Teva Shells Out $1.6 Billion to Pfizer

Posted: Jun 13, 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: 

Cooper Tire & Rubber Co. , (SYMBOL: CTB) and the headline says:

Indian Tire Outfit Apollo Cuts $2.5 Billion Deal To Buy Cooper Tire – Forbes

Cooper Tire & Rubber Co. has agreed to be acquired by Apollo Tyres Ltd. for $35 per share, in an all-cash deal worth $2.5 billion. Apollo Tyre is the largest tire manufacturer in India, though smaller than Cooper Tire.

Shareholders would likely make more money by selling today near the acquisition price and reinvesting their capital elsewhere, as opposed to waiting for the deal to close around the end of 2013 in an effort to save a stock commission.

Our Ransom Note trendline says:  SELL COOPER TIRE & RUBBER.

CTB Chart

CTB data by YCharts

Stock number two is

Teva Pharmaceuticals Industries Ltd. , (SYMBOL: TEVA) and the headline says:

Pfizer Reaches $2.15 Billion Protonix Accord With Teva -- Bloomberg

“Teva Pharmaceuticals Industries Ltd. and Sun Pharmaceutical Industries Ltd. will pay $2.15 billion to Pfizer Inc. to settle litigation over unauthorized sales of the heartburn drug Protonix,” reports Bloomberg.

Teva’s financial obligation in the patent infringement lawsuit will total $1.6 billion, of which $560 million may be covered by insurance.  The company had almost $3 billion in cash at the end of 2012.

In May, we told investors to avoid Teva, due to a stagnant chart pattern, falling 2013 earnings, and prospects of an increased tax rate in Israel.  With those problems now compounded by this hit to its balance sheet …

Our Ransom Note trendline says: AVOID TEVA PHARMACEUTICALS.

TEVA Chart

TEVA data by YCharts

Stock number three is:

Ulta Salon, Cosmetics & Fragrance, Inc. , (SYMBOL: ULTA ) and the headline says:

Ulta’s First Quarter Earnings Rise 20% -- Crain’s Chicago Business

Beauty retailer Ulta Salon, Cosmetics & Fragrance reported first quarter earnings of 65 cents per share, vs. the consensus estimate of 62 cents, on good revenue growth.  Ulta plans to open 125 new stores this year, and dozens of Lancome and Clinique boutiques.

Earnings are expected to grow 24-26% per year for the next three years.  The PE is 29.

Ulta’s stock price fell through a medium-term trading range this spring, and launched back towards its highs in today’s trading.  Expect the stock to trade between $84 and $102 for a while now.  Traders could make money within that range, but buy & hold investors should look for growth stocks with more bullish charts.

Our Ransom Note trendline says:  STAY ON THE SIDELINES.

ULTA Chart

ULTA data by YCharts