John Ransom

Welcome to Ransom's Stocks in the News where the headline meets the trendline.

Stocks in the News is produced by John Ransom in conjunction with Ransom Notes Radio.

Stock Number One: Home Inns & Hotels Management I (SYMBOL: HMIN)

And the headline says: Home Inns: Motel 168 Buy Smoothes Out Operations- Barron’s Emerging Markets Daily

“It seems Chinese budget hotelier Home Inns & Hotels Management (HMIN)’s $460 million acquisition in Motel 168 back in May has merits.,” writes Barron’s Emerging Markets Daily. “Data from the third quarter shows Motel 168 may be smoothing out Home Inns’ operations. While the unit price and occupancy rates at Home Inns’ original branches declined, Motel 168’s operations stayed firm.”

Chinese hotelier Home Inns and Hotel management stock jumped on big volume today as operating results from recent acquisitions have proved smart.

The recent acquisition of Motel 168 is seen by analyst to be helping offset declines in the company’s existing business.

The company trades today at about 100 times trailing earnings but about 3.25 times forward earnings.

Analysts however have recently reduced earnings estimates for the most recent quarter while upgrading earning prospects for the next quarter and next year.

With China’s economy’s turning around the hotel sector could provide an attractive play for aggressive growth stock investors.

Our Ransom Notes Trendline says: Buy Home Inns & Hotels Management

HMIN Chart

HMIN data by YCharts

Stock number two: Citrix Systems, Inc. (SYMBOL: CTXS)

And the headline says: Citrix Stock Dives On Disappointing Q3 Earnings- Investor’s Business Daily

“Citrix Systems (CTXS) stock fell 11% in early trading Thursday after the maker of virtualization and content delivery software and other cloud computing system products late Wednesday preannounced a Q3 earnings miss,” writes Investor’s Business Daily. “The Santa Clara, Calif., company expects to post adjusted earnings of 68 cents to 69 cents per share. The consensus estimate of analysts polled by Thomson Reuters was 73 cents.”

The company has been enjoying healthy revenue and earnings growth in last few years, thanks to the advances in cloud computing. And this earnings miss may be a sign of trouble to come for cloud computing companies.

For the past five years the companies enjoyed about 16% earnings growth year-over-year. Going forward the company expects to enjoy about 13% earning growth annually.

Our Ransom Note Trendline says: Sell Citrix

HMIN Chart

HMIN data by YCharts

Stock Number Three: Rite Aid Corporation (SYMBOL: RAD)

And the headline says: Rite Aid Will Pay $12 Million Over Dumping Lawsuit- Wall Street Cheat Sheet

“Rite Aid shares are up by 4.7 percent mid-morning Thursday, while the company has been ordered to pay over $12 million to resolve a civil lawsuit filed in California alleging that some 600 of its Rite Aid stores illegally dumped pesticides, bleach, and other toxics,” writes the Cheat Sheet. “The environmental protection lawsuit was brought in September by the district attorneys of Los Angeles, San Joaquin and Riverside counties. All told, 52 California district attorneys participated in the civil action.”

Right Aid is currently trading about 16 times earnings on $.32 per share in earnings over the trailing 12 months.

This company struggled over the last five years with earnings down about 75% annually. Going forward we see visibility of 8% earnings growth next five years annually.

Our Ransom Note Trendline says: Avoid Rite Aid.

RAD Chart

RAD data by YCharts

John Ransom

John Ransom’s writings on politics and finance have appeared in the Los Angeles Business Journal, the Colorado Statesman, Pajamas Media and Registered Rep Magazine amongst others. Until 9/11, Ransom worked primarily in finance as an investment executive for NYSE member firm Raymond James and Associates, JW Charles and as a new business development executive at Mutual Service Corporation. He lives in San Diego. You can follow him on twitter @bamransom.

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