John Ransom

Welcome to stocks in the news where the headline meets the trendline.

Stock Number Microsoft (SYMBOL: MSFT)

And the headline says: Will Microsoft (MSFT) Miss Earnings Estimates?- Zacks

“Microsoft Corp. (MSFT) is set to report first-quarter fiscal 2014 results on Oct 24.” reports Zacks. “Last quarter, it posted a 21% negative surprise. The extent of decline in Microsoft’s Windows segment in the last quarter does not bode well for the next few quarters although the company’s recent restructuring and refocus could get it through these difficult times.”

The company is trading about 14 times trailing earnings; and about 12 times forward earnings. The company’s annual dividend for next year is 3.6%.

But as we mention almost everyday this is a market that reward upside earnings surprises and punishes negative earning surprises.

Can’t fight the trend on this one.

Our Ransom Notes Trendline says: Sell Microsoft

MSFT Chart

MSFT data by YCharts

Stock number two: Crosstex Energy Inc. (SYMBOL: XTXI)

And the headline says: Devon Energy Cancels MLP Spinoff, Opts for Merger Instead- Motley Fool

“Crosstex Energy LP (NASDAQ: XTEX ) and Crosstex Energy Inc (NASDAQ: XTXI) were up big yesterday on plans to merge with Devon Energy's (NYSE: DVN) midstream assets to create two new publicly traded entities, one general partner, and one master limited partnership,” writes

The new company will be able to send more cash to shareholders via it’s LLPs and will be able increase it’s debt rating to investment grade says the Fool.

That means more development, more future cash flow too. But this horse has already left the barn.

XTXI Chart

XTXI data by YCharts

Our Ransom Note Trendline says: Sell Crosstex

Stock Number Three: Netflix (SYMBOL: NFLX)

And the headline says: Netflix shares slump as post-earnings rally fades- Reuters

“Shares of Netflix Inc tumbled on Tuesday, reversing early gains that took the stock to all-time highs on the back of its quarterly results,” reports Reuters. “While the results were viewed as strong, with faster profit and subscriber growth than had been expected, the online movie renter was unable to continue its meteoric rise this year that has taken it up more than 260 percent in 2013, the biggest gainer in the S&P 500.”

The company is trading right now at 420 times earnings. While earnings are expected to ramp up moving forward, it’s expected to be more in the 20ish% range, this multiple would imply triple digit growth.

I love this company. I just don’t like the stock price.

Our Ransom Note Trendline says: Avoid Netflix.

NFLX Chart

NFLX 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.

Get the best of Townhall Finance Daily delivered straight to your inbox

Follow Townhall Finance!