Stocks in the News: China Arrests 4 in Glaxo Bribery, Prostitution Investigation

Posted: Jul 17, 2013 12:01 AM
Stocks in the News: China Arrests 4 in Glaxo Bribery, Prostitution Investigation

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: 

GlaxoSmithKline PLC, (SYMBOL: GSK) and the headline says:

GlaxoSmithKline executives arrested in China bribery investigation -- World News Views

Four senior Chinese executives have been arrested in a criminal investigation against healthcare company GlaxoSmithKline, after Glaxo allegedly used extensive bribery to increase sales.  Bribes allegedly totalled $489 million, and were spent on fraudulent travel and meeting expenses, and sexual favors, to 700 companies, doctors and officials.

A separate Chinese pricing investigation could potentially cause greater harm to  pharmaceutical companies, as it did with Mead Johnson and other baby formula manufacturers earlier this month.

The stock chart is neutral and the price has not been affected by the potential $5-$10 million dollar fine.

Our Ransom Note trendline says:  HOLD GLAXOSMITHKLINE.

GSK Chart

GSK data by YCharts

Stock number two is: 

Coca-Cola Co., (SYMBOL: KO) and the headline says:

A Perfect Storm -- Bad Weather Nearly Everywhere Depresses 2Q Volume Growth – Citi Research

Coca-Cola reported earnings in-line with expectations today, masking sales problems generated from bad global weather, weak economies, unfavorable foreign exchange rates, and negative PR on sugary soft drinks.  Global sales volume grew 1%, far below the 3.3% average estimate.

Earnings are expected to grow 6-9% per year for the next three years.  The dividend yield is 2.79% and the PE is 19.

The stock has been trading between $39 and $43 for four months, and will likely remain there for the time being.

Our Ransom Note trendline says: HOLD COCA-COLA.

KO Chart

KO data by YCharts

Stock number three is:

DreamWorks Animation Inc., (SYMBOL:  DWA) and the headline says:

Profits of $0.18 per share anticipated for Dreamworks Animation's second quarter -- Reuters

Wall Street is bullish on DreamWorks Animations’ second quarter report due out on July 31, despite weak peer group performance.  DreamWorks is the maker of the hit movie Shrek, and tomorrow’s new release Turbo.

The company lost $53 million last year, and is expected to earn 83 cents per share this year.  Anaylsts are expecting between five and forty cents per share for the quarter, which means we’ll see volatility when earnings are announced.

The stock is up 33% since we recommended it as a trading buy on March 22.  There’s price support at $24 and $22.  Shareholders should protect recent profits with stop-loss orders.

Our Ransom Note trendline says:  HOLD DREAMWORKS ANIMATION.

DWA Chart

DWA data by YCharts