Welcome to stocks in the news where the headline meets the trendline.
Stock Number One: Hertz Global Holdings, Inc (SYMBOL: HTZ)
And the headline says Hertz sinks despite better than expected profit as fleet issues weigh—Fly on the Wall
“Shares of car rental and leasing company Hertz (HTZ) are falling despite reporting better than expected quarterly earnings,” reports FOTW, “as the company noted it continues to have issues with fleet efficiency. WHAT'S NEW: Last night, Hertz reported third quarter adjusted earnings per share of 73c and revenue of $3.06B, compared to analysts’ consensus estimates of 71c and $3.06B. The company also reaffirmed its FY13 outlook.”
At issue is the size of the fleet that Hertz owns. They own a bigger fleet than demand warrants which means they are gonna have to sell some of those cars earlier than anticipated. That will cost them some money.
Analysts have been downgrading Hertz estimates for the last several months and that’s not a good sign. I like stocks with earnings or sales momentum.
The company is trading at 9 times it’s forward earnings estimates and doesn’t pay a dividend.
Our Ransom Notes Trendline says: Avoid Hertz
Stock number two: Endo Health Solutions Inc (SYMBOL: ENDP)
And the headline says: Endo Health Solutions Surges on Earnings, Complicated Acquisition– Barron's
“Endo Health Solutions, a generic-drug maker that competes with the likes of Mylan (MYL) Sagent Pharmaceuticals (SGNT) and Teva Pharmaceuticals (TEVA),” reports Barron’s, “has surged today after it announced better-than-expected earnings and made a big acquisition.”
Forget earnings: The story here is in the acquisition.
The new companies combined earnings take effect right away, and the tax advantages of being an Irish domiciled company make the deal attractive to analysts.
Just count it as another American company fleeing the United States for more attractive tax treatment.
Our Ransom Note Trendline says: Avoid Endo Health.
Stock Number Three: Pandora (SYMBOL: P)
And the headline says: Heck yeah, it’s a bubble! So what?– MarketWatch
“Whether or not this current market is full of outright bubbled stocks that we’ll look back at one day and marvel at the valuations people were paying for YelpYELP +2.39% and ZillowZ -0.31% , two of the stocks that came public during this app revolution, isn’t the point,” writes Cody Willard for MarketWatch. “The point is that almost all of our stocks are trading at much higher levels and higher multiples on future earnings than they were back in 2010, and that means there’s inherently more risk in them now.”
Willard is using put options as hedges to protect gains in stocks that might look a little bubbly to him, one of which he mentions is Pandora.
That’s good advice. If you don’t know how to do this, call a professional.
Our Ransom Note Trendline says: Use Put Options to Protect Gains in Bubbly Stocks
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