By Larry Gellar
We’ve identified five stocks that have had their 20-day simple moving average crossed above their 50-day simple moving average. That means a bullish trend could be under way well into January, and these stocks have compelling stories as well. For instance, Delta’s aggressive expansion plans should help the company take advantage of an improving economy. Meanwhile, stocks like Procter & Gamble, Johnson & Johnson, and Time Warner offer terrific dividends. Let’s see what specifically has been happening with the five stocks discussed below:
It’s been a tough year for Delta Air Lines Inc. (DAL), but the company’s management remains top-notch regardless. The company just promoted Steve Sear to senior vice president of global sales, a wise move considering the success the company has had with that division. Here’s what CEO Ed Bastian said,
This promotion reflects the impressive progress our entire sales group has made under Steve's guidance and vision. His experience will help us continue to make Delta the strongly preferred airline for corporate travel and agency partners.
Meanwhile, Delta is making big plans in New York. The company is adding a variety of new flights and destination to its operations at LaGuardia Airport. That’s a move that makes sense because the company already has plenty going on at JFK International. Additionally, LaGuardia is a good starting point for expansion as the economy continues to improve. Delta’s global operations are also impressive. The company’s deal with China Eastern is something that many investors are looking forward to. Important competitors for Delta include AMR (AMR) and United Continental (UAL). In fact, value metrics for United Continental are quite similar to Delta but overall a bit lower. That might be surprising to some since United Continental’s margins are much better – those numbers for United Continental are 27.65% gross and 6.71% operating.
Time Warner Inc. (TWX) should be able to finish the year up, but it’s been a bit of a rocky road. Part of the problem is that the once dominant CNN is now getting beaten by Fox News (owned by News Corp. (NWSA) and MSNBC (owned by NBC Universal, which is owned by Comcast (CMCSA) and General Electric (GE)). Jim Walton, president of CNN, believes that CNN can turn things around though by tapping into the mobile industry. That’ll probably mean the subsidiary will have to find some nifty acquisitions, and such a move would also have the side effect of sprucing up the company’s image. Many younger viewers have fallen for the trendy style of reporting that Fox and MSNBC employ. Regardless, CNN still has a foothold with older viewers, with or without Larry King. For the time being, investors can get excited about an iPad app called Zite, which CNN acquired a few months ago. Sources say that only cost Time Warner $20 million, which is surprising because of its immense possibility to generate peripheral revenue. One important competitor for Time Warner is Walt Disney Co. (DIS), and that stock is slightly higher for ratios such as price to earnings, price/earnings to growth, and price to sales.
Procter & Gamble Co. (PG) has been up and down all year, but everyone knows this is a high-quality stock. In fact, the company’s recent “innovation tournament” is gathering quite a bit of attention from the business community. Having tasked itself with saving energy and limiting pollution, the company brought in external experts to see who could figure out the best ideas for constructing plants. Here’s what Scott Borcherding from the company’s global facilities engineering said about one topic:
It became clear to all of us that if you want to make a significant impact on energy use, you need multiple turbines… We don't have vast plots for 80 wind turbines.
In other news, Procter & Gamble is teaming up with Google (GOOG) for some new marketing techniques. Specifically, Procter & Gamble will use some of Google’s search data to determine which areas of the U.S. are the most flu-prone. Armed with that information, Procter & Gamble will be able to ensure its mobile ads about its new Behind Ear Thermometer are going to the right people. For comparison’s sake, investors might want to check out Kimberly-Clark (KMB), but that stock has much lower margins – Kimberly-Clark's numbers are 31.41% gross and 14.08% operating.
Johnson & Johnson (JNJ) has had an okay year, but the company continues to be plagued by recalls. The latest issue is with some forms of its Motrin drug, but there have been problems with completely different segments of the company as well. Johnson & Johnson has made plans to change the McNeil division that makes many of the products that have been at fault, but that wasn’t in time to avoid a securities fraud suit from investors. Johnson & Johnson’s HIV drugs have also been in the news lately. While the Medicines Patent Pool was hoping to get Johnson & Johnson to turn over its recipes to generic drug manufacturers, the company has refused, noting that such a move could increase viral resistance to the treatments. That’s certainly true, and it’s unfortunate that it comes at the expense of developing countries that might have better access to the medicines. Other important drug manufacturers that investors might consider are Abbott Laboratories (ABT), Covidien (COV), and Novartis (NVS). Johnson & Johnson has the highest price/earnings to growth and price to sales ratios of those stocks, and that can be explained by Johnson & Johnson’s strong reputation. Johnson & Johnson also has terrific margins – those numbers are 68.99% gross and 25.42% operating.
Advanced Micro Devices, Inc. (AMD) has been declining all year, but the company’s new Bulldozer chips have many investors excited. These chips are being put in a variety of products ranging from desktop PCs to servers, and they could be a moneymaker for AMD since they’re inherently different from what Intel’s (INTC) currently offering. More specifically, the Bulldozer chip beats Intel’s products for certain tasks. Other chips like Llano, Trinity, Zacate, and Ontario are also looking good for AMD. Indeed, those chips may actually have more of an edge over their Intel counterparts than the Bulldozer chip. If there has been one problem for AMD though, it’s the situation with GlobalFoundries. That company, one of AMD’s business partners, has had some bizarre manufacturing issues, causing AMD to shift some of its business to TSMC. While that’s a good temporary solution, AMD would certainly benefit if GlobalFoundries gets back on track. As for value metrics, AMD has much lower price to earnings and price to sales ratios than Intel, IBM (IBM), and Nvidia (NVDA), and many investors question the company’s ability to win in a competitive environment. AMD’s low margins are also worth taking a look at – those numbers are 44.67% gross and 6.62% operating.