Stocks in the News:
Stock Number One: Bank of America (BAC)-
And the headline says:
Bank of America Cost Cuts Have Analyst Drooling- The Street.com
“Bank of America cost cuts and low valuation are the chief reasons Raymond James analyst Anthony Polini is leaving a ‘strong buy on the stock going into third-quarter earnings,” writes Dan Freed in the Street.com.
BAC is trading less than one times it’s book value as of the last quarter, on revenue of $78 billion with year over year earnings growth of 63 percent.
The company has a high PE due to the composition of it’s portfolio, but earnings will continue to grow robustly according to analysts.
Earnings are estimated by analyst to grow 51 percent next year and in the 18 percent range over the next five years.
Our Ransom Note Trendline says: Buy Bank of America
Stock number two: Facebook (FB)-
And the headline says:
Facebook Will Report Chatter to TV Networks About Shows- The Cheat Sheet.
“Although it says that it will not make the data generally open to the pubic,” writes Mark Lawson from the Cheat Sheet, “Facebook will begin sending weekly reports to the four largest domestic television networks this week, providing a look at how much chatter their shows are causing on the social network. The reports will contain how many “actions” such as likes, comments, or shares a TV episode has generated on Facebook and how many members took part in an action. Facebook will share the data reports with Fox, ABC, NBC, and CBS, and a few select partners.”
Facebook ahs enjoyed a tremendous run over the past several months after a rocky debut as a public company. The PE is 231 times earnings right now, and although earnings are expected to grow at 30 percent per annum over the next five years, it’s short operating history, low revenue visibility makes it appropriate for the only the most patient and aggressive investors.
Current shareholder should protect profits with stop-loss orders. Other investors should look elsewhere.
Our Ransom Note Trendline says: Hold Facebook.
Stock Number Three: The Active Network (ACTV)-
And the headline says:
Active Network Agrees To Private Equity Buyout- Investor’s Business Daily
“The Active Network (ACTV) stock soared 26% in early trading Monday after the enterprise software company agreed to be acquired for $1.05 billion, or $14.50 a share, by a private equity firm. Active Network is a leading provider of software that companies and other enterprises use to manage their events and various corporate functions.
The buyout comes amid signs that revenue and profit growth are slowing for the company.
Current investors should take advantage of today’s upswing.
Our Ransom Note Trendline says Sell the Active Network.
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