Stocks in the News: Bank of America Cuts China Bank Holdings

Posted: Sep 04, 2013 12:01 AM

Stock number one is: 

Bank of America Corp., (SYMBOL: BAC) and the headline says: Bank of America cutting China bank holdings with $1.5 billion stake sale -- Reuters

Bank of America Corp. plans to sell its holdings in China Construction Bank Corp. for  $1.5 billion, in a move to clean up its balance sheet and enhance its capital ratios.

Bank of America had several unprofitable years after the 2008 Financial Meltdown.  Earnings per share are now growing aggressively, from 25 cents per share last year, to a projected $1.59 per share in 2015.

The stock is up 11% since we said to buy BofA on July third, currently trading between $14 and $15.  There’s price resistance at $15, and again at $19.

Our Ransom Note trendline says:  BUY BANK OF AMERICA.

BAC Chart

BAC data by YCharts

Stock number two is: 

Citigroup, (SYMBOL: C) and the headline says: Citigroup to sell private equity fund to Rohatyn Group -- Reuters

Citigroup sold more than $6 billion in private-equity and hedge-fund assets in order to “comply with new regulations that restrict banks' holdings of alternative investments,” reports Reuters. “The so-called ‘Volcker rule’ is still being finalized, but is likely to be implemented within a few years. It prohibits banks from investing in any funds they do not manage.”

Earnings growth projections have increased significantly since we reported on Citigroup in July, now expected to rise 28% this year.  The PE is 10.  Share buybacks are expected to total $7.4 billion in 2014.

The stock has been trading sideways this summer, between $48 and $53, and should attract traders and growth stock investors.

Our Ransom Note trendline says..... ACCUMULATE CITIGROUP UNDER $50.

C Chart

C data by YCharts

Stock number three is:

Microsoft Corp., (SYMBOL:  MSFT) and the headline says: Microsoft to Buy Nokia’s Devices Unit for $7.2 Billion -- Bloomberg

“Microsoft agreed to buy Nokia's mobile-phone business and license its patents for $7.2 billion, seeking to revive two smartphone businesses that have struggled for a half-decade to gain share against Apple and Google,” reports Bloomberg.

The deal will bring 32,000 Nokia employees to Microsoft, along with Nokia CEO Stephen Elop.  There is speculation that Elop will be chosen to succeed CEO Steve Ballmer, who plans to retire next August.

Microsoft is expected to grow earnings by 4% this year.  The PE is 11.4, and the dividend yield is 2.93%.  The share price is testing support levels today at $31.

Our Ransom Note trendline says....  STAY ON THE SIDELINES.

MSFT Chart

MSFT 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.