TheStreet’s Divided Dozen: Six Buys and Six Sells for the Market Right Now
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When investors turn their attention to the most actively traded and popular stocks, they expect to find the best of the best. Why else would these stocks be considered some of the most popular on the market? And in some cases, they’re right. But when it comes to comparing apples to apples for a dozen of the most popular stocks traded on the market right now, nothing could be further from the truth. TheStreet Quant Rating stock algorithm reveals a great divide between 12 of the most actively traded U.S. shares. One group of buy-rated stocks are the kind of highly-caffeinated, high-flying runners around which to build a portfolio. The other half-dozen are lackluster and our ratings algorithm indicates they may be losers over the next year.
As the old saying goes, “Let your winners run and cut your losers short.” If you do not yet own these buy-rated stocks, it is not too late to add them to your portfolio. On the other hand, if you own any of these sell-rated stocks, consider nixing them from your holdings today.
Overview of the Sell-Rated Stocks
Ticker Symbol
LNKD
TSLA
NEM
P
ABX
JCP
Growth Points
4.5
1.5
0.5
1
0.5
0.5
Total Return Points
3.5
5
0.5
3.5
0.5
0.5
Efficiency Points
2.5
0.5
1.5
0.5
1
1
Price Volatility Points
4
4
0.5
3
0.5
0.5
Solvency Points
4.5
2
4
1.5
2
1.5
Income Points
0.5
0.5
5
0.5
5
0.5
Total Points
19.5
13.5
12
10
9.5
4.5
Overall Ratings Grade
D+
D
D+
D
D
D
Overview of the Buy-Rated Stocks
Ticker Symbol
SBUX
MA
QCOM
NKE
BA
LOW
Growth Points
5
5
5
4.5
4.5
5
Total Return Points
5
5
4.5
5
4.5
4.5
Efficiency Points
5
5
5
4.5
5
4
Price Volatility Points
5
5
4.5
5
4.5
4
Solvency Points
5
5
5
5
5
4.5
Income Points
3.5
3
4
3.5
3.5
3.5
Total Points
28.5
28
28
27.5
27
25.5
Overall Ratings Grade
A+
A+
A+
A+
A+
A+
The Buy-Rated Stocks
TheStreet’s Divided Dozen: Six Buys and Six Sells for the Market Right Now
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The Company: Starbucks Corporation (SBUX)
TheStreet Quant Rating Grade: A+ (BUY)
What They Do:Starbucks is a global coffee company and coffeehouse chain, which engages in the purchase, roasting and sale of whole
bean coffee. Since its inception forty years ago, the company’s product range has diversified to include tea products,
bottled beverages, complementary food items and Starbucks-branded merchandise.
In addition, Starbucks produces and sells ready-to-drink beverages, including bottled beverages, espresso drinks, chilled
cup coffees, and ice creams. As of July 1, 2012, the company operates 17,651 stores worldwide. Starbucks was founded
in 1985 and is based in Seattle, Washington.
Our Quantitative Briefing: Starbucks has improved earnings per
share by 27.9% in the most recent quarter
compared to the same quarter a year
ago. The company has demonstrated a
pattern of positive earnings per share
growth over the past two years. We feel
this trend will continue. During the past
fiscal year, Starbucks increased its bottom
line, earning $1.79 vs. $1.62 in the
prior year. This year, the market expects
an improvement in earnings ($2.23 vs.
$1.79).
Net income growth over the year-ago
quarter has exceeded the S&P 500
and greatly outperformed the Hotels,
Restaurants & Leisure industry average.
Net income increased by 25.5%
compared with the same quarter one year
prior, rising to $417.8 million from $332.9 million.
TheStreet’s Divided Dozen: Six Buys and Six Sells for the Market Right Now
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The Company: MasterCard Incorporated (MA)
TheStreet Quant Rating Grade: A+ (BUY)
What They Do:MasterCard is a multinational financial services institution. Its primary business is to act as an intermediary credit processor
between banks and the consumers using the MasterCard brand to make purchases. MasterCard manages and licenses
payment card brands, including MasterCard, MasterCard Electronic, Maestro, and Cirrus. The company’s payment
programs, which are facilitated through its brands, include consumer credit, debit and prepaid programs, and commercial
and contactless payment solutions. As of December 31, 2008, it served approximately 23,000 financial institutions. The
company was founded in 1966 and is headquartered in Purchase, New York.
Our Quantitative Briefing: MasterCard is a multinational financial
services institution. Its primary business is
to act as an intermediary credit processor
between banks and the consumers
using the MasterCard brand to make
purchases. MasterCard manages and
licenses payment card brands, including
MasterCard, MasterCard Electronic,
Maestro, and Cirrus. The company’s
payment programs, which are facilitated
through its brands, include consumer
credit, debit and prepaid programs, and
commercial and contactless payment
solutions. As of December 31, 2008, it
served approximately 23,000 financial
institutions. The company was founded in
1966 and is headquartered in Purchase,
New York.
TheStreet’s Divided Dozen: Six Buys and Six Sells for the Market Right Now
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The Company: Qualcomm Incorporated (QCOM)
TheStreet Quant Rating Grade: A+ (BUY)
What They Do:Qualcomm, a global semiconductor business, engages in the development, design, manufacture, and marketing of digital
wireless telecommunications products and services. Its separate divisions work to develop and supply technologies to
support wireless voice and data communications and GPS products, and grant licenses for the use of its intellectual
property. Qualcomm primarily operates in China, South Korea, Taiwan, Japan, and the United States. The company was
founded in 1985 and is based in San Diego, California.
Our Quantitative Briefing: Qualcomm has improved earnings per
share by 30.4% in the most recent quarter
compared to the same quarter a year ago.
The company has demonstrated a pattern
of positive earnings per share growth
over the past two years. We feel this
trend will continue. During the past fiscal
year, Qualcomm increased its bottom
line, earning $3.06 vs. $2.71 in the
prior year. This year, the market expects
an improvement in earnings ($4.54 vs.
$3.06).
Net income growth from the same quarter
one year ago has greatly exceeded
the S&P 500, but is less than the
Communications Equipment industry
average. Net income increased 30.9% to
$1.6 billion from $1.2 billion in the year-
ago quarter.
TheStreet’s Divided Dozen: Six Buys and Six Sells for the Market Right Now
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The Company: Nike Incorporated (NKE)
TheStreet Quant Rating Grade: A+ (BUY)
What They Do:Nike designs, develops, and markets footwear, apparel, equipment, and accessory products for men, women, and children.
The company offers footwear for outdoor recreation, sports-specific needs, and cosmetic use as well as sports apparel
and accessories, sports-inspired lifestyle apparel, and athletic bags and accessory items. Further, it offers performance
equipment, including bags, socks, sport balls, eyewear, timepieces, electronic devices, bats, gloves, protective equipment,
golf clubs, and other equipment designed for sports activities under the NIKE brand name. The company sells its products
primarily through retail stores and e-commerce, retail accounts, independent distributors, franchisees, and licensees. As
of May 31, 2010, it operated 346 retail stores in the United States and 343 retail stores internationally. The company was
founded in 1964 and is headquartered in Beaverton, Oregon.
Our Quantitative Briefing: Nike has improved earnings per share
by 35.4% in the most recent quarter
compared to the same quarter a year ago.
The company has demonstrated a pattern
of positive earnings per share growth over
the past two years. We feel this trend will
continue. During the past fiscal year, Nike
increased its bottom line, earning $2.70
vs. $2.42 in the prior year. This year,
the market expects an improvement in
earnings ($3.05 vs. $2.70).
Net income growth from the year-ago
quarter has significantly exceeded the
S&P 500 and the Textiles, Apparel &
Luxury Goods industry average. Net
income increased 37.6% to $780 million
from $567 million in the year-ago quarter.
TheStreet’s Divided Dozen: Six Buys and Six Sells for the Market Right Now
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The Company: Boeing (BA)
TheStreet Quant Rating Grade: A+ (BUY)
What They Do:Boeing, the world’s leading aerospace company, designs, develops, manufactures, sells, and supports commercial
jetliners, military aircraft, satellites, missile defense, human space flight, and launch systems and services worldwide. The
Commercial Airplanes segment develops, produces, and markets commercial jet aircraft, and provides related support
services to the commercial airline industry and government customers. The Boeing Military Aircraft segment engages in the
research, development, production, and modification of military aircraft and precision engagement, and mobility products
and services. The Network & Space Systems segment is involved in products and services to assist customers transform
their operations through network integration, intelligence and surveillance systems, communications, architectures, and
space exploration. Boeing’s Space Systems segment acts as the prime contractor for the International Space Station. The
company also engages in engineering, operations, and technology activities. Boeing was founded in 1916 and is based in
Chicago, Illinois.
Our Quantitative Briefing: Boeing has improved earnings per share by 11% in the most recent quarter compared to the same quarter a year ago. Though it has reported somewhat volatile earnings recently, we feel Boeing is poised for EPS growth in the coming year. During the past fiscal year, Boeing reported lower earnings of $5.12 vs. $5.32 in the prior year. This year, the market expects an improvement in earnings ($6.52 vs. $5.12).
Net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than the Aerospace & Defense industry average. Net income increased 12.5% to $1.09 billion from $967 million in the year-ago quarter. Boeing’s revenue growth has slightly outpaced the industry average of 8.6%, up
9% on the year-ago quarter. Growth in the company’s revenue appears to have helped boost earnings per share.
TheStreet’s Divided Dozen: Six Buys and Six Sells for the Market Right Now
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The Company: Lowe’s Companies Incorporated (LOW)
TheStreet Quant Rating Grade: A+ (BUY)
What They Do:Lowe’s operates as a home improvement retailer in the United States and Canada. The company offers a range of products
for home decorating, maintenance, repair, remodeling, and property maintenance. The company also offers installation
services through independent contractors in various product categories. Lowe’s serves DIY homeowners and renters
and commercial business customers, who work in construction, repair/remodel, commercial and residential property
management, or business maintenance professions. Lowe’s operates more than 1,825 stores in the United States, Canada
and Mexico. The company also offers its products online through electronic product catalogs and Lowes.com. Lowe’s was
founded in 1952 and is based in Mooresville, North Carolina.
Our Quantitative Briefing: Powered by strong earnings growth of
37.5%, this stock has surged by 57.86%
over the past year, outperforming the
S&P 500 Index during the same period.
Looking ahead, the stock’s sharp rise over
the last year has already driven it to a level
relatively expensive compared to the rest
of its industry. We feel, however, that other
strengths this company displays justify
higher price levels.
Lowe’s has improved earnings per share
by 37.5% in the most recent quarter
compared to the same quarter a year ago.
The company has demonstrated a pattern
of positive earnings per share growth over
the past two years. We feel this trend
will continue. During the past fiscal year,
Lowe’s increased its bottom line, earning
$1.68 vs. $1.42 in the prior year. This year, the market expects an improvement in earnings ($2.19 vs. $1.68).
The Sell-Rated Stocks
TheStreet’s Divided Dozen: Six Buys and Six Sells for the Market Right Now
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The Company: LinkedIn Corporation (LNKD)
TheStreet Quant Rating Grade: D+ (SELL)
What They Do:LinkedIn operates an online professional network, which allows members to create, manage, and share their professional
identity online, build and engage with their professional networks, and find business opportunities. In addition, it offers
hiring solutions for enterprises and professional organizations to find, contact, and hire qualified candidates. The company
also provides marketing solutions, such as LinkedIn Ads, a self-service platform that enable advertisers to build and target
their advertisement to its members LinkedIn was founded in 2002 and is headquartered in Mountain View, California.
Our Quantitative Briefing: LinkedIn has experienced an impressive
jump in stock price over the past two
years. Despite positive price performance,
LinkedIn has demonstrated higher volatility
than other stocks in its industry. More
importantly, the stock’s downside risk is
slightly higher than that of the industry. The
beta of 1.73 indicates LinkedIn is quite
sensitive to the movements of the overall
market.
The higher P/E ratio for LinkedIn may
signify a more expensive stock or higher
growth expectations compared to its
peers.
The return on equity has improved slightly
compared to the year-ago quarter. This
can be construed as a modest strength
in the organization. In comparison to other companies in the Internet Software & Services industry and the overall market,
LinkedIn’s return on equity is significantly below the industry average and S&P 500.
TheStreet’s Divided Dozen: Six Buys and Six Sells for the Market Right Now
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The Company: Tesla Motors Incorporated (TSLA)
TheStreet Quant Rating Grade: D (SELL)
What They Do:Tesla engages in the design, manufacture, and sale of electric vehicles and advanced electric vehicle power train
components. The company was incorporated in 2003 and is headquartered in Palo Alto, California with a showroom in
Copenhagen.
Our Quantitative Briefing: The gross profit margin for Tesla is
currently lower than desired, coming in
at 30.28%, lower than the same quarter
a year ago. Additionally, the net profit
margin of -7.52% is significantly below
the industry average.
Tesla’s higher price-to-book ratio makes
it less attractive to investors seeking
stocks with lower market values per dollar
of equity on the balance sheet. TSLA
is trading at a significant premium to its
peers.
TheStreet’s Divided Dozen: Six Buys and Six Sells for the Market Right Now
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The Company: Newmont Mining Corporation (NEM)
TheStreet Quant Rating Grade: D+ (SELL)
What They Do:Newmont Mining engages in the acquisition, exploration, and production of gold and copper properties. It operates in the
United States, Australia, Peru, Indonesia, Ghana, Canada, New Zealand, and Mexico. As of December 31, 2012, Newmont
had gold reserves of approximately 99.2 million equity ounces and an aggregate land position of 29,400 square miles. The
company was founded in 1916 and is headquartered in Greenwood Village, Colorado.
Our Quantitative Briefing: Newmont Mining has experienced a steep
decline in earnings per share in the most
recent quarter. The company has reported
somewhat volatile earnings recently and
we feel it is likely to report a decline
in earnings in the coming year. During
the past fiscal year, Newmont Mining
increased its bottom line, earning $3.78
vs. $1.03 in the prior year. For the next
year, the market is expecting earnings to
contract 52.8% ($1.79 vs. $3.78).
The company, on the basis of change in
net income from the year-ago quarter, has
significantly underperformed compared
with the S&P 500 and Metals & Mining
industry. The net income has significantly
decreased, down 823.6% to -$2 billion
from $279 million in the same quarter a
year ago.
TheStreet’s Divided Dozen: Six Buys and Six Sells for the Market Right Now
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The Company: Pandora Media Incorporated (P)
TheStreet Quant Rating Grade: D (SELL)
What They Do:Pandora provides Internet radio services in the United States. The company allows listeners access to unlimited hours of
free music and comedy free-of-charge or through its paid subscription service, Pandora One. As of January 31, 2013, the
company had approximately 175 million registered users and 65.6 million active users. Pandora was founded in 2000 and
is headquartered in Oakland, California.
Our Quantitative Briefing: Pandora’s earnings per share declined
33.3% in the most recent quarter
compared to the same quarter a year
ago. The company has reported a trend
of declining earnings per share over the
past two years. However, the consensus
estimate suggests this trend should
reverse in the coming year. During the
past fiscal year, Pandora reported poor
results of -23 cents vs. -10 cents in the
prior year. This year, the market expects
an improvement in earnings (3 cents vs.
-23 cents).
On the basis of change in net income
from the same quarter a year ago, the
company has significantly underperformed
compared with the S&P 500 and Internet
Software & Services industry. Net loss
has significantly increased when compared with the same quarter one year ago, rising to -$7.8 million from -$5.4 million.
TheStreet’s Divided Dozen: Six Buys and Six Sells for the Market Right Now
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The Company: Barrick Gold Corporation (ABX)
TheStreet Quant Rating Grade: D (SELL)
What They Do:Barrick Gold Corporation engages primarily in the production and sale of gold and related activities such as international
exploration and mine development. The company has a portfolio of 26 operating mines and a pipeline of projects located
across North America, South America, Australia, and Africa. It also produces copper and holds interests in oil and gas
properties located in Canada. In addition, its products include copper cathode, silver, nickel, and platinum. The company
was founded in 1983 and is based in Toronto, Canada.
Our Quantitative Briefing: Barrick Gold has experienced a steep
decline in earnings per share in the
most recent quarter compared to its
performance in the year-ago quarter.
The company has reported a trend of
declining earnings per share over the
past two years. During the past fiscal
year, Barrick Gold swung to a loss,
reporting -60 cents vs. $4.48 in the prior
year.
On the basis of change in net
income from the same quarter a year
ago, the company has significantly
underperformed compared with the
S&P 500 and Metals & Mining industry.
Net income has significantly decreased
compared with the same quarter a year
ago, falling to -$8.6 billion to $787
million.
TheStreet’s Divided Dozen: Six Buys and Six Sells for the Market Right Now
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The Company: J.C. Penney Company (JCP)
TheStreet Quant Rating Grade: D (SELL)
What They Do:J. C. Penney Company, Inc. operates a network of department stores in the United States and Puerto Rico. It sells apparel
and footwear, accessories, jewelry, beauty products, and home furnishings. The company also provides various services,
including optical, portrait photography, and custom decorating. It sells products through its 1,100 department stores, as
well as online at jcp.com. The company was founded in 1902 and is based in Plano, Texas.
Our Quantitative Briefing: J.C. Penney has experienced a steep
decline in earnings per share in the
most recent quarter compared to its
performance in the same quarter a year
ago. Earnings per share have declined
over the last two years. We anticipate this
will continue in the coming year. During
the past fiscal year, J.C. Penney reported
poor results of -$4.49 vs. -$0.73 in the
prior year. For the next year, the market is
expecting a 33.3% contraction in earnings
(-$5.99 vs. -$4.49).
On the basis of change in net income
from the same quarter a year ago, the
company has significantly underperformed
compared with the S&P 500 and
Multiline Retail industry. Net income has
significantly decreased compared to the
same quarter one year ago, falling to -$586 million from -$147 million.