Here's a Stock Dilemma

 | Dec 17, 2013 | 11:12 AM EST
  • Comment
  • Print Print
  • Print
Stock quotes in this article:






The threshold of pain on the Kimberly-Clarke (KMB), Clorox (CLX) and Colgate (CL) cohort may soon be upon us, the threshold that gets crossed because of the leaking of the bond-market-equivalent balloon.

These stocks are neither here nor there right now. They don't have much earnings momentum. Their consistency is NOT desirable if the economy's getting stronger and their dividends aren't big enough if the Fed says it is time to cut back on bond buying.

So what do you do?

I think there's a real dilemma here. I remember in 1987 I had been a huge believer in KMB and Heinz (HNZ). I had just started my hedge fund and I was being careful to invest in what I thought of as safe names, the ones that couldn't hurt me because I was more concerned with the downside than the upside.

I couldn't have been more wrong about safety. At the very time I started, we got into one of those moments where the economy had broken out of a small slump and took off. It left these stocks in the dust and as money rotated to stocks like Alcoa (AA) and the U.S. Steel (X) these stocks started to get clocked.

When I look at Kimberly I can't believe that the high water mark was when the company announced the spinoff. It's plummeted six points since then. Can it keep going down?

I am almost certain it can. But is it worth selling? I think it's come down too much to be able to get out and then back in, but maybe I am thinking too much like an Action Alerts PLUS portfolio manager where the stock gets knocked down pretty hard on a sell alert and gets knocked right back up on a buy alert, basically giving you a trade where you got out and got in at the same prices.

But if I were fleet of foot and was able to sell some with the idea of buying it back ten points below the high, both because the company isn't expensive and because of the very attractive spinoff, I would certainly make that trade.

Columnist Conversations

Foot Locker's (FL) less than expected quarterly earnings set off a round of selling the entire athletic appare...
View Chart »  View in New Window » Gold has met the first upside target off the last setup zon...



News Breaks

Powered by


Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.