Buy Rated Retail-Wholesalers Headline Earnings

TheStreet.com

NEW YORK (TheStreet) -- This week's earnings reports highlight six buy rated stocks in the retail-wholesale sector, one major buy rated tech stock, and a sell rated name in the construction sector.

On April 9 I wrote, Rating the Three Consumer Sectors where I gave the retail-wholesale sector an overweight rating. Today I re-iterate this rating even though the sector is the most overvalued by 19.2%. The overall stock market begins the week under a ValuEngine valuation warning with 68.7% of all stocks overvalued. This is the highest such reading in 2013. We show that 228 stocks out of the 360 in the retail-wholesale sector are rated buy. With 63.3% of the sector rated buy the overweight rating remains justified.

Before I profile the eight stocks that I am focusing on this week, it's important to note that there has been another downgrade to sell among the homebuilders. Toll Brothers ($36.40), which has been consistently rated hold now rates a sell after a weekend downgrade. My quarterly value level is $34.31 with a monthly pivot at $35.02 and monthly risky level at $38.22.

Among the 10 home builders I profiled on April 30 in, Homebuilder Downgrades Cloud Earnings there have been six downgrades since then. Today there are two hold rated homebuilders and eight rated sell. The construction sector is rated underweight with 59.7% of all stocks in the sector rated sell.

The labor market is an important factor in consumer spending and initial jobless claims are declining under the recessionary threshold of 350,000. This positive is offset by a longer term set of statistics published yesterday in the Tampa Bay Times. The source of this data is the Organization for Economic Cooperation and Development.


The non-employment rate includes anyone not working: those unemployed plus those out of the labor force, like students, caring for relatives or too discouraged to look for work. In the year 2000 the non-employment rate in the US was 18.5% in sixth place behind Japan, France, Germany, Britain and Canada. In 2011 the U.S. topped the list with a non-employment rate of 26.6%.

This morning at 8:30 AM the Retail Sales data for April is released, and a decline of 0.4% is expected.

Here are this week's pre-earnings buy-and-trade profiles:

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.


Two companies report quarterly results on Tuesday:

Dick's Sporting Goods ($52.31): Lags its multi-year high at $54.24 on Sept. 19. The stock has been trading back and forth around its 200-day SMA at $49.28 so far in 2013. The weekly chart profile is positive with the five-week modified moving average at $49.05. My quarterly value level is $48.20 with a weekly pivot at $50.64 and semiannual risky level at $56.73.

Valspar ($67.53): Is the only sell rated stock in today's table, and lags its multi-year high at $68.31 set on Jan. 25. The weekly chart stays positive with the five-week MMA at $64.34. My semiannual value level is $63.37 with a monthly risky level at $70.01.

Three companies report quarterly results on Wednesday:

Big Lots ($37.69): Lags its multi-year high at $47.22 set on March 27, 2012. The weekly chart profile is positive but overbought with the five-week MMA at $36.13. My monthly value level is $33.76 with a weekly pivot at $37.25 and semiannual risky level is $47.99.

Macy's ($47.23): Traded to a new multi-year high at $47.23 last Friday. The weekly chart profile is positive but overbought with the five-week MMA at $44.22. My semiannual value level is $44.21 with a quarterly pivot at $47.33.

Cisco Systems ($21.10): Closed Friday just above its 200-day simple moving average at $19.57. The weekly chart profile is neutral with declining momentum but with last week's close above the five-week MMA at $20.92. My quarterly value level is $20.19 with a monthly pivot at $20.69 and semiannual risky level at $22.43.

Three companies report quarterly results on Thursday:

Kohl's ($48.90): Lags its multi-year high at $57.39 set on July 21, 2011 with a close on Friday just above its 200-day SMA at $48.38. The weekly chart profile is positive with the five-week MMA at $47.84 and 200-week SMA at $50.89. My weekly value level is $46.43 with an annual pivot at $49.19 and semiannual risky level is $53.86.

Wal-Mart ($78.89): Set its multi-year high at $79.50 on April 24. The weekly chart profile is positive but overbought with the five-week MMA at $77.02. My monthly risky level is $74.08 with a quarterly pivot at $78.49 and weekly risky level at $82.70.


Nordstrom ($59.17): Set a new multi-year high at $59.30 on Friday, May 10, which challenges the higher high at $59.70 set in February 2007. The weekly chart profile is positive with the five-week MMA at $56.60. My monthly value level is $52.70 with a quarterly pivot at $58.87 and annual risky level at $59.87.

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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