Market Focus Shifts to First-Quarter Earnings

NEW YORK ( TheStreet ) -- First-quarter earnings season shifts into a higher gear this week. Today I profile six companies that report quarterly results tomorrow, three premarket and three after the close.

Three of the stocks are components of the Dow Jones Industrial Average, which set new all-time closing and intraday highs last Thursday at 14,865.14 and 14,887.51. This week's risky level is 14,993.

I will continue to handicap earnings tomorrow and again on Wednesday to cover a total of 19 companies that investors should focus on both before and after they report quarterly results. At www.ValuEngine.com, we show that 58.6% of all stocks are overvalued and that 15 of 16 sectors are overvalued, 11 by double-digit percentages.

Given this fundamental setup, stocks that miss earnings estimates or offer cautious guidance are at risk of being taken behind to the woodshed for a share price cut.

Last Thursday, we learned that the four-week moving average for initial jobless claims remains greater than the recessionary threshold of 350,000. On Friday the stock market took in stride data showing that retail sales fell 0.4% in March with PPI down 0.6%. There was also a surprise decline in Michigan consumer sentiment to a reading of 72.3 for April when 78.5 was expected. This index remains less than the neutral 90-to-110 range.

Reading the Table

OV / UN Valued: The 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 One-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 is the 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 is the price at which to enter a GTC limit order to sell on strength.

The six companies I cover today represent five overvalued sectors.

Those reporting premarket on Tuesday:

Goldman Sachs ( GS) ($149.12) is a hold-rated stock in the finance sector, which is 16.5% overvalued. The stock has been moving sideways to down since setting a 52-week high of $159.00 on Feb. 19. GS tested its 50-day simple moving average (SMA) at $150.26 last week. The weekly chart profile is neutral with the stock above its five-week modified moving average (MMA) at $147.64 and its 200-week SMA at $138.21. My weekly value level is $144.59 and my monthly risky level is at $161.11.

Coca-Cola ( KO) ($41.08) is a buy-rated Dow component in the consumer staples sector which is 18.0% overvalued. The stock set a multiyear high at $41.41 last Thursday vs. its all time high of $44.47 set in July 1998. The weekly chart profile is positive but overbought with the five-week MMA at $39.60. My monthly value level is $36.15 with a quarterly pivot at 41.53 and semiannual risky level at $42.26.

Johnson & Johnson ( JNJ) ($82.74) is a hold-rated stock in the medical sector, which is 10.5% overvalued. JNJ set an all-time high at $82.96 last Thursday, which could become a double-top vs. the prior high at $82.95 set on April 3. The weekly chart profile is positive with extremely overbought momentum and the five-week MMA at $79.44. My monthly value level is $77.46 with a quarterly pivot at $81.06 and weekly risky level at $83.64.

Those reporting after the close on Tuesday:

CSX ( CSX) ($24.51) is a sell-rated transportation stock in a sector that's 20.0% overvalued. I describe this sector as "avoid as source of funds" with 78.5% of all transportation stocks rated sell or strong sell. The daily chart shows a potential double-top with year-to-date highs at $24.69 on April 1 and Friday's high at $24.64. The stock's all-time high is $27.06 set back on July 7, 2011. The weekly chart is positive but extremely overbought with the five-week MMA at $23.57. My monthly value level is $20.93 with a weekly risky level at $24.85.

Intel ( INTC) ($21.67) is a buy-rated stock in the computer and technology sector that is 11.6% overvalued. Last week Intel traded up to but stayed below its 200-day SMA at $22.52. The weekly chart profile is positive with the five-week MMA at $21.33 and the 200-week SMA at $21.97. My semiannual value level is $19.80 with a weekly pivot at $21.52 and quarterly risky level at $26.37.

Yahoo! ( YHOO) ($24.69) is a hold-rated stock in the computer and technology sector. The stock traded to a new multiyear high at $24.80 last Friday. The weekly chart profile is positive but overbought with the five-week MMA at $22.75. My monthly value level is $22.85 with an annual pivot at $23.56 and weekly risky level at $25.11.

This article was written 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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