Senate Tries to Kill Off Fannie Mae, Freddie Mac

Posted: Jun 05, 2013 12:01 AM

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: 

FedEx Corp., (SYMBOL: FDX) and the headline says:

FDX Announces Dividend Increase, and Earlier Retirement of Aircraft – Morgan Stanley

FedEx Corp. announced it would accelerate retirement of aircraft and engines, resulting in impairment charges in 2013 and '14.  The company also increased its dividend.

Earnings are expected to fall 8% this year. Despite the unexpected 2014 impairment charges, earnings are expected to rise 21% next year.  The PE is 16. Morgan Stanley calls FedEx shares “a cheap option on a cyclical rebound”  and maintains an Overweight rating on the stock.

FedEx stock broke out of a three-year trading range in January, rose to $109, and is now trading sideways between $92 and $109.

Our Ransom Note trendline says:  ACCUMULATE FEDEX SHARES BELOW $98.

FDX Chart

FDX data by YCharts

Stock number two is: 

Zynga Inc., (SYMBOL: ZNGA) and the headline says:

Zynga Cuts 520 Jobs, Closes Offices as Games Underperform -- Bloomberg

Online gamemaker Zynga announced that it will cut 18% of its workforce, saving about $80 million annually, and close offices in New York, L.A. and Dallas.  Several of its games are underperforming, although Farmville continues to do well.  Zynga’s tally of 253 million monthly active users was down 13% in the first quarter.

The company is not expected to earn a profit until at least 2015.

The stock price crashed shortly after its ipo in December 2011, and is currently in a sideways trading pattern.

Our Ransom Note trendline says..... SELL ZYNGA.

ZNGA Chart

ZNGA data by YCharts

Stock number three is:

Federal National Mortgage Association and Federal Home Loan Mortgage Corporation, (SYMBOL: FNMAS and FMCC ) and the headline says:

Senators Draft Plan to Abolish Fannie Mae – Bloomberg

“A bipartisan group of U.S. senators is putting the final touches on a bill that would liquidate Fannie Mae and Freddie Mac and replace them with a government reinsurer of mortgage securities behind private capital,“ reports Bloomberg.  This move would limit the U.S. government’s role in mortgage financing to be one of assuming catastrophic risk.  Under the proposal, Fannie Mae and Freddie Mac would be liquidated within five years.

After three years of trading below $1.00, Freddie Mac’s share price shot up to $5.00 this spring.  Fannie Mae shares moved in sync.  Lucky shareholders should take their chips off the table.

Our Ransom Note trendline says....  SELL FANNIE MAE, AND SELL FREDDIE MAC.

FMCC Chart

FMCC data by YCharts

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