Stocks in the News: Another Green Automaker Faces Trouble

Posted: Aug 08, 2013 12:01 AM

Stock number one is: 

The Walt Disney Co., (SYMBOL: DIS) and the headline says: Film Writedown to Impact Fourth Quarter but Underlying Thesis Intact – Citi Research

Walt Disney reported third quarter earnings above consensus, but warned of a fourth quarter writedown for losses incurred by The Lone Ranger.  The company reported higher costs and lower ad revenue at the ABC television network, and strength in affiliate fees, ESPN ad sales, and resorts & theme parks.

Projected annual earnings growth in the mid-teens is coming primarily from resort & theme park performance, and the Lucasfilm acquisition.

On May 8, we told listeners that the chart was overextended, and that new investors should buy  on a pullback below $62.  The stock immediately peaked and has been trading sideways for several months, with the chart recently turning bullish.

Our Ransom Note trendline says:  ACCUMULATE WALT DISNEY COMPANY.

DIS Chart

DIS data by YCharts

Stock number two is: 

Tesla Motors Inc., (SYMBOL: TSLA) and the headline says: Tesla Seen Posting Quarterly Loss After First Profit -- Bloomberg

Tesla Motors is expected to report revenues down about 31% and a net quarterly loss, after its first-ever quarterly profit earlier this year.  Ironically, first quarter profits came from selling green-car credits to other automakers, and loan repayments, but not from selling profitable cars.

Previous projections for a full-year profit have come up short; the company is now expected to lose money again this year.  Tesla and the U.S. government continue to subsidize the purchase and lease of its  electric cars via tax credits and repurchase guarantees.

We told investors twice this year to avoid Tesla shares.  Frenzied gamblers have driven the stock price to unsustainable highs.

Our Ransom Note trendline says..... AVOID TESLA MOTORS.

TSLA Chart

TSLA data by YCharts

Stock number three is:

Time Warner Inc., (SYMBOL:  TWX) and the headline says: Time Warner Raises Earnings Forecast As ‘Man Of Steel’ Contributes To Second Quarter Strength –

Media conglomerate Time Warner beat third quarter expectations, and increased full-year earnings projections, boosted by hit movies “Man of Steel” and “The Great Gatsby”, HBO’s “Game of Thrones”, and basketball ad revenue.  Even the publishing division performed better than expected.

Earnings are expected to grow 15-16% per year over the next three years.

Time Warner expects to spin-off Time Inc. in the fourth quarter, which includes Time magazine, People, and Sports Illustrated.  We recommended Time Warner shares three times this year.  Now that we’ve seen competitor News Corp. spin off 21st Century Fox, which brought immediate profit to shareholders, we think Time Warner shareholders will be equally well-rewarded.

Our Ransom Note trendline says....  BUY TIME WARNER.

TWX Chart

TWX data by YCharts

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.