Overvalued Stocks Raise the Earnings Bar

Reporting before the open on Wednesday, Constellation Brands (STZ) ($36.75) is expected to earn 55 cents per share. Constellation Brands set an all-time high at $37.57 last week so this earnings bar could not be any higher. The daily chart is positive, but the weekly chart is neutral as momentum is declining despite a weekly close solidly above the five-week MMA at $35.34. My annual value level lags at $30.65 with a weekly pivot at $34.37 and monthly risky level at $41.03.

Reporting after the close on Wednesday, Texas Industries (TXI) ($55.60) is expected to report a loss of 34 cents per share. TXI set a multi-year high at $56.10 last week raising this earnings bar. Both the daily and weekly charts are overbought with the stock above the five-week MMA at $48.86. My monthly value level is $51.71 with my annual risky level at $61.58.

Reporting before the open on Friday, Wells Fargo (WFC) ($34.94) is expected to earn 89 cents per share. WFC is trending below its multi-year high at $36.60 set on Sept. 14 and is trending above its Nov. 14 low at $31.25. Both the daily and weekly charts are positive with the stock above the five-week MMA at $33.88. My annual value level is $32.82 with an annual pivot at $34.17 and quarterly risky level at $36.83.

At the time of publication the author held no positions in any of the stocks mentioned.

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This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Richard Suttmeier has an engineering degree from Georgia Tech and a master of science from Brooklyn Poly. He began his career in the financial services industry in 1972 trading U.S. Treasury securities in the primary dealer community. In 1981 he formed the Government Bond Department at LF Rothschild and helped establish that firm as a primary dealer in 1986. Richard began writing market research in 1984 and held positions as market strategist at firms such as Smith Barney, William R Hough, Joseph Stevens, and Rightside Advisors. He joined www.ValuEngine.com in 2008 producing newsletters covering the U.S. capital markets, and a universe of more than 7,000 stocks. Richard employs a "buy and trade" investment strategy and can be reached at [e-mail].

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