How to Trade the Big Stocks Reporting Earnings Tuesday
NEW YORK ( TheStreet) -- Earnings season is off to a solid start, and this week's focus is on 10 Dow components reporting earnings on Tuesday, Wednesday and Thursday.
Today I profile nine companies that report quarterly results on Tuesday, and tomorrow I will profile nine companies that report on Wednesday and Thursday.
At www.ValuEngine.com we show that 41.4% of all stocks are undervalued, which makes 58.6% of all stocks overvalued.
All 16 sectors are overvalued, including the six covered by the nine stocks profiled today. Those are: basic industries, overvalued by 5.8%; computer & technology, overvalued by 13.0%; finance, overvalued by 13.9%; medical, overvalued by 13.2%; transportation, overvalued by 20.4%; and utilities, overvalued by 5.6%.
Among today's nine companies, five are rated buy and four are rated hold. Five are undervalued (by 1.8% to 19.6%), while four are overvalued (by 8.1% to 21.2%).
Only two are down over the last 12 months, and five of the winners show double-digit gains ranging from 11.3% to 38.1%.
All are expected to be higher 12 months from now. Expected upside is muted, however, and ranges between 2.3% and 8.3%. The 12-month trailing price-to-earnings ratio ranges from 11.9 to 48.4. We show five of nine above their 200-day simple moving averages (SMA), which reflects the downside risk of a reversion to the mean.
Following are my "buy and trade" profiles for the four stocks reporting before the open on Tuesday. For more information on my "buy and trade" strategy, see this article on TheStreet.
DuPont (DD) ($46.99) is expected to earn 9 cents per share. DD set a 52-week low at $41.67 on Nov. 16, and the the stock is below its 200-day SMA at $48.48. The daily chart shows an overbought condition, while the weekly chart is positive, with the five-week modified moving average (MMA) at $45.59 and the 200-week SMA at $43.10. The stock has a hold rating. My monthly value level is at $41.24, the weekly pivot is at $47.08 and my quarterly risky level is at $47.55.
Johnson & Johnson (JNJ) ($73.23) is expected to earn $1.17 per share. JNJ set a multiyear high at $73.23 on Friday, with the stock above its 200-day SMA at $67.85. The daily chart shows an extremely overbought condition, and the weekly chart is positive with the five-week MMA at $71.19. The stock has a buy rating, with my monthly value level at $71.86, weekly pivot at $72.88 and annual risky level at $76.79.
Travelers Companies (TRV) ($76.31) is expected to earn 11 cents per share, up from 4 cents, the estimate posted last week. TRV set a multiyear high at $76.55 on Friday, and the stock is above its 200-day SMA at $66.58. The daily chart shows an extremely overbought condition, and the weekly chart is positive, with the five-week MMA at $73.27. The stock has a buy rating with my monthly value level at $70.65. My weekly pivot is at $76.10.