On May 7, three stocks had buy ratings according to www.ValuEngine.com today one of those has a hold rating leaving two with current buy ratings. Three months ago five had hold ratings and today six have hold ratings, one was a downgrade from buy, another was an upgrade from sell. A hold-rated stock became the only sell rated stock today.
On May 7, two stocks were modestly undervalued and today there are four. Back then three were overvalued by more than 20% and today there are five. The gains over the last 12 months remain robust by 20.0% to 95.7% across all nine stocks.
On May 7, all nine were above their 200-day simple moving averages and today three are below, reflecting the risk of a reversion to the mean. Six of the nine stocks returned to their 200-day SMA between the May 7 post and today's post.
Three months ago we were in the midst of first-quarter 2013 earnings season, and today we are looking at second-quarter earnings.
Other companies are in the retail-wholesale sector, which is 25.4% overvalued up from 17.4% three months ago, and the industrial products sector, which is 20.7% overvalued today up from 7.3% overvalued in May. Such companies provide miscellaneous building, machine tools and other repair items. The consumer discretionary sector, which is 24.9% overvalued up from 8.9% in May. This sector includes companies that provide replacement household appliances.
Reading the Table
OV / UN Valued - The 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 twelve 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 twelve months. Stocks with a Black number in the Table are projected to move higher by that percentage over the next twelve months.
Value Level: is the 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: is the price at which to enter a GTC Limit Order to sell on strength.
Home Depot ($79.66) is up 5.8% since May 6 and set a new all-time high at $81.56 on May 22, and still has a buy rating. The company beat first-quarter earnings by 6 cents on May 21 earning 83 cents and is expected to earn $1.19 in its second-quarter report to be released on August 20. The stock was certainly helped by the super storm Sandy disaster relief. My semiannual value level is $74.17 with a monthly pivot at $80.39 and quarterly risky level at $80.48.
Lowe's ($45.57) is up 11.4% since May 6 and set a new all-time high at $45.49 on Monday, and still has a buy rating. The company missed first-quarter earnings by 2 cents on May 22 earning 49 cents and is expected to earn 79 cents in its second-quarter report to be released on Aug. 21. The sequential rise in EPS is a sign of Sandy relief spending. My quarterly value level is $41.14 with a monthly pivot at $43.99.
Louisiana-Pacific ($16.81) is down 10.4% since May 6 setting a 2013 low at $14.51 on June 26. Shortly after the May 6 post the stock was downgraded to hold from buy according to ValuEngine. The company matched first-quarter earnings estimates on May 6 earning 41 cents and is expected to earn 31 cents in the second quarter on August 6. It appears that the provider of building materials and engineered wood products did not benefit from the Sandy recovery. My weekly value level is $16.01 with a quarterly pivot at $17.73 and semiannual risky level at $17.94.
Sherwin Williams ($176.83) is down 5.8% since May 6 after setting a new a new all-time high at $194.55 on May 14. The hold rated stock traded down to and held its 200-day SMA at $166.23 on July 18, which fulfilled the risk of a reversion to the mean. The company beat first-quarter earnings estimates by 3 cents a share on April 18 earning $1.11. On July 18, the company missed second-quarter earnings estimates by 4 cents a share earning $2.54 a share. It appears that the distributor and retailer of paint was helped by the Sandy recovery in a modest way. My semiannual value level is $174.49 with a quarterly risky level at $189.34.
Stanley Black & Decker ($86.88) is up 12.8% since May 6 and set a new multiyear high at $87.85 on Monday. The hold rated stock traded below its 200-day SMA at $75.68 on June 24, then recovered. On April 25 the company reported a first-quarter earnings beat of 7 cents a share earning $1.03. On July 26 the company reported second-quarter earnings and beat EPS estimates by 2 cents earning $1.21 a share. In a disaster such as Sandy, the supplier of tools and related accessories benefited by homeowners and businesses doing their own repairs using the company's products. My weekly value level is $83.97 with a monthly pivot at $86.10 and semiannual risky level at $88.90.
USG ($26.74) is up just 0.8% since May 6 set a multiyear high at $30.97 on Feb. 13 and traded as low as $21.35 on June 24. The stock was downgraded to sell from hold later in May. The company reported a first-quarter earnings miss of 8 cents a share on April 24, earning 1 cent. On July 25 it reported a second-quarter earnings beat of 6 cents earning 23 cents a share. The sequential improvement in earnings was likely helped by the Sandy disaster recovery for this provider of building materials for home construction. The stock has rebounded to its 200-day SMA at $26.78. My semiannual value level is $25.64 with a monthly pivot at $26.23 and annual risky level at $44.11.
Whirlpool ($137.05) gained 15.2% since May 6 and set a new multi-year high at $138.33 on Friday. The hold-rated company reported a first-quarter earnings beat of 2 cents a share on April 24, earning $1.97. On July 19 it missed second-quarter EPS estimates by 3 cents earning $2.37 a share. The maker of major home appliances seemed to have been helped by replacement demand during the recovery from the wrath of Sandy. My semiannual value level is $130.26 with a monthly pivot at $136.56.
Weyerhaeuser ($28.16) lost 9.3% since May 6 and set a new multiyear high at $33.24 on May 22. The hold rated stock then declined to $26.38 on June 24. The stock had been trading back and forth around its 200-day SMA at $29.33 since June 5. On April 26 the company reported a first-quarter earnings beat of 4 cents a share, earning 26 cents. Then on July 26 it reported a second-quarter earnings beat of 5 cents earning 35 cents a share. The harvester of timber and forest products might have been helped by Sandy relief to some degree. My semiannual value level is $24.26 with an annual pivot at $28.69 and monthly risky level at $31.18.
At the time of publication the author had no position in any of the stocks mentioned.
This article was written by an independent contributor, separate from TheStreet's regular news coverage.