Welcome to John Ransom's Stocks In The News, where the headline meets the trendline.
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:
Yahoo! Inc., (SYMBOL: YHOO) and the headline says:
Yahoo’s [CEO Marissa] Mayer Buys Tumblr for $1.1 Billion -- Bloomberg
Yahoo! Inc. will purchase Tumblr in a $1.1 billion all-cash deal. “Tumblr … will continue to host its more than 108 million blogs, while CEO and founder David Karp …will remain in charge of the website, ‘per the agreement and our promise not to screw it up,’ … Yahoo said today..,” reports Bloomberg. Improvements to the Flickr photo-sharing site are also being unveiled today, as Yahoo! aggressively competes with Facebook and Google for users and advertisers.
The acquisition leaves Yahoo! with another $4 billion cash-on-hand. Yahoo’s earnings were previously expected to grow 20% this year. Expect upward revisions to future earnings estimates.
The stock is up 60% since it broke out in October. As we reported last week, we like Yahoo!, and will probably recommend shares after a price correction. Current shareholders should protect profits!
Our Ransom Note trendline says: STAY ON THE SIDELINES.
Stock number two is:
Campbell Soup Company, (SYMBOL: CPB) and the headline says:
Unusually Robust Soup Season Drives First Quarter Upside – Morgan Stanley Research
Campbell Soup Company reported third quarter earnings of 62 cents per share, above consensus estimates of 56 cents. Soup sales were up 14% year-over-year. The company also guided full-year estimates upward.
Earnings per share are projected to grow 6% per year for the next three years. The PE is high at 18.6, in a four-year range of 12-18. The long-term debt ratio is high at 61%.
Campbells Soup stock broke past long-term resistance at $40 in late February, rose another 20%, leveled out, and appears to be rising again. Current shareholders have been lucky recently, and should use stop loss orders to protect rapid gains.
Stock number three is:
General Electric Co. (SYMBOL: GE) and the headline says:
GE Capital Plans $6.5 Billion in Dividends to Parent -- Bloomberg
GE Capital will pay $6.5 billion in dividends to parent company General Electric in 2013, which GE will use to fund share repurchases, and dividends to shareholders. On April 8, we reported, “GE is changing its business mix, paring back entertainment and banking businesses, and focusing on equipment and service to industrial sectors, especially the oil and gas markets.” In that light, GE is actively shrinking the size of GE Capital now that access to capital markets is more restricted.
Earnings are growing 9-10% per year, and the dividend yield is 3.24%. The PE is 14.2.
General Electric’s stock price experienced a shake-out in late April, which is a bullish sign of upcoming near-term price movement. We recommended that investors buy GE in early April.
Our Ransom Note trendline says.... BUY GENERAL ELECTRIC