Stocks in the News: New York Times Shrinks

Posted: Jul 11, 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: 

Family Dollar Stores, Inc., (SYMBOL: FDO) and the headline says:

Fine Quarter, but Management Lowers Fourth Quarter Guidance – Citi Research

Family Dollar Stores reported third-quarter earnings of $1.05 a share, above the $1.03 estimate, on increased sales and gross margins.  However, the company guided fourth quarter estimates downward as consumer discretionary spending remains hampered by the poor economy.

Family Dollar's 2013 earnings growth projections have already fallen from 15% down to 4% this year.  The PE is 17.3.

The stock continues to recover from a big fall in December.  We think investors should sell as the price reaches the upper $60’s.

Our Ransom Note trendline says:  SELL FAMILY DOLLAR STORES.

FDO Chart

FDO data by YCharts

Stock number two is: 

New York Times Co., (SYMBOL: NYT) and the headline says:

S&P Downgrades New York Times to Sell from Hold – Standard & Poor’s Research

“While we are encouraged by the trajectory of New York Times' digital conversion and believe it remains the best positioned of the newspapers in our coverage universe, we believe its valuation has run ahead of its fundamentals,” reports S&P.

Earnings are projected to fall a total of 28% over the next three years.  The PE is 30.

The stock price is approaching long-term resistance at $14.  We see no reason for investors to own shares in a company with consistently shrinking earnings.

Our Ransom Note trendline says: SELL NEW YORK TIMES.

NYT Chart

NYT data by YCharts

Stock number three is:

Delta Air Lines, Inc., (SYMBOL:  DAL) and the headline says:

Strong Dollar Keeps S&P 500 Profits in Check -- Bloomberg

“The yen has weakened by about 21 percent against the dollar since Oct. 31,” reports Bloomberg.  International companies will be taking a hit in upcoming earnings releases.  Delta Air Lines said that the weak yen reduced unit revenue for a fourth straight month.

Delta’s earnings are projected to grow 42 percent this year, with a PE of 7.2.  The long-term debt ratio is 106%.

The stock is up 38% since we told investors to buy at $14 this year.  The chart remains bullish, but we caution investors that market focus could shift from earnings growth and low PE, to weak yen and high debt levels.  Use stop loss orders.

Our Ransom Note trendline says: HOLD DELTA AIR LINES.

DAL Chart

DAL data by YCharts