings growth.  Earnings are expected to grow 6-8% per year for the next three years.

Cisco’s stock price hasn’t made any progress in ten years.  However, it’s in a short-term uptrend, broke past resistance today, and could head toward $28 in the near future.

Our Ransom Note trendline says: TRADERS SHOULD BUY ON A DIP BELOW $23.

CSCO Chart

CSCO data by YCharts