Stocks in the News: Citi's Back?

Posted: Jul 16, 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: 

Citigroup Inc., (SYMBOL: C) and the headline says:

Citigroup Profit Beats Estimates as Stock Trading Gains -- Bloomberg

Citigroup reported second-quarter operating profit of $1.24, beating the consensus estimate of $1.18, and up 42% year-over-year.  Stock-trading revenue spiked 68%.  Losses on unwanted assets in Citi Holdings fell to $570 million, its smallest quarterly loss ever.

Earnings per share are expected to rise 23% this year.  The PE is 10.9.  Share buybacks are expected to total $7.4 billion in 2014.

The stock appears capable of breaking past long-term resistance at $52 in the near-term.

Our Ransom Note trendline says:  BUY CITIGROUP.

C Chart

C data by YCharts

Stock number two is: 

AT&T Inc. and Leap Wireless Int'l Inc., (SYMBOL: T, LEAP) and the headline says:

AT&T to Acquire Leap Wireless for $1.2 Billion in Cash – The Wall Street Journal

AT&T has agreed to buy Leap Wireless for $15 per share, and the stock is trading near $17 today.  The deal gives AT&T more customers and airwaves.  Leap shareholders should absolutely sell into today’s inflated share price.

AT&T’s earnings are expected to grow 8-9% per year for the next three years.  The PE is 14, and the dividend yield is 5%.

With a big dividend and a neutral stock chart, we told investors to hold AT&T three times this year.

Our Ransom Note trendline says: SELL LEAP WIRELESS and HOLD AT&T.

T Chart

T data by YCharts

Stock number three is:

Alexion Pharmaceuticals, (SYMBOL: ALXN) and the headline says:

Alexion valuation could choke any Roche bid -- Reuters

Roche Holdings is purportedly seeking financing on a bid for Alexion Pharmaceuticals, in order to diversify into treatments for severe and rare health disorders.  However, Alexion is not the best strategic fit for Roche, and might be too expensive.

Wall Street expects Alexion to increase earnings per share another 38% in 2013.  The PE is 37.

On February 14, we said “buy Alexion under $90”.  The stock then rose 23% through May, corrected, and is now bouncing up against last year’s record high at $118.

Our Ransom Note trendline says: HOLD ALEXION PHARMACEUTICALS.

ALXN Chart

ALXN data by YCharts