Stocks in the News: Smith & Wesson Ups Expectations

Posted: Jun 15, 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

Smith & Wesson Holding Corp, (SYMBOL: SWHC) and the headline says:

Smith & Wesson expects higher fourth-quarter results -- Reuters

Gunmaker Smith & Wesson reported preliminary fourth quarter numbers, beating earnings estimates, and reflecting huge year-over-year gains.  The company also announced that it will buy back $100 million of common stock.  “Fears of new gun controls have spurred demand of guns, particularly among first-time buyers,” reports Reuters.

Earnings are projected to grow 190% this year, then fall a little for the next two years.  The PE is 8.2.

The stock is on an uptrend, and will meet resistance around $10.50 per share.  There’s not enough long-term earnings excitement for investors, nor enough short-term juice for traders.

Our Ransom Note trendline says:  STAY ON THE SIDELINES.

Stock number two is: 

Boeing Company, (SYMBOL: BA) and the headline says:

Boeing Seen Reaping $6 Billion a Year on 787 Output Boost – Bloomberg

With a record backlog of 800 Dreamliner orders to fill, Boeing’s production pace will necessarily ramp up dramatically over the next few years.  The company intends to use 80% of the increased free cash flow towards dividends and share repurchases, which provides tremendous shareholder value.

Boeing’s earnings are expected to grow 27, 11 and 10 percent in the next three years.  The PE is 15.8 and the dividend yield is 1.90%.

The stock broke past resistance in early March and rose 33%, and is now retracing the 2007 high of $106.  There’s plenty of time to wait for the share price to correct to $90 before accumulating shares.

Our Ransom Note trendline says: HOLD BOEING COMPANY.

Stock number three is:

Edwards Lifesciences Corp., (SYMBOL:  EW) and the headline says:

German Litigation Loss Leaves Estimates Unchanged – Morgan Stanley

A German court has determined that Medtronic’s CoreValve product does not infringe Edwards Lifesciences’ patent.  Court decisions relating to two additional patent lawsuits are expected in July, and in early 2014.  Edwards Lifesciences designs treatments for cardiovascular disease.

Earnings are expected to grow 13, 19, and 15 percent in the next three years.  The PE is 23.

The stock has been trading between $61 and $106 for almost three years.  Traders could make money  by purchasing today, and selling at resistance at $90.  But with a high PE and a lackluster chart, ...

Our Ransom Note trendline says:  STAY ON THE SIDELINES.