All eyes will be on earnings now as the season has begun. These five stocks are all reporting in the coming week. I have previously stated I like all these stocks. In the following sections we will take a closer look at each stock to determine if we should buy or sell the stock prior to earnings being announced.
In the following sections, we will take a closer look at these stocks to ensure the mean target prices are justified. We will perform a review of the fundamental and technical state of each company. Finally, we will determine if a catalyst for growth exists for the companies based on sector, industry or company specific dynamics. The following table depicts summary statistics and Monday's performance for the stocks.
Bank of America Corporation (BAC)
The company reports earnings on April 17th. The company is trading 6% below its 52-week high and has 2% potential upside based on a consensus mean target price of $12.47 for the company. BAC was trading Monday at $12.21, up over 2% for the day.
Fundamentally, BAC has several positives. The company has a forward P/E of 9.32. BAC has a net profit margin of 5.03%. BAC is trading for approximately 56% of book value. Insider ownership is up by 33% over the last six months. EPS next year is expected to rise by 34% and the company pays a dividend with a yield of .33%.
Technically, BAC is still in good shape. The stock just bounced off support at the 50-day sma which is positive. The stock has been in a solid uptrend since mid-July.
BAC announced a massive $10.5 billion share repurchase program after passing the stress tests. This propelled the stock to new 52-week highs. Nevertheless, the stock has pulled back significantly as of late due to global growth concerns. The stock is still trading at a 35% discount to book value. With the housing market continuing to improve, I see significant upside in the stock going forward. I like the stock going into earnings.
General Electric Company (GE)
The company reports earnings on April 19th. The company is trading 3% below its 52-week high and has 11% potential upside based on the consensus mean target price of $25.60 for the company. GE was trading Monday at $23.12, up almost 1% for the day.
Fundamentally, GE looks solid. GE's forward P/E is 12.50. GE's quarter-over-quarter EPS and sales growth rates are 10% and 4%, respectively. GE's net profit margin is 10.11%. GE pays a dividend with a yield of 3.29%.
Technically, GE has been in an uptrend since bouncing off a low of $18 in June. Recently, the stock has broken out to the upside after testing the 200-day sma twice in the last quarter. Currently the stock is consolidating just above the 50-day sma. I like the stock here.
GE just announced it has acquired oil pump maker Lufkin Industries for $3.3 billion. This is good news for America's shale boom. GE said in its release,
"The pumps represent a booming $13 billion patch of the oil and gas industry, fueled by shale and other unconventional sources of energy, and also by the need to make mature oil fields productive again."
I live in South Texas and can tell you things are booming regarding shale oil. This is a smart move by GE. GE looks poised to move higher. GE raised its authorized stock buyback to $35 billion and plans to buy back $10 billion worth of shares in 2013. I like the stock here, yet would definitely layer into any position prior to earnings.
Intel Corporation (NASDAQ:INTC)
The company reports earnings on April 16th. The company is trading 26% below its 52-week high and has 9% upside potential based on the consensus mean target price of $22.91 for the company. Intel was trading Monday for $21.09, up almost 1% for the day.
Fundamentally, Intel has some positives. The company has a forward P/E of 9.90. Intel pays a dividend with a yield of 4.27%. The company has a net profit margin of 20.63%. The company is trading for slightly over two times book value and has a PEG ratio of .84.
Technically, the stock is in a long-term downtrend, yet has rallied back recently after missing earnings last time on January 17th. The stock has reversed direction but still needs to break through $23 to confirm a full reversal.
Intel has the wherewithal to transition into the new age of tech. Recently Intel acquired Altera (NASDAQ:ALTR) as a chip foundry client. Altera has hired Intel to make FPGAs using next-gen 14nm manufacturing process and 3D transistor technology
For pure dividend growth and value, you might not find a better deal in the technology sector than Intel. The stock is bouncing off the bottom of the uptrend channel which was a buying opportunity in the past. I posit the stock is a solid buy at this point as the weak hands were shaken out after earnings. The risk/reward ratio favors longs.
Verizon Communications Inc. (VZ)
The company reports earnings on April 18th. The company is trading 1% below its 52-week high and 2% above the consensus mean target price of $48.50 for the company. Verizon was trading Monday for $49.43, down slightly for the day.
Fundamentally, Verizon has some positives. Verizon pays a dividend with a yield of 4.17%. The company has a forward P/E of 15.69. The company has a net profit margin of 9.11%. The company is trading for 23 times free cash flow.
Technically, Verizon has just broken through long-term resistance. The stock had been hugging the 200 day SMA but now is trading 11% above it. The stock has an RSI of 65. This is nearing overbought territory.
Verizon is well positioned for the telecom revolution. With the proliferation of mobile devices discussed in the AT&T section above, Verizon stands to grow profits substantially. The stock just broke out above long-term resistance. The risk/reward is unfavorable in my mind going into earnings. I would look for shares to sell off as this may be a case of buy the rumor sell the news with the current run up in share prices.
Yahoo Inc. (YHOO)
The company reports earning on April 16th. The company is trading 2% below its 52-week high and 1% above the consensus mean target price of $23.23 for the company. YHOO was trading Monday for $23.48, up almost 1% for the day.
Fundamentally, YHOO has some positives. The company has a forward P/E of 19.25. The company has a net profit margin of 65%. The company is trading for 21 times free cash flow.
Technically, YHOO is in great shape. The stock is in a solid uptrend. The stock is currently resting at the bottom on the uptrend channel which has been a buying opportunity each time.
YHOO is doing everything correct. I use Yahoo as my home page. I can tell you from personal experience they are doing a great job of utilizing all the available ad space. With the potential spinoff of the Alibaba unit in the works, I see YHOO continuing higher. I like the stock going in to earnings.
The Bottom Line
I believe these stocks are buys that have major upside potential. I see these stocks continuing to move higher as the year unfolds. The market is trading at all-time highs in the face of several negative market developments. I posit a correction may be in the works. With that in mind, you may see a significant buying opportunity in the near future. Keep some powder dry to pick up shares at a discount. Furthermore, always remember to maintain a well-balanced diversified portfolio containing several asset classes. I would not allocate more than 5% of a portfolio to speculation.
Use this information as a starting point for your own due diligence and research methods before determining whether or not to buy or sell a security. If you choose to start a position in any stock, I suggest layering in on a weekly basis at a minimum to reduce risk. Set a stop loss order to minimize losses even further if you wish.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in INTC, GE, BAC, VZ, YHOO over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: This is not an endorsement to buy or sell securities. Investing in securities carries with it very high risks. The information contained within this article is for informational purposes only and is subject to change at any time. Do your own due diligence and consult with a licensed professional before making any investment.