Seven Stocks Go to the Woodshed While Apple Fills Gap

NEW YORK (TheStreet) -- The seven companies I am profiling today were taken to the woodshed for various reasons as the Dow Industrial Average attempts to achieve a new all-time closing high above its Oct. 9, 2007 all-time closing high at 14,164.53, and its intraday all-time high at 14,198.10.

Meanwhile, Apple ( AAPL), which has been taken to the woodshed several times since September's all-time high at $705.07. Apple bottomed at $435.00 on Jan. 25 and emerged from behind the woodshed to a high of $484.94 on Feb. 11, filling the gap to the Jan.15 low at $483.38. Many market technicians say that when a stock experiences a price gap up or down that those gaps are almost always filled once a stock tops, or sets a tradable bottom.

Apple ($467.90) still has a buy rating, is 19.4% undervalued with a trailing 12 months price-to-earnings ratio at 10.7. The weekly chart profile remains extremely oversold with the five-week modified moving average at $489.81. My annual value level remains $421.05 with a semiannual pivot at $470.21, which was tested again on Tuesday, and annual risky level at $510.64.

At www.ValuEngine.com we show that 63.9% of all stocks are overvalued versus the 65.0% valuation warning threshold. Eleven of 16 sectors are overvalued by double-digit percentages including four of the five sectors represented in the stocks profiled today; computer and technology is overvalued by 14.0%, construction is overvalued by 23.8%, consumer discretionary by 9.5%, medical by 14.1%, and retail-wholesale by 11.5%.

Reading the Table

OV/UN Valued: Stocks with a red number are undervalued by this percentage. Those with a black number are overvalued by that percentage according to ValuEngine.

VE Rating: A "1-engine" rating is a strong sell, a "2-engine" rating is a sell, a "3-engine" rating is a hold, a "4-engine" rating is a buy and a "5-engine" rating is a strong buy.

Last 12-Month Return (%): Stocks with a red number declined by that percentage over the last 12 months. Stocks with a black number increased by that percentage.

Forecast 1-Year Return: Stocks with a red number are projected to decline by that percentage over the next 12 months. Stocks with a black number in the table are projected to move higher by that percentage over the next 12 months.

Value Level: Price at which to enter a GTC limit order to buy on weakness. 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: Price at which to enter a GTC limit order to sell on strength.

Here's My Buy and Trade Strategies for today's Woodshed Stocks:

Akamai Technologies ( AKAM) ($36.74) declined from $41.58 at the close on Feb. 6 to a low of $33.55 on Feb. 7 after offering weaker than expected first quarter guidance. The stock is rated a hold with a negative weekly chart profile, but weakness was above its 200-week simple moving average at $33.37 with its five-week MMA at $38.71. My semiannual value level is $28.24 with a weekly risky level at $40.14.

Ann ( ANN) ($28.44) reported weaker than expected preliminary sales results for Q4 2012. The stock has been sliding since testing a multi-year high at $39.78 on Sept. 13. The recent gap came from $32.80 on Feb. 6 to $28.37 yesterday. The stock is rated a buy with an oversold weekly chart profile and the five-week MMA at $31.07. My annual value level is $22.86 with an annual pivot at $30.07 and monthly risky level at $37.58.

Coinstar ( CSTR) ($51.14) declined from $52.19 at the close on Feb. 7 to a low of $47.25 on Feb. 8 on investors fear of competition from Netflix (NFLX). The stock is rated a hold with a neutral weekly chart profile with the five-week MMA at $49.84 and the 200-week SMA at $45.38. My annual value level at $47.60 held at the low and my annual pivot at $50.73 has been a magnet with my semiannual risky level at $54.90.

Novo Nordisk ( NVO) ($168.98) plunged from $192.29 at the close on Feb. 8 to a low of $163.52 on Feb 11 after the U.S. Food and Drug Administration asked for additional testing on its diabetes treatments Tresiba and Ryzodeg. The stock is rated a buy with an overbought weekly chart profile and the five-week MMA at $175.94. My quarterly value level is $161.56 with a semiannual risky level at $176.21.

Nuance Communications ( NUAN) ($18.91) declined from $24.55 at the close on Feb. 7 to a low of $18.83 yesterday following an earnings miss. The stock is rated a buy with a negative weekly chart profile, the five-week MMA at $21.73 and the 200-week SMA at $19.18. My semiannual pivot is $20.75 with my annual risky level at $22.02.

Riverbed Technology ( RVBD) ($16.12) declined from $20.10 at the close on Feb. 7 to a low of $15.92 on Feb 8 after missing Q4 earnings estimates. The stock is rated a hold with a negative weekly chart profile and the five-week MMA at $18.38. My quarterly value level is $15.42 with a monthly risky level at $21.81.

The Valspar ( VAL) ($61.94) declined from $66.93 at the close on Feb. 11 to a low of $60.51 on Feb 12 after missing earnings estimates pre-market. The stock is rated a buy with an overbought weekly chart profile, and the five-week MMA at $64.63. My quarterly value level is $60.41 with a semiannual pivot at $63.37 and monthly risky level at $68.66.

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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