Stocks in the News: Time Warner Kicks Retirees Off Healthcare Because of Obamacare

Crista Huff
Posted: Sep 12, 2013 12:01 AM
Stocks in the News: Time Warner Kicks Retirees Off Healthcare Because of Obamacare

Stock number one is: 

Marriott International, Inc., (SYMBOL: MAR) and the headline says: China rich list topped by property developer Wang Jianlin – BBC News

Property developer Wang Jianlin is now China’s richest man, with a net worth of $22 billion.  Bloomberg is reporting that Jianlin “has hired two investment banks to buy hotel-management companies in the U.S.”  Shares in Marriott International are up about 3% today based on takeover speculation.

Marriott’s earnings are expected to grow 16-18% per year for the next three years.  However, their long-term debt ratio is extremely high at 153% and their cash position is weak at $88 million as of December.  It makes sense that a cash-rich investor could appeal to Marriott’s board of directors.

Traders and takeover speculators could accumulate shares at $41, but we wouldn’t otherwise recommend the stock due to the company’s cash and debt positions.

Our Ransom Note trendline says:  HOLD MARRIOTT.

MAR Chart

MAR data by YCharts

Stock number two is: 

American Express Co., (SYMBOL: AXP) and the headline says: Time Inc. Buys Food & Wine, Travel & Leisure From Amex -- Bloomberg

Time Inc. has agreed to purchase American Express Publishing for approximately $100 million, for which parent company Time Warner can easily write a check.  American Express “is selling the magazines because banking regulations restrict the company from non-financial activities,” reports Bloomberg.

Earnings per share at AmEx are expected to grow 10% per year for the next three years.  The company gets over half its revenues from card spending, while maintaining strong credit quality and an extremely low delinquency ratio.

AmEx shares broke past long-term resistance in May, and have traded between $71 and $79 since that time.  The company is doing well financially, but there’s no compelling reason to purchase shares.

Our Ransom Note trendline says..... HOLD AMERICAN EXPRESS.

AXP Chart

AXP data by YCharts

Stock number three is:

Time Warner Inc., (SYMBOL: TWX) and the headline says: Time Warner joins IBM in moving retirees off health plan due to rising costs – Fox News

“Time Warner Inc. says it plans to move its retired workers off its health plan and provide money to them to purchase coverage on private exchanges at the beginning of next year,” reports Fox News.  The benefit change mirrors an identical decision made by IBM last week, and is attributed to rising healthcare costs.

Earnings at Time Warner are projected to grow 14-15% per year for the next three years.  Time Inc. will spin off from Time Warner in first quarter 2014.  Now that we’ve seen competitor News Corp. spin off 21st Century Fox, which brought immediate profit to shareholders, we think Time Warner shareholders will be equally well-rewarded.

Shares are up 18% since we began recommending the stock in February.  The share price experienced an orderly correction within an uptrend during August, and could easily begin reaching new highs again near-term.

Our Ransom Note trendline says....  BUY TIME WARNER.

TWX Chart

TWX data by YCharts

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.