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Earnings Preview: Dow Stocks J&J, Travelers and Verizon Report Premarket Tuesday

NEW YORK (TheStreet) - Earnings season has been quite treacherous for overvalued stocks as companies that miss analysts' estimates or offer cautious guidance will likely take significant share price haircuts.

The eight companies I profile today include three from the finance sector, including two members of the regional bank index. The third is the diversified insurance company, asset manager and Dow component Travelers (TRV). The finance industry is 22.3% overvalued with an equal-weight rating as 83.8% of the 2961 stocks in the sector have hold ratings, according to www.ValuEngine.com.

Two companies are in the oils-energy sector, which is 14.6% overvalued with an equal-weight rating, as 61.4% of the 539 stocks in the sector have hold ratings. A warning is that 27.3% have sell ratings and only six stocks have buy ratings.


[Read: The New Mercedes C Class: A Tesla Competitor?]

Dow component Johnson & Johnson (JNJ - Get Report) is the representative from the medical sector, which is the most overvalued sector by 38.8%. The medical sector has an equal-weight rating as 56.3% of the 764 stocks in the sector have hold ratings. Only 7.2% have buy ratings and 32.1% have sell ratings.

Must Read: Be Careful in an Overvalued, Overbought Market

One is in the transportation sector, which is 33.3% overvalued with an underweight rating as 72.9% of the 170 stocks in the sector have sell or strong sell ratings. Only 4.7% have buy ratings.

Dow component Verizon (VZ - Get Report) is the representative from the utilities sector, which is 12.9% overvalued with an overweight rating as 91.4% of the 210 stocks in the sector have buy or strong buy ratings. There are only 125 stocks among 8,081 stocks in the ValuEngine universe with strong buy ratings and 78 are utility stocks. This is a warning to investors to be cautious and consider dividend stocks.

Baker Hughes (BHI) ($54.14) - Analysts expect the company to earn 66 cents a share. The oil-field services company traded down to $50.80 on Jan. 10 and is between its 200-day simple moving average at $49.89 and its 50-day SMA at $94.96. The weekly chart is negative with its five-week modified moving average at $54.18 with the 200-week SMA at $50.96. Baker Hughes has a hold rating and is 0.1% overvalued with a gain of 26.7% over the last 12 months. My weekly, annual and quarterly value levels are $50.31, $47.11 and $44.98 with monthly and semiannual risky levels at $56.88, $61.42 and $62.17.

Delta Airlines
(DAL) ($31.07) - Analysts expect the company to earn 63 cents a share. The airline set a new all-time intraday high at $32.30 on Jan. 15 and is above its 50-day and 200-day SMAs at $28.52 and $22.34. The weekly chart is positive but overbought with its five-week MMA at $28.96 with the 200-week SMA at $13.28. The airline has taken off into a parabolic orbit since moving above its 200-week in the fourth quarter of 2012. Delta has a sell rating and is 94.5% overvalued with a gain of 124.7% over the last 12 months. Quarterly and semiannual value levels are $26.50, $21.32 and $19.30 with a monthly pivot at $29.88.

Halliburton (HAL) ($50.66) - Analysts expect the company to earn 89 cents a share. The oil & gas-field services company traded to a multiyear intraday high at $56.52 on Nov. 15 and now trades between its 200-day SMA at $47.13 and its 50-day SMA at $51.64. The weekly chart is negative with its five-week MMA at $50.97 with the 200-week SMA at $38.82. Halliburton has a hold rating and is 15.4% overvalued with a gain of 39.6% over the last 12 months. My weekly, annual and quarterly value levels are $50.31, $47.11 and $44.98 with monthly and semiannual risky levels at $56.88, $61.42 and $62.17.

Johnson & Johnson ($95.06) - Analysts expect the company to earn $1.20 a share. The diversified large cap pharmaceutical company traded to an all-time intraday high at $95.99 on Nov. 25 and is trading above its 50-day and 200-day SMAs at $93.53 and $89.34. The weekly chart is neutral with its five-week MMA at $93.35 with the 200-week SMA at $70.28. Johnson & Johnson has a buy rating and is 20.2% overvalued with a gain of 30.4% over the last 12 months. My semiannual and annual value levels are $83.76, $82.19 and $81.60 with quarterly and monthly pivots at $92.15 and $94.12.

[Read: Three Reasons Why Rite Aid Is Right On]

Regions Financial
(RF) ($10.57) - Analysts expect the company to earn 20 cents a share. The regional bank traded to a multiyear intraday high at $10.68 on Jan. 15 and is trading above its 50-day and 200-day SMAs at $9.82 and $9.46. The weekly chart is positive with its five-week MMA at $10.02 with the 200-week SMA at $7.13. Regions has a hold rating and is 46.9% overvalued with a gain of 41.9% over the last 12 months. My semiannual value levels are $9.89 and $9.66 with monthly and quarterly risky levels at $10.73 and $12.24.

Synovus Financial (SNV) ($3.68) - Analysts expect the company to earn 5 cents a share. The regional bank traded to a multiyear intraday high at $3.78 on Jan. 15 and is trading above its 50-day and 200-day SMAs at $3.45 and $3.15. The weekly chart is positive but overbought with its five-week MMA at $3.52 with the 200-week SMA at $2.43. Synovus has a hold rating and is 34.9% overvalued with a gain of 40.5% over the last 12 months. My semiannual value level is $1.83 with monthly and quarterly risky levels at $3.85 and $4.15.

Travelers ($86.47) - Analysts expect the company to earn $2.15 a share. The property-liability insurer and asset management company traded to an all-time intraday high at $91.68 on Nov. 29 and currently trades below its 50-day SMA at $88.44 and above its 200-day SMA at $84.90. The weekly chart is negative with its five-week MMA at $87.97 with the 200-week SMA at $65.20. Travelers has a buy rating and is 5.3% undervalued with a gain of 13.9% over the last 12 months. My weekly value level is $72.65 with semiannual risky levels at $82.23 and $83.58.

Verizon ($48.35) - Analysts expect the company to earn 65 cents a share. The telecomm utility traded as low as $46.58 on Jan. 14 and is below its 50-day and 200-day SMAs at $49.14 and $49.60. The weekly chart is negative with its five-week MMA at $48.62 with the 200-week SMA at $39.97. Verizon has a buy rating and is 4.7% undervalued with a gain of 14.8% over the last 12 months. Weekly and monthly value levels are $46.90 and $44.04 with semiannual, annual and quarterly risky levels at $49.60, $50.75, $51.08 and $52.31.

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

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff















Richard Suttmeier is the chief market strategist at ValuEngine.com. He has been a professional in the U.S. Capital Markets since 1972, transferring his engineering skills to the trading and investment world.

Suttmeier has an engineering degree from Georgia Tech and a Master of Science degree from Brooklyn Poly. He began his career in the financial services industry in 1972 trading U.S. Treasury securities in the primary dealer community. He became the first long bond trader for Bache in 1978, and formed the Government Bond Department at LF Rothschild in 1981, helping establish that firm as a primary dealer in 1986. This experience gives him the insights to be an expert on monetary policy, which he features in his newsletters, and market commentary.

Suttmeier's industry licenses include, Series 7 and Registered Principal (Series 24). He has been the Chief Market Strategist for ValuEngine.com since 2008 and often appears on financial TV.

Click here for details on Suttmeier's "Buy and Trade" investment strategy.

Richard Suttmeier can be reached at RSuttmeier@Gmail.com

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