Blue Chip Thursday: Caterpiller, 3M, Ford, GM, Plus Three Homebuilders to Report

NEW YORK (TheStreet) -- Today's pre-earnings stock profiles include two Dow components led by Caterpillar (CAT), whose stock is up 21% year to date, and 3M (MMM), which is up 3.5%; the Dow Jones Industrial Average is up 3.2%.

There are two U.S. auto stocks on today's list -- Ford Motor (F) is up 16% year to date, and General Motors (GM), with all of its recalls, is down 7.6%.

Three homebuilders have three different performance statistics: D.R. Horton (DHI) is up 8.9% year to date, while Meritage Homes (MTH) is down 11%, and Pulte Group (PHM) is down 4.5%. All three are components of the housing market index, which is down 1.2% year to date.

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Let's take a look at the stock profiles. Two "crunching the numbers" tables follow. All seven companies are scheduled to report their quarterly financial results before the opening bell on Thursday.

Caterpillar ($110.06) set a 52-week intraday high at $111.46 on July 16, and is above all five moving averages in today's first table.

Analysts expect the company to report earnings per share of $1.50. The company's 12-month trailing price-to-earnings ratio is 18.1, and its dividend yield is 2.5%.

The weekly chart is positive but overbought its five-week modified moving average at $108.56. Quarterly and annual value levels are $102.07 and $95.20, respectively, with monthly and semiannual risky levels at $115.01 and $120.38, respectively.

D,R, Horton ($24.30) set a 52-week intraday high at $25.23 on July 2, and is above all five moving averages in today's first table.

Analysts expect the company to report earnings of 49 cents per share. The company has a 12-month trailing P/E ratio of 14.6 and a dividend yield of 0.6%.

The weekly chart shifts to negative given a weekly close below its five-week MMA at $23.88. A semiannual value level is $23.01 with quarterly and monthly risky levels at $25.79 and $26.95, respectively.

Ford ($17.82) traded at a multiyear intraday high of $18.08 last Thursday, and is above all five moving averages in the first "crunching the numbers" table.

Analysts expect the company to report earnings of 37 cents per share. The company' has a 12- month trailing P/E ratio of 12.8 and dividend yield of 2.8%.

The weekly chart is positive but overbought with its five-week MMA at $17.17. Semiannual and monthly value levels are $16.63 and $15.30, respectively, with semiannual and quarterly risky levels at $18.22 and $19.96, respectively.

GM ($37.78) has been above its 200-day SMA at $36.56 since July 1.

Analysts expect the company to report earnings of 77 cents per share. The company has a 12-month trailing P/E ratio of 13.9 and dividend yield of 3.2%.

The weekly chart is positive but overbought with its five-week MMA at $36.80. Semiannual and monthly value levels are $36.09 and $35.84, respectively, with weekly and quarterly risky levels at $40.11 and $45.79, respectively.

3M ($145.12) has been above all five moving averages in my first "crunching the numbers" table setting an all-time intraday high at $146.35 last Wednesday.

Analysts expect the company to report earnings of $1.91 per share. The company has a 12-month trailing P/E ratio of 20.3 and dividend yield of 2.4%.

The weekly chart is positive but overbought with its five-week MMA at $143.78 and its 200-week SMA at $102.09. Semiannual value levels are $140.56 and $121.85 with weekly and monthly risky levels at $147.84 and $151.09, respectively. .

Meritage Homes ($42.58) has been below its 200-day SMA at $43.02 since April 10.

Analysts expect the homebuilder to report earnings of 81 cents per share. The company has a 12-month trailing P/E ratio of 11.6, and it doesn't pay a dividend.

The weekly chart is positive with its five-week MMA at $41.60. A monthly pivot is $41.57 with weekly and semiannual risky levels at $43.29 and $44.69, respectively.

Pulte Group ($19.45) has been above its 200-day SMA at $18.98 since May 9.

Analysts expect the homebuilder to report earnings of 26 cents per share. The company has a 12-month trailing P/E ratio of 13.1 and dividend yield of 1%.

The weekly chart is negative with its five-week MMA at $19.62 and its 200-week SMA at $13.18. A semiannual value level is $16.15 with semiannual and monthly risky levels at $20.51 and $21.90, respectively.

Crunching the Numbers with Richard Suttmeier: Moving Averages & Stochastics

This table provides the technical status for the stocks profiled in today's report.

The 12-month trailing price to earnings ratio

The Dividend Yield

There are five columns with moving average titles: Five-Week Modified Moving Average, 21-Day Simple Moving Average, 50-Day Simple Moving Average, 200-Day Simple Moving Average and the 200-Week Simple Moving Average.

The column labeled 12x3x3 Weekly Slow Stochastics shows the pattern on each weekly chart with readings from Oversold, Rising, Overbought, Declining or Flat.

Interpretations: Stocks below a moving average are listed in red.

Five-Week Modified Moving Average (MMA) is one of two indicators that define whether or not a weekly chart profile is positive, neutral or negative. The other is the status of the 12x3x3 weekly slow stochastic.

A stock with a positive technical rating is above its five-week MMA with rising or overbought stochastics.

A stock with a negative technical rating is below its five-week MMA with declining or oversold stochastics.

A stock with a neutral technical rating has a profile that is not positive or negative.

The 200-Week Simple Moving Average (SMA) is considered a long-term technical support or resistance and as a "reversion to the mean" over a rolling three- to five-year horizon.

The 21-Day Simple Moving Average is a short-term technical support or resistance used by many hedge fund traders to adjust positions. A stock above its 21-day SMA will likely move higher over a rolling three to five day horizon and vice versa.

The 50-Day Simple Moving Average is also a technical support or resistance used by many strategists and commentators in financial TV.

The 200-Day Simple Moving Average is another technical support or resistance and I consider this level as a shorter-term "reversion to the mean" over a rolling six- to 12-month horizon.

Crunching the Numbers with Richard Suttmeier: Earnings & Where to Buy & Where to Sell

This table presents the EPS estimates including date and before or after the close, and where to buy on weakness and where to sell on strength.

Value Levels, Pivots and Risky Levels are calculated based upon the last nine weekly closes (W), nine monthly closes (M), nine quarterly closes (Q), nine semiannual closes (S) and nine annual closes (A). I have one column for pivots, which is a magnet for the period shown. The columns to the left of the pivots are first and second value levels. The columns to the right of the pivots are first and second risky levels.

Investors who wish to buy a stock should use a good-until-canceled GTC limit order to buy weakness to a value level. Investors who want to sell a stock should use a GTC limit order to sell strength to a risky level.

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

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

TheStreet Ratings team rates CATERPILLAR INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate CATERPILLAR INC (CAT) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, reasonable valuation levels, good cash flow from operations and increase in net income. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • CAT's revenue growth has slightly outpaced the industry average of 6.2%. Since the same quarter one year prior, revenues slightly increased by 0.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 25.84% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, CAT should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Machinery industry average. The net income increased by 4.8% when compared to the same quarter one year prior, going from $880.00 million to $922.00 million.
  • Net operating cash flow has increased to $1,897.00 million or 33.21% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -2.92%.

Richard Suttmeier is the chief market strategist at ValuEngine.com. He has been a professional in the U.S. Capital Markets since 1972, transferring his engineering skills to the trading and investment world.

Suttmeier has an engineering degree from Georgia Tech and a Master of Science degree from Brooklyn Poly. He began his career in the financial services industry in 1972 trading U.S. Treasury securities in the primary dealer community. He became the first long bond trader for Bache in 1978, and formed the Government Bond Department at LF Rothschild in 1981, helping establish that firm as a primary dealer in 1986. This experience gives him the insights to be an expert on monetary policy, which he features in his newsletters, and market commentary.

Suttmeier's industry licenses include, Series 7 and Registered Principal (Series 24). He has been the Chief Market Strategist for ValuEngine.com since 2008 and often appears on financial TV.

Click here for details on Suttmeier's "Buy and Trade" investment strategy.

Richard Suttmeier can be reached at RSuttmeier@Gmail.com

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