How to Trade the Big Stocks Reporting Earnings Tuesday

NEW YORK ( TheStreet) -- Earnings season is off to a solid start, and this week's focus is on 10 Dow components reporting earnings on Tuesday, Wednesday and Thursday.

Today I profile nine companies that report quarterly results on Tuesday, and tomorrow I will profile nine companies that report on Wednesday and Thursday.

Among the companies I'll profile are are Google ( GOOG), which reports after the close on Tuesday, and Apple ( AAPL) which reports after the close on Wednesday.

At www.ValuEngine.com we show that 41.4% of all stocks are undervalued, which makes 58.6% of all stocks overvalued.

All 16 sectors are overvalued, including the six covered by the nine stocks profiled today. Those are: basic industries, overvalued by 5.8%; computer & technology, overvalued by 13.0%; finance, overvalued by 13.9%; medical, overvalued by 13.2%; transportation, overvalued by 20.4%; and utilities, overvalued by 5.6%.

Among today's nine companies, five are rated buy and four are rated hold. Five are undervalued (by 1.8% to 19.6%), while four are overvalued (by 8.1% to 21.2%).

Only two are down over the last 12 months, and five of the winners show double-digit gains ranging from 11.3% to 38.1%.

All are expected to be higher 12 months from now. Expected upside is muted, however, and ranges between 2.3% and 8.3%. The 12-month trailing price-to-earnings ratio ranges from 11.9 to 48.4. We show five of nine above their 200-day simple moving averages (SMA), which reflects the downside risk of a reversion to the mean.

Following are my "buy and trade" profiles for the four stocks reporting before the open on Tuesday. For more information on my "buy and trade" strategy, see this article on TheStreet.

DuPont ( DD) ($46.99) is expected to earn 9 cents per share. DD set a 52-week low at $41.67 on Nov. 16, and the the stock is below its 200-day SMA at $48.48. The daily chart shows an overbought condition, while the weekly chart is positive, with the five-week modified moving average (MMA) at $45.59 and the 200-week SMA at $43.10. The stock has a hold rating. My monthly value level is at $41.24, the weekly pivot is at $47.08 and my quarterly risky level is at $47.55.

Johnson & Johnson ( JNJ) ($73.23) is expected to earn $1.17 per share. JNJ set a multiyear high at $73.23 on Friday, with the stock above its 200-day SMA at $67.85. The daily chart shows an extremely overbought condition, and the weekly chart is positive with the five-week MMA at $71.19. The stock has a buy rating, with my monthly value level at $71.86, weekly pivot at $72.88 and annual risky level at $76.79.

Travelers Companies ( TRV) ($76.31) is expected to earn 11 cents per share, up from 4 cents, the estimate posted last week. TRV set a multiyear high at $76.55 on Friday, and the stock is above its 200-day SMA at $66.58. The daily chart shows an extremely overbought condition, and the weekly chart is positive, with the five-week MMA at $73.27. The stock has a buy rating with my monthly value level at $70.65. My weekly pivot is at $76.10.

Verizon Communications ( VZ) ($42.54) is expected to earn 54 cents per share, down from 55 cents, the estimate posted last week. VZ set a multiyear high at $48.77 on Oct. 1, and the stock is below its 200-day SMA at $43.16. The daily chart is negative, and the weekly chart is neutral, with the five-week MMA at $43.49. The stock has a hold rating, with my annual value level at $40.76, weekly pivot at $43.33 and quarterly risky level at $45.88.

Here are my "buy and trade" profiles for the five stocks reporting after the close on Tuesday:

Cree ( CREE) ($33.76) is expected to earn 20 cents per share. CREE set a 52-week high at $35.12 on Jan. 2, and the stock is above its 200-day SMA at $28.53. The daily chart is positive, and the five-week MMA is at $32.69. The stock has a hold rating, with my monthly value level at $26.65 and weekly risky level at $35.29.

CSX ( CSX) ($20.91) is expected to earn 39 cents per share. CSX set a 52-week low at $18.88 on Nov. 16, and the stock is below its 200-day SMA at $21.44. The daily chart is positive, and the weekly chart is also positive. The five-week MMA is at $20.37, and the 200-week SMA is at $19.41. The stock has a buy rating, my monthly value level is at $19.73, my weekly pivot is at $20.76 and my quarterly risky level is at $22.31.

Google ( GOOG) ($704.51) is expected to earn $8.61 per share. Google set an all-time high at $774.38 on Oct. 5 then fell to $636.00 on Nov. 16, holding its 200-day SMA at $638.41 that day. The daily chart is negative, and the weekly chart is neutral. The five-week MMA is at $709.40. The stock has been upgraded to buy from hold. My quarterly value level is at $660.40, and my monthly risky level is at $734.46.

IBM ( IBM) ($194.47) is expected to earn $5.25 per share. IBM set a multiyear high at $211.79. The stock is below its 200-day SMA at $196.91. The daily chart is neutral, and the weekly chart is positive, with the five-week MMA at $193.40. The stock has a buy rating. My weekly value level is at $191.39, and my quarterly risky level is at $228.38.

Texas Instruments ( TXN) ($33.52) is expected to earn 33 cents per share. TXN is approaching its 52-week high at $34.24, which was set on March 27, 2012, and the stock is above its 200-day SMA at $29.39. The daily chart is overbought, and the weekly chart is also overbought, with the five-week MMA at $31.27 and the 200-week SMA at $27.98. The stock has a hold rating, with my quarterly value level at $28.56, an annual pivot at $32.99 and semiannual risky level at $41.27.

At the time of publication, Suttmeier had no positions in stocks mentioned.

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

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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