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Buy Alcoa, Intel; Sell Infosys; Hold Johnson & Johnson

Stocks in this article: AAJNJINTCINFY

What's more, not only did Intel log sequential revenue growth arriving at 5% but remarkably, its PC revenue rose a respectable 4%. Although I will not suggest that the company is free and clear from any struggles, there are positives to consider.

Intel will be reporting its third-quarter earnings on Tuesday after the market closes, and analysts are expecting EPS of 50 cents on revenue of $13.2 billion. These would represent annual declines of 23% and 7%, respectively.

The stock is currently trading near its 52-week low of $21.48 -- almost 40% below some analysts' price targets, which have been as high as $29.71. As the stock continues to trade at what I believe to be a considerable discount with a price-to-earnings ratio of 9, there is the possibility that Intel can see the $25 level by year's end. If you are a value investor looking for a safe investment in technology and one that pays a respectable dividend, you should consider Intel.

Sell Infosys

Infosys (INFY) disappointed investors last week by reporting results that fell short of analysts' expectations. The company reported earnings of 75 cents a share on revenue of $1.8 billion, missing estimates for EPS of 77 cents and revenue of $1.9 billion. Making matters worse was that the company cut its forecasts for net income through the first quarter of 2013 from $3.03 per share to $2.97 due to changes in currency values.

There continue to be growing concerns that the company is unable to execute effectively as it faces headwinds stemming from weak IT spending. Consequently, it is had no choice but to offer an outlook that is weaker than many analysts' predictions. That the quarter yielded the smallest number of new customers (39) in more than a year suggests that the company is having a difficult time growing revenues, a challenge that may last through the second quarter of 2013.

I would sell the stock at this point and look for a re-entry when it trades for less than $40. The company needs to demonstrate that it can put together two consecutive quarters of revenue and EPS growth before the stock can show any signs of life.

Hold Johnson & Johnson

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