Will Apple Sour a Mixed Earnings Season?

TheStreet.com

NEW YORK (TheStreet) -- Last week I profiled 19 companies' pre-earnings including 10 Dow components. There were 15 companies that beat EPS estimates, one matched and three missed. Despite this positive mix, ten of the stocks ended the week lower in price than on the day I profiled them. The mixed bag included weaker than expected revenue and cautious comments.

Today I profile seven stocks that report quarterly results on Tuesday, three pre-market and four after the close. Four are Dow components. On Tuesday and Wednesday I will profile 12 more stocks matching the total of 19 I covered last week. Nine are Dow components. One is the important earnings report from Apple , which could sour this mixed earnings season, or prove that results are sweet enough to have a significant oversold rally.

On March 26 I suggested that investors Allocate U.S. Holdings to 14 Top Dow Stocks. Two of the 14 were profiled on March 25 in 9 Consumer Staples Stocks at Risk of Reversion. Since then two of these stocks have been downgraded to hold. Four of these report quarterly results this week. Here's a recap on the six that reported their results last week:

Coca Cola ($42.66 vs. $40.04 on March 25) -- set a multi-year high at $42.77 on April 19 on better than expected earnings. Coca Cola still has a buy rating and the stock is above my semiannual pivot at $42.26, which should be a magnet.

General Electric ($21.75 vs. $23.24 on March 26) -- declined after beating EPS estimates on cautious comments on their European business. GE still has a buy rating with an annual value level at $21.09 and a monthly risky level at $23.33. The stock ended last week just below its 200-day simple moving average at $21.77.


Intel ($22.44 vs. $21.15 on March 26) -- ended last week just above its 200-day SMA at $22.41 even though they missed EPS estimates by two cents last Tuesday. Intel offered positive comments and the stock still has a buy rating with a semiannual value level at $19.80, a weekly pivot at $22.83 and quarterly risky level at $26.37.

McDonald's ($99.92 vs. $98.24 on March 26) -- missed earnings estimates and the stock dropped $1.99 on Friday. McDonald's still has buy rating and set a new multi-year high at $103.70 on April 12. My semiannual value level is $96.26 with an annual pivot at $99.38 and annual risky level at $104.63.

Microsoft ($29.77 vs. $28.16 on March 26) -- beat EPS estimates by a nickel and the stock gapped higher on Friday. The stock had been downgraded to hold from buy after testing a year-to-date high at $30.32 on April 10 and Friday's high fell short of this level. My monthly value level is $27.18 with annual pivots at $27.92 and $28.57, and quarterly risky level at $30.92.


UnitedHealth ($60.04 vs. $54.86 on March 26) -- matched EPS estimates and the stock traded down to $58.03 on Thursday. The stock had been downgraded to hold from buy following the test of a multi-year high at $63.95 on April 2. My semiannual value level is $54.10 with a semiannual pivot at $59.89 and quarterly risky level at $63.66, which was tested at the April 2 high.

Verizon ($52.25 vs. $49.16 on March 26) -- beat EPS estimates by three cents and the stock still has a buy rating after setting a new multi-year high at $52.35 on Friday. My quarterly and monthly value levels are $46.78 and $45.74 with this week's risky level at $52.83.

Today's earnings profiles are seven stocks in seven different sectors.

Reading the Table

OV/UN Valued: 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 in the table are projected to move higher by that percentage over the next 12 months.

Value Level: 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 time frame noted.

Risky Level: Price at which to enter a GTC limit order to sell on strength.

The seven companies I cover today represent five overvalued sectors.

Reporting pre-market on Tuesday: Du Pont ($49.19) is a hold rated Dow component in the basic materials sector which is 15.3% undervalued. The stock has been seeing lower highs going back to May 2011. The weekly chart profile is positive but overbought with the stock above its five-week modified moving average and 200-week SMA at $48.83 and $44.50. My monthly value level is $45.04 with a weekly risky level at $51.08.

Travelers ($84.81) is a hold rated Dow component in the finance sector which is 11.1% overvalued. The stock set a multi-year high at $86.61 on April 15. The weekly chart profile is positive but extremely overbought with the five-week MMA at $83.15. My quarterly value level is $73.36 with a weekly pivot at $86.28 and monthly risky level at $87.09.

United Technologies ($93.22) is a buy rated Dow component in the multi-sector conglomerates sector which is 1.1% undervalued. United Technologies set a multi-year high at $95.84 on April 11. The weekly chart profile is positive with extremely overbought momentum and the five-week MMA at $92.50. My annual value level is $90.05 with a semiannual pivot at $94.43 and monthly risky level at $95.20.


Reporting after the close on Tuesday:

Apple ($390.53) is a buy rated stock in the computer and technology sector which is 6.2% overvalued. Apple was a $700 stock in September and is now approaching its 200-week SMA at $372.70 on an extremely oversold weekly chart with its five-week MMA at $434.64. I do not have a value level with a weekly pivot at $403.52, an annual pivot at $421.05, and monthly, semiannual and annual risky levels at $461.98, $470.21 and $510.64.

AT&T ($38.28) is a buy rated Dow component in the utilities sector which is 8.8% overvalued. The stock set a multi-year high at $38.80 on April 11. The weekly chart profile is positive but overbought with the five-week MMA at $37.12. My quarterly value level is $36.47 with a weekly pivot at $38.86 and annual risky level at $39.86.

Norfolk Southern ($74.75) is a sell rated stock in the transportation sector which is 10.6% overvalued. The stock has tried three times to breakout above $78.00 to $78.50 since July 2011 and has failed to do so. The weekly chart profile is positive but overbought, but a close this week below its five-week MMA at $74.25 will shift this profile to negative. My quarterly value level is $69.85 with a semiannual pivot at $74.99 and annual risky level at $75.90.

YUM! Brands ($65.04) is a buy rated stock in the retail-wholesale sector which is 13.2% overvalued. The weekly chart profile is negative with the five-week MMA at $67.41. My semiannual value level is $61.13 with a weekly risky level at $70.02.

At the time of publication the author held no positions in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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