Eh, Safeway Sells Stores to Canada

Crista Huff
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Posted: Jun 14, 2013 12:01 AM
Eh, Safeway Sells Stores to Canada

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

Safeway Inc., (SYMBOL: SWY) and the headline says:

Safeway to Sell Canada Unit to Sobeys for $5.7 Billion -- Bloomberg

Safeway has agreed to sell its Canadian stores to Sobeys.  Safeway will receive about $4 billion after taxes and expenses, which will be used to pay down $2 billion in debt, and repurchase shares.  Safeway’s long-term debt ratio is high at 60%.

Citi Research has revised its earnings projection for Safeway down to $1.89 per share in 2013, which is down 12% year-over-year.  The PE is 13.6, and the dividend yield is 3.11%.

The chart pattern is turning bullish, and the stock is likely to trade between $22 and $27 in the near-term.  Citi says, “we see a lack of catalysts to drive significant additional upside in the near term. “

Our Ransom Note trendline says:  HOLD SAFEWAY.

SWY Chart

SWY data by YCharts

Stock number two is: 

E I du Pont de Nemours and Co, (SYMBOL: DD) and the headline says:

DuPont Lowers 2Q and FY13 Guidance; Remain Neutral – Citi Research

DuPont has lowered Wall Street’s earnings expectations for the second quarter to about $1.27 vs. consensus $1.36.  Unusually cool, wet weather is impacting its Agriculture and Nutrition & Health businesses.

Earnings are expected to grow 16, 14 and 12% in the next three years.  The PE is 14, within a five-year range of 10 to 24; and the dividend yield is 3.34%.

DuPont stock has been in a three-year trading range between $40 and $56, narrowing recently toward the mid-50’s.  The numbers are attractive but the chart is neutral.

Our Ransom Note trendline says:  HOLD DUPONT.

DD Chart

DD data by YCharts

Stock number three is:

H&R Block, Inc., (SYMBOL: HRB) and the headline says:

H&R Block Misses Earnings Estimates -- Zacks

H&R Block has announced fourth quarter  and full year earnings slightly below consensus estimates, but much better than last year’s numbers.  The company gained digital tax return market share, is successfully receiving interest in the sale of its banking operations, and will exit its partnership in 300 Wal-Mart stores.

Earnings are expected to grow 18, 14, and zero percent in the next three years.  The dividend yield is 2.81% and the PE is 15.

H&R Block’s stock price had a huge run-up early this year, and is now trading sideways at long-term resistance near $30.

Our Ransom Note trendline says:  HOLD H&R BLOCK.

HRB Chart

HRB data by YCharts