7 Conglomerates to Trade in Earnings Season
It's not a question of market timing; it's the idea of adding to long positions on market weakness to a value level and to reduce long positions on strength to a risky level.
The multi-sector conglomerates sector is 3.6% overvalued and there are 13 of 16 sectors that are more overvalued as we enter the earnings season for fourth-quarter 2012 results. The seven companies I am profiling today report their earnings between Jan. 18 and Feb. 5, so we are on the alert for upgrades and downgrades between now and then.
I will show the current EPS estimates from Wall Street and then compare these numbers to more current estimates during the weeks these companies report.
All seven of these stocks are trading around their fair value prices between 6.1% undervalued and 7.8% overvalued and five of seven have buy ratings according to www.ValuEngine.com. One stock has been downgraded to hold from buy this morning.
All seven have had solid performances over the last 12 months with gains between 17.2% and 38.5%. They are all expected to be higher 12 months from now but only by 3.5% to 7.0%.
The 12-month trailing price-to-earnings ratios are reasonable between 11.5 and 18.5. All are above their 200-day simple moving averages so there is risk of a reversion to the mean in 2013.
Reading the Table
OV/UN Valued : The stocks with a red number are undervalued by this percentage. Those with a black number are overvalued by that percentage according to ValuEngine.
VE Rating : A "1-Engine" rating is a Strong Sell, a "2-Engine" rating is a sell, a "3-Engine" rating is a hold, a "4-Engine" rating is a buy and a "5-Engine" rating is a strong buy.
Last 12-Month Return (%): Stocks with a red number declined by that percentage over the last 12 months. Stocks with a Black number increased by that percentage.
Forecast 1-Year Return : Stocks with a red number are projected to decline by that percentage over the next 12 months. Stocks with a black number are projected to move higher by that percentage over the next 12 months.
Value Level : The price at which to enter a GTC Limit Order to buy on weakness. The letters mean; W-Weekly, M-Monthly, Q-Quarterly, S-Semiannual and A- Annual.