Caterpillar, Apple Ratings Peeled To Hold

TheStreet.com

NEW YORK (TheStreet) -- The yield on the U.S. Treasury 30-Year bond rose by 13.5 basis points on Friday to 2.954% following the so called solid employment report for April.

Dow Industrials, S&P 500 and Russell 2000 set new all-time highs with the Nasdaq setting a new multi-year high. Dow transports did not set a new all-time high.

As a result of higher yields, higher stocks prices and the benchmark revisions we begin the first full week of May with a ValuEngine Valuation Watch with 62.9% of all stocks overvalued.

With significant changes occurring overnight several brand names stocks have been downgraded to hold from buy including these two:

Apple ($449.98 vs. $385.10 on April 19) is no longer a value play even though the stock is 13.4% undervalued. With a projected 12 month gain down to 4.1% the rating has been peeled to hold from buy. If you are a momentum trader the weekly chart profile is now positive with the five-week modified moving average at $434.92. My weekly value level is $436.93 with semiannual risky level at $470.21.

Caterpillar ($86.98 vs. $79.49 on April 22) has outrun its 12 month price target at $84.12 hence the downgrade to hold from buy. If you are a momentum trader the weekly chart profile is now positive with the five-week modified moving average at $86.46. My weekly value level is $81.05 with a monthly risky level at $90.84.


Welcome to the Obamacare Labor Market

Consumer spending accounts for nearly 70% of the U.S. economy. Many retailers and eateries have cut back hours worked by employees to less than 30 hours a week to avoid the requirement to provide healthcare insurance under Obamacare. To fill the lost hours additional part-time or temporary jobs have been created. I have noticed that our favorite restaurants in Tampa Bay have many new servers and kitchen help to keep the number of full time employees at five or less.

This Obamacare labor market will continue as companies adjust work forces to minimize the cost of providing healthcare benefits. Meanwhile employees working fewer hours face the cost of healthcare on their own, which increases their cost of living. If a worker takes on a second part-time job, that job is counted as an increase in the nonfarm payroll number. In other words if a worker enters the workforce with two new part-time jobs, nonfarm payrolls will rise by two not one.

Today I profile five stocks that report quarterly results this week:

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.


Reporting after the close on Tuesday:

Disney ($64.80) set an all-time high at $64.85 on Friday as the mouse-house bubble inflates. Disney is well above its 200-day simple moving average at $52.76, which reflects the risk of reversion to the mean. The 200-day has been tested in each of the past two years. The weekly chart profile is positive but extremely overbought with the five-week modified moving average at $59.92. My monthly value level is $59.82 with a weekly pivot at $63.15.

Whole Foods Market ($91.46) set its all-time high at $101.86 on Oct. 5. The weekly chart stays positive on a close this week above its five-week MMA at $88.15. My monthly value level is $85.91 with a weekly pivot at $90.60 and the 200-day SMA at $91.87.

Reporting Wednesday, Deere ($90.54) set its 2013 high at $95.60 on Jan. 30. Deere is well above its 200-day SMA at $84.70, which reflects the risk of reversion to the mean. The 200-day has already been tested in 2013 and was tested in each of the past two years. The weekly chart profile stays positive with a close this week above the five-week MMA at $87.44. My weekly value level is $84.18 with a monthly risky level is $99.30.

Reporting after the close Wednesday, Transocean ($53.24) set its 2013 high at $59.50 on Feb. 14. Transocean is above its 200-day SMA at $49.37, which reflects the risk of reversion to the mean. The 200-day has already been tested in 2013 and was tested in each of the past two years. The weekly chart profile remains positive with a close this week above the five-week MMA at $51.66 with the 200-week SMA at $61.72. My monthly risky level is $49.94 with a semiannual risky level at $66.07.


Reporting after the close Thursday, Public Storage ($166.48) is going parabolic with an all-time high at $167.32 set on Friday. Public Storage is well above its 200-day SMA at $147.33, which reflects the risk of reversion to the mean. The 200-day has been tested in each of the past two years. The weekly chart profile stays positive but overbought with a close this week above the five-week MMA at $157.59. My quarterly value level is $162.68 with a weekly pivot at $164.33.

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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