Mojo Wave Includes Walmart, Others

NEW YORK ( TheStreet) -- Amazon ( AMZN), Apple ( AAPL) and Google ( GOOG) have been the high-flying mojo stocks of 2012 reaching new all-time highs recently. Homebuilders have had the biggest gains since last October and year to date, but these stocks have not even recovered half their losses from their mid-2005 highs.

Despite consumer confidence readings well below levels considered normal, many retailers have reached all-time highs or multi-year highs in 2012. Below, I update profiles for these stocks applying new monthly and quarterly value levels, pivots and risky levels.

On Sept. 12, the day the Federal Reserve announced QE3, I wrote Amazon, Apple and Google Now Overvalued. Amazon set a new all-time high two days later. Apple did so on Sept. 21. Google waited until last Friday, Oct. 5.

My concern about overvalued and technically overbought stocks this earnings season is that the downside risk is significant given a hiccup in earnings or lowered guidance. For the homebuilders, I profiled the best performer, but most of the stocks in this industry have similar profiles. In the retail-related stocks, I profiled three Dow components, but there are many stocks with similar profiles.

Amazon ( AMZN) ($259.06 vs. $255.67 on Sept. 11) is still buy rated according to ValuEngine with fair value at $181.04, which makes the stock 43.1% overvalued. The ValuEngine one-year price target is $273.62. Amazon is up 15.3% over the past 12 months with a price-to-earnings ratio at a crazy level at 150.8 times 12-month forward analysts' earnings estimates.

The stock set a new all-time high at $264.11 on Sept. 14. My semiannual value level remains $236.23 with new monthly and quarterly pivots at $260.13 and $263.71, which makes it tough to call for yet another new high. This week's risky level is $274.90.

Apple ( AAPL) ($638.17 vs. $660.59 on Sept. 11) is still buy rated according to ValuEngine with fair value at $617.36, which makes the stock 3.4% overvalued. The ValuEngine one-year price target is $675.61. Apple is up 73.3% over the past 12 months and has a reasonable 12.0 P/E ratio.

After setting an all-time high at $705.07 on Sept. 21, the stock ended last week with a close below its 50-day simple moving average at $657.78 with its 200-day SMA at $572.82. The last test of its 200-day was on Nov. 25, 2011 when that average was $363.90. Apple ended September below my new quarterly pivot is $674.2

Google ( GOOG) ($757.84 vs. $692.19 on Sept. 11) has been downgraded to hold from buy according to ValuEngine with fair value at $744.04, which makes the stock 1.9% overvalued.

The ValuEngine one-year price target is $793.30. Google is up 47.1% over the past 12 months with a 19.3 P/E ratio. Google set its latest all-time high at $774.38 last Friday, Oct. 5. My new monthly and quarterly value levels are $720.41 and $713.85 with this week's risky level at $798.11.

PulteGroup ( PHM) was last profiled on Sept. 27 when I wrote Homebuilders' Valuations Are Extremely Speculative. Pulte ($16.09 vs. $15.30 on Sept. 16) is still buy rated according to ValuEngine with fair value at $14.37, which makes the stock 12.0% overvalued.

The ValuEngine one-year price target is $17.98 vs. the multi-year high at $17.47 set on Sept. 21. Pulte has been the best performer among the homebuilders with a 12-month return of 301.3%. By having this extreme mojo the stock has a 12-month forward P/E ratio of 19.7 times vs. 9.9 times back on May 17, 2005 when the stock traded at $86.00.

Another overvalued measure is the current market to book at 3.39 vs. trading at a fraction of book value at the October 2011 low. My annual value level lags at $11.37 with a new monthly pivot at $15.56 and this week's risky level at $18.09.

My last two posts covering retail were Continue to Book Profits in Consumer Staples, on Sept. 18, and Continue to Book Profits in Consumer Discretionary Stocks on Sept. 19.

Walmart ( WMT) ($75.25 vs. $73.99 on Sept. 17) set another all-time high at $75.55 on Monday. The stock remains rate a strong buy according to ValuEngine with fair value at $72.82, which makes the stock 3.3% overvalued.

Walmart has a 14.5 P/E ratio and traded 43.7% higher over the past 12 months. My new quarterly value level is $68.55 with a new monthly pivot at $74.05. I do not have a risky level, but isn't it unusual to have Wal-Mart as a mojo stock?

Disney ( DIS) ($52.33 vs. $51.90 on Sept. 18) set an all-time high at $53.39 on Sept. 21. The stock remains buy rated according to ValuEngine with fair value at $46.75, which makes the stock 11.9% overvalued. Disney is up 67.8% over the past 12 months, has a 14.8 P/E ratio. My annual value level lags at $44.04 with a new quarterly pivot at $52.26 and monthly risky level at $55.82.

Home Depot ( HD) ($61.88 vs. $58.86 on Sept. 18) set a multi-year high at $63.20 on Friday, Oct. 5. The stock has recently been downgraded to buy from strong buy according to ValuEngine with fair value at $50.92, which makes the stock 21.5% overvalued.

The stock has a 12-month forward P/E ratio at 18.7, and has gained 87.1% over the past 12 months. My new quarterly value level is $58.83 with a new monthly pivot at $62.65 and a weekly risky level at $65.46.

How to Use my Value Levels, Pivots and Risky Levels

Value Level: is the price at which to enter a GTC Limit Order to buy on weakness to initiate a new long, add to an existing long, or to begin to cover a short position. The letters mean; W-Weekly, M-Monthly, Q-Quarterly, S-Semiannual and A- Annual.

Pivot: A level between a value level and risky level that should be a magnet during the time frame noted.

Risky Level: is the price at which to enter a GTC Limit Order to sell on strength to book a profit on long positions, or to build short positions.

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 RSuttmeier@Gmail.com.

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