4 Stocks Taken to the Woodshed
A fast food chain reported weaker-than-expected fried chicken sales in China. And an Internet software company said raising prices for their products would be limited due to a new deal with the U.S. government.
The three retailers taken to the woodshed are in the retail-wholesale sector, which is 7.6% overvalued according to www.ValuEngine.com. The Internet software stock is in the computer-technology sector, which is 3.3% overvalued. The Internet software industry is 16.9% undervalued.
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.
Pivot: A level between a value level and risky level that should be a magnet during the timeframe noted.
Risky Level : The price at which to enter a GTC Limit Order to sell on strength.
Kohl's Corp (KSS) ($44.65) gapped below its 200-day simple moving average at $49.82 last Thursday after they reported weaker-than-expected same store sales blaming Superstorm Sandy. Shares were taken to the woodshed and chopped by 9.0%.
The stock traded as low as $44.18 on Friday testing my annual value level at $44.22. Investors considering KSS as a "buy and trade" stock with a buy at the value level should consider booking profits on strength to my semiannual pivot at $47.45.
Kohl's has a buy rating according to ValuEngine, is 17.0% undervalued and has a favorable trailing 12-month price-to-earnings ratio of 10.4.
Tiffany & Co (TIF) ($58.98) gapped below its 200-day SMA at $61.68 last Thursday after reporting earnings that missed analysts' estimates. The luxury retailer reported solid sales of high-end jewelry, but weaker-than-expected lower-end sales of silver-based goods.
Investors considering TIF as a "buy and trade" stock should try to catch this falling knife with a buy on weakness to my semiannual value level at $57.66. The upside is a return to the 200-day SMA with my weekly risky level at $62.99.