Stocks in the News — week of June 16, 2014 (June 18th update)
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Air Products Shares Leap on New CEO Appointment
(APD, $130.72)
Air Products and Chemicals, Inc. announced the appointment of Seifi Ghasemi as its new Chairman, President, and CEO. The stock broke past short-term upside resistance, to new highs, on the news this morning.
Mr. Ghasemi is currently a Director at Air Products, and is Chairman and CEO of Rockwood Holdings, Inc. He is very experienced in the field of industrial gases.
Wall Street expects Air Products’ earnings per share (EPS) to grow 4% this year and 11% in 2015 (September year-end). The price/earnings ratio is way too high in comparison, at 22.8.
The stock has a current dividend yield of 2.36%.
If I owned APD, I’d count myself lucky to have participated in today’s price run-up, and I’d use a stop-loss order to protect my downside.
Goodfellow LLC Rating: Hold, Public. (06/18/14)
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Revisiting Danaher Corp.: Hold
I regularly review hundreds of stocks, to see if they currently deserve a buy recommendation. In the course of my research, I noticed that the chart on Danaher Corp. (DHR, $80.06) is decidedly bullish.
I last wrote about Danaher in September 2013. The company manufactures science and technology products. At that time, the projected earnings growth was too low to earn a buy rating at Goodfellow LLC, and the PE was very high, indicating that the stock was overvalued.
The numbers have barely changed since then. Earnings per share (EPS) are projected to grow 9-11% per year for the next three years, and the PE is 21.3.
Last September I said, “Danaher’s stock price is on a steady, long-term uptrend and appears immediately capable of continuing to climb. The valuation seems pricey….” The stock price has risen 14.75% since then. More importantly, it broke past upside resistance and began climbing to new highs again this month, on June 5.
Shareholders should definitely hold their stock, and use stop-loss orders to protect their downside. The high PE adds a significant element of risk to owning DHR shares.
Goodfellow LLC rating: Hold, Public (06/16/14)
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Goodyear Tire Shares Rise 3% Today: Hold
Shares of The Goodyear Tire & Rubber Company are up over 3% today.
The company reported in May that it will increase its share repurchase plan and its dividend, reduce debt, and build a new tire plant in the Americas.
However, earnings per share (EPS) growth projections have fallen again, since my comments from April 29, to 9.9%, 12.5%, and 8% in 2014 through 2016 (December year-end). These numbers are good, but nowhere near good enough to earn a buy rating from Goodfellow LLC.
On April 29, I told my subscribers, “Current shareholders will likely see the stock trade between $25.00 – $28.50 in the near-term.” I will now adjust that trading range expectation to $24-$28.50, and say that the next move is probably back toward the top of that trading range.
Still, there’s no bullish earnings catalyst to launch the shares through upside price resistance. I wouldn’t buy GT shares under any circumstances right now.
Goodfellow LLC Rating: Hold, Public, Volatile. (06/16/14)
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Crista Huff
President
Goodfellow LLC
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