Stocks in the News: Macy's Keeps Roaring

Posted: Jul 10, 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: 

Kroger Co., (SYMBOL: KR) and the headline says:

Kroger and Harris Teeter Announce Merger – Citi Research

Grocery chain Kroger Co. has agreed to buy fresh food retailer Harris Teeter Supermarkets Inc. in a debt-financed deal totaling $2.5 billion.  Harris shareholders will receive $49.38 per share.  The deal enhances Kroger’s ability to compete in the southeastern U.S.

Kroger’s earnings were previously projected to grow 6, 10, and 10% in the next three years.  The dividend yield is 1.6%.

The stock price broke out of a steady trading range last week and is in the climbing phase.

Our Ransom Note trendline says:  BUY KROGER ON A PULLBACK TO $35.

KR Chart

KR data by YCharts

Stock number two is: 

Alcoa Inc., (SYMBOL: AA) and the headline says:

Alcoa Earnings Exceed Estimates as Aircraft Orders Gain

Alcoa reported a second quarter earnings beat on better aluminum pricing and margins. Still Aloca lost 11 cents per share. Better than estimates But, watch for third quarter estimates to ratchet downward with ongoing pricing issues, which are hurting cash flow.  Moody’s cut Alcoa’s credit rating to junk in May.

Earnings per share are projected to rise over 60% for each of the next two years.  The PE is 20.

Alcoa’s stock chart is terrible, and the stock price is reaching four-year lows.

Our Ransom Note trendline says: AVOID ALCOA

AA Chart

AA data by YCharts

Stock number three is:

Macy's Inc., (SYMBOL:  M) and the headline says:

Macy's Attains New High – Zack’s

Nationwide retailer Macy’s, Inc., which also owns Bloomingdale’s, is seeing its stock continue to move upward after 12 straight  quarters of positive earningssurpises.  Morgan Stanley Research says, “we remain convinced Macy’s sales momentum and margin improvement are sustainable.”

Earnings are expected to grow 13-14% per year for the next three years.  The PE is 12.8 and the dividend yield is 2%. 

We recommended Macy’s stock on Ransom Notes three times since February.  The stock is up 28% since then, and appears to be breaking out of a trading range again.

Our Ransom Note trendline says:  BUY MACY’S INC.

M Chart

M data by YCharts