Back Up The Truck For Value Stocks?

The major indexes appeared to be in the process of forming a significant short-term low. Why not, it is time for one. What we needed was a good rally to confirm it, and that’s just what we got on Friday. This must be an excellent time to pick up the stocks you’ve have on your buy-on-next-pullback watchlist.

We’re also starting to hear some good earnings news. In this morning’s Investor’s Business Daily, some Page 2 headlines are:

  • Whirlpool profit jumps on mix
  • Honeywell ’16 outlook beats
  • Seagate easily tops on profit
  • Colgate Q4 profit beats Street

Holy cow, let me back up the truck to my broker’s loading dock.

Well, you can. I won’t, and here is what is wrong with the picture.

  • Whirlpool’s revenue actually fell 7.4%
  • Honeywell’s sales fell 2.8%
  • Seagate’s revenue slid 19%
  • Colgate’s revenue fell 7.6%

Positive earnings can positively affect stock prices, but only for a while. Earnings cannot grow indefinitely without revenue growth. There is only so much cutting-back and efficiency gaining you can do before you need revenue growth.

And as far as my four examples above, would you be buying these at good values?

  • Whirlpool’s (WHR) P/E is now 11, which is good compared to the 5-year range of 10-38. The decline in revenue is the first one in several quarters. WHR is paying a 2.7% dividend yield, is averaging a 15% 5-year growth rate in the dividend, and has increased the dividend for 5 consecutive years. If it seems like the revenue drop may be a short-term thing, then WHR shares could be considered a value at this point.
  • Honeywell’s (HON) P/E is now 16, which is fair compared to the 5-year range of 12-23. The quarterly decline in revenue is the fifth in a row. HON is paying a 2.3% dividend yield, is averaging a 12% 5-year growth rate in the dividend, and has increased the dividend for 5 consecutive years. Even though Honeywell’s CEO is Jim Cramer’s next door neighbor, HON doesn’t seem like much of a bargain after 5 quarters of decreasing revenue.
  • Seagate’s (STX) P/E is now 8, which is fair compared to the 5-year range of 3-15. The quarterly decline in revenue is the fourth one in a row. STX is paying an 8.7% dividend yield, but is averaging a 0% 5-year growth rate in the dividend, and has increased the dividend for only 2 consecutive years. Seagate’s decline reflects the troubles in the desktop PC market.
  • Colgate Palmolive’s (CL) P/E is now 23, which is no bargain compared to the 5-year range of 16-25. The quarterly decline in revenue is the fifth one in a row. CL is paying a 2.3% dividend yield, is averaging a 7.5% 5-year growth rate in the dividend, and has increased the dividend for 53 consecutive years – at least that’s good news.

I just don’t see good value here, and these are basic American companies that provide the some of the products U.S. consumers buy on a regular basis.  My truck keys are remaining on the hook beside the door.

Of course, there's much more you need to know and many more stocks you can capitalize upon each and every day.  To find out more, please click on the following link: www.markettamer.com/seasonal

By Gregg Harris, MarketTamer Chief Technical Strategist

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MarketTamer is not an investment advisor and is not registered with the U.S. Securities and Exchange Commission or the Financial Industry Regulatory Authority. Further, owners, employees, agents or representatives of MarketTamer are not acting as investment advisors and might not be registered with the U.S. Securities and Exchange Commission or the Financial Industry Regulatory.


This company makes no representations or warranties concerning the products, practices or procedures of any company or entity mentioned or recommended in this email, and makes no representations or warranties concerning said company or entity’s compliance with applicable laws and regulations, including, but not limited to, regulations promulgated by the SEC or the CFTC. The sender of this email may receive a portion of the proceeds from the sale of any products or services offered by a company or entity mentioned or recommended in this email. The recipient of this email assumes responsibility for conducting its own due diligence on the aforementioned company or entity and assumes full responsibility, and releases the sender from liability, for any purchase or order made from any company or entity mentioned or recommended in this email.


The content on any of MarketTamer websites, products or communication is for educational purposes only. Nothing in its products, services, or communications shall be construed as a solicitation and/or recommendation to buy or sell a security. Trading stocks, options and other securities involves risk. The risk of loss in trading securities can be substantial. The risk involved with trading stocks, options and other securities is not suitable for all investors. Prior to buying or selling an option, an investor must evaluate his/her own personal financial situation and consider all relevant risk factors. See: Characteristics and Risks of Standardized Options. The www.MarketTamer.com educational training program and software services are provided to improve financial understanding.


The information presented in this site is not intended to be used as the sole basis of any investment decisions, nor should it be construed as advice designed to meet the investment needs of any particular investor. Nothing in our research constitutes legal, accounting or tax advice or individually tailored investment advice. Our research is prepared for general circulation and has been prepared without regard to the individual financial circumstances and objectives of persons who receive or obtain access to it. Our research is based on sources that we believe to be reliable. However, we do not make any representation or warranty, expressed or implied, as to the accuracy of our research, the completeness, or correctness or make any guarantee or other promise as to any results that may be obtained from using our research. To the maximum extent permitted by law, neither we, any of our affiliates, nor any other person, shall have any liability whatsoever to any person for any loss or expense, whether direct, indirect, consequential, incidental or otherwise, arising from or relating in any way to any use of or reliance on our research or the information contained therein. Some discussions contain forward looking statements which are based on current expectations and differences can be expected. All of our research, including the estimates, opinions and information contained therein, reflects our judgment as of the publication or other dissemination date of the research and is subject to change without notice. Further, we expressly disclaim any responsibility to update such research. Investing involves substantial risk. Past performance is not a guarantee of future results, and a loss of original capital may occur. No one receiving or accessing our research should make any investment decision without first consulting his or her own personal financial advisor and conducting his or her own research and due diligence, including carefully reviewing any applicable prospectuses, press releases, reports and other public filings of the issuer of any securities being considered. None of the information presented should be construed as an offer to sell or buy any particular security. As always, use your best judgment when investing.