Positive Earnings in Overvalued Market

NEW YORK (TheStreet) -- Earnings winners continued on Thursday with more beats than misses. But this week we also observed that all stocks are not created equal in an extremely overvalued market. Stocks that missed earnings estimates or offered cautious outlooks can get their share price severely cut in a move to behind the investor woodshed.

I did not realize that potash prices were controlled by cartels similar to OPEC in the oil market. This week companies that produce fertilizer took a major hit on a glut of the ingredient called potash. Wholesale potash prices have been falling since mid-2009, so when a dominating potash cartel collapsed, the industry got hit hard on a potential price war. The three names I profile today were taken to the woodshed on Tuesday on this news.

On July 30 I profiled nine stocks in, Apple Downgraded, Chevron, Exxon and P&G Earnings Preview Apple Downgraded, Chevron, Exxon and P&G Earnings Preview where I profiled eight stocks that reported results on Aug. 1. The ninth Chevron ( CVX) ($126.44) reports results premarket this morning.

Beazer Homes ( BZH) ($17.01) beat EPS estimates by 13 cents with a loss of 22 cents a share. The homebuilder has been hovering above its July 5 low at $16.48. My weekly value level is $15.79 with a monthly risky level at $19.71.

Cardinal Health ( CAH) ($51.09) beat EPS estimates by 2 cents earning 79 cents a share. This retail-wholesale stock set a new multi-year high at $51.33 on Aug. 1. My semiannual value level is $43.56 with monthly and semiannual pivots at $50.97 and $51.18.

Linkedin ( LNKD) ($213.00) beat EPS estimates by 3 cents earning 7 cents a share. This social media stock traded up to a new all time high at $228.80 in the afterhours vs. my new monthly risky level at $231.49.

Mohawk Industries ( MHK) ($121.29) beat EPS estimates by 18 cents earning $1.84 a share. This consumer discretionary stock traded up to $131.50 in afterhours trading versus my monthly risky level at $132.63.

Procter & Gamble ( PG) ($81.64) beat EPS estimates by 2 cents earning 79 cents a share. The reaction high on August 1 was $82.23 vs. the May 24 high at $82.35 and the April 23 high at $82.54. This Dow component has annual value levels at $78.73 and $75.13 with semiannual and monthly risky levels at $81.86 and $82.93.

Public Storage ( PSA) ($161.28) beat EPS estimates by 6 cents earning $1.83 a share. This stock is categorized as a REIT-equity Trust in the finance sector. I have read that nonpayment of monthly rent of storage units is on the rise, and that after the grace period ends the storage facility owner auctions off the contents of defaulted units sight unseen by the bidders. For the stock, my annual value level is $149.89 with monthly and quarterly risky levels at $168.47 and $168.55.

Vulcan Materials ( VMC) ($49.68) missed EPS estimates by a penny earning 13 cents. This construction stock set a reaction high at $50.78 on Aug. 1, which was a failed test of the 50-day SMA at $50.80. My semiannual, monthly and quarterly pivots are $47.42, $48.82 and $49.74.

Exxon Mobil ( XOM) ($92.73) missed EPS estimates by 34 cents earning $1.55. My quarterly value level is $91.62 was tested at the Aug. 1 low at $91.25 with the close above the 50-day SMA at $91.94. My monthly pivot is $92.64 with an annual risky level at $105.52.

Here are three potash stocks that were taken to the woodshed this week:

Intrepid Potash ( IPI) ($13.07) plunged from $19.44 on July 29 to $12.04 on Aug. 1. The stock began the week with a sell rating and has been upgraded to hold this morning. My quarterly value level is $10.66 with a monthly risky level at $15.36.

Mosaic ( MOS) ($41.88) plunged from $53.21 on July 29 to $39.95 on July 30. The stock has a hold rating with a quarterly value level is $41.36 and weekly risky level at $49.82.

Potash of Saskatchewan ( POT) ($29.48) plunged from $37.90 on July 29 to $28.85 on Aug. 1. The stock has a hold rating with a quarterly value level is $26.01 and monthly risky level at $37.65.

Other woodshed stocks:

Digital River ( DRIV) ($17.27) plunged from $20.02 on July 18 to $16.74 on Aug. 1. The stock has a buy rating with a monthly value level is $16.94 which held at the low. My weekly risky level is $20.08.

Health Management Associates ( HMA) ($13.46) plunged from $17.28 on July 10 to $13.00 on July 30. This buy rated medical stock has a quarterly value level at $9.42 with a semiannual risky level at $15.36.

Jive Software ( JIVE) ($13.25) plunged from $17.07 on July 30 to $12.75 on Aug. 1. The stock has a buy rating with a monthly risky level at $16.02.

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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