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:
Dow Jones Utility Average, (SYMBOL: DJU) and the headline says:
S&P DOWNGRADES UTILITY SECTOR TO UNDERWEIGHT – S&P
As interest rates head higher, utility stocks will have increased competition as investors may soon be choosing bond yields over utility stock dividends. S&P comments, “we do not believe the [utility] sector's above average valuation is justified by its negative 2013 EPS outlook.”
The utility sector, as represented by the Dow Jones Utility Average, had an 18% run-up year-to-date. It then lost almost its entire year-to-date gains in the last four weeks.
The chart is bearish, and unlikely to recover in sync with the broader stock market.
Our Ransom Note trendline says: STAY ON THE SIDELINES.
Stock number two is:
CarMax Inc., (SYMBOL: KMX) and the headline says:
CarMax First Quarter Results Top Estimates – RTT News
Used car retailer CarMax Inc. reported first quarter earnings of 64 cents, surpassing Wall Street’s estimate of 58 cents. The company also beat expectations on revenue, operating income and margins, continuing a long-term corporate growth trend.
CarMax is expected to increase earnings per share 11-13% per year for the next three years. The PE of 21.6 is high, within a normal range of 11 to 22; and the long-term debt ratio is high at 64%.
The stock ran up 36% since breaking past resistance levels in late December, and is now experiencing a pullback.
Today, at 11:20 AM PT: Get the Market Movements in Advance; Williams Edge Webinar for July 22nd, 2014 | John Ransom