Welcome to John Ransom's Stocks In The News, where the headline meets the trendline.
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.
Stock number one is:
Lululemon Athletica Inc., (SYMBOL: LULU) and the headline says:
Only the CEO Has Changed – Morgan Stanley Research
Christine Day is stepping down as CEO of Lululemon, maker of much-loved yoga pants, in the wake of a product recall which also cost the Chief Product Officer her job. Morgan Stanley said today, “The CEO exit may imply deep organizational turmoil sometimes seen in high growth businesses. “
We reported on March 19 that the company was forced to recall yoga pants which were too sheer, due to a manufacturing error, and we told investors to stay on the sidelines. Expected 2013 earnings growth has since come down from 23% to 8%. The PE is 34.
After reaching new highs yesterday, Lululemon’s stock crashed through several support levels today, down to support at $65. With a CEO search underway and a bearish chart, there is no near-term upside to this stock.
Our Ransom Note trendline says: AVOID LULULEMON.
Stock number two is:
Sprint Nextel Corp., (SYMBOL: S) and the headline says:
Softbank Raises Sprint Bid -- Bloomberg
SoftBank Corp. has raised its bid to acquire Sprint Nextel shares to $7.65 apiece, vs. Dish Network’s offer valued at about $7.00 per share in cash and Dish stock. “Sprint says that Dish has until June 18 to make its 'best and final' offer,” reports Bloomberg.
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