Avoid the Value Traps

John Ransom | September 23, 2014 2:31 PM

Welcome to John Ransom’s Stocks in the News where the headlines meet the trendlines.

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Stock number one: CARBO Ceramics Inc.

Carbo warns on ceramic sales-- Investor's Business Daily

The chemical company sees Q3 ceramic proppant sales volume of 375 mil pounds, similar to Q1 sales, as demand for frac sand rises from drillers like Rosetta Resources (ROSE). Carbo Ceramics (CRR) also noted increased price competition on ceramic proppant sales, especially in the Bakken. Some clients are also seeing delays with well completion, pushing some sales that the company expected to make in Sept. to later in the year.

Symbol: CRR

Trailing PE: 18; Forward PE: 13

PEG: 1.12

Dividend: 1.10%

Estimate Trend: Down

Ransom Note Trendline: Avoid Carbo Ceramics

Stock number two: Mechel OAO

Mechel Steel trading lower …on continued concerns --Briefing.com

Russian miner MTL is lower by another 30% this morning on continued bankruptcy concerns. The stock lost 35% in Moscow trading today. This morning's weakness follows a 30% decline in MTL yesterday following comments from a Russian economic minister suggesting that bankruptcy was the most likely scenario.

CarMax (KMX) shares are getting towed 8% lower after the company missed earnings by 3-cents. Sales of new cars were up an impressive 18% but that's a relatively small part of what CarMax does. As it turns out selling used cars is where the real money is and CarMax didn't do enough of that to satisfy Wall Street. Surprisingly enough that's been the case for a lot of car retailers in 2014. For companies like CarMax, AutoNation and Sonic Automotive sales are brisk but the stocks have been lemons.

Symbol: KMX

Trailing PE: 22; Forward PE: 17

PEG: 1.40

Dividend: NA

Estimate Trend: Up

Ransom Note Trendline: Avoid CarMax