Dole Food CEO Wants Leftovers

Posted: Jun 12, 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: 

Lululemon Athletica Inc., (SYMBOL: LULU) and the headline says:

Only the CEO Has Changed – Morgan Stanley Research

Christine Day is stepping down as CEO of Lululemon, maker of much-loved yoga pants, in the wake of a product recall which also cost the Chief Product Officer her job.  Morgan Stanley said today, “The CEO exit may imply deep organizational turmoil sometimes seen in high growth businesses. “

We reported on March 19 that the company was forced to recall yoga pants which were too sheer, due to a manufacturing error, and we told investors to stay on the sidelines.  Expected 2013 earnings growth has since come down from 23% to 8%.  The PE is 34.

After reaching new highs yesterday, Lululemon’s stock crashed through several support levels today, down to support at $65.  With a CEO search underway and a bearish chart, there is no near-term upside to this stock.

Our Ransom Note trendline says:  AVOID LULULEMON.

LULU Chart

LULU data by YCharts

Stock number two is: 

Sprint Nextel Corp., (SYMBOL: S) and the headline says:

Softbank Raises Sprint Bid -- Bloomberg

SoftBank Corp. has raised its bid to acquire Sprint Nextel shares to $7.65 apiece, vs. Dish Network’s offer valued at about $7.00 per share in cash and Dish stock.  “Sprint says that Dish has until June 18 to make its 'best and final' offer,” reports Bloomberg.

Shareholders should wait to see if a Dish Network counteroffer emerges, then sell Sprint shares as they approach the full value of the buyout offer.  We don’t recommend that shareholders accept a cash & stock deal, because the tax implications tend to be too complex, and cost investors extra in accounting fees at tax time.  To avoid that nightmare, shareholders could sell into the inflated share price right before a Dish deal goes through.  When a final offer is presented to shareholders….

Our Ransom Note trendline says: SELL SPRINT NEXTEL.

S Chart

S data by YCharts

Stock number three is:

Dole Food Company Inc., (SYMBOL: DOLE) and the headline says:

Dole Food Receives Unsolicited Takeover Offer From C.E.O.—The New York Times

Dole Food Co. CEO David Murdock, who owns 40% of Dole, has offered to buy all outstanding shares for $12 per share and also take on the company’s debt obligations.  Mr. Murdock previously took the company private in 2003 and took it public again in 2009.

Earnings are expected to fall 10% this year, then climb 48% next year.

The chart has been decidedly bearish.  We advise shareholders to take the money and run, or at least use stop loss orders in case the buyout falls through.

Our Ransom Note trendline says:  SELL DOLE FOOD COMPANY.

DOLE Chart

DOLE data by YCharts