Thu10302014

Business & Real Estate

Timing the stock market proves futile

Stocks moved higher Friday, with the Dow Jones industrial average within striking distance of all-time closing highs of 16,576.66 and the S&P 500 in record territory of 1,866.66. Anything above those levels would be a good reason to review your portfolio.

Of course, the bears have no shortage of reasons to be pessimistic, as they will claim that stock prices are unusually high relative to corporate earnings and stocks will suffer when profit margins revert to normal.

Federal Reserve Chairwoman Janet Yellen helped the market Thursday by assuring that the Fed would be watching incoming data to ensure that the economy remains on track.

Considering the severity of the market decline and the impact on investor psychology, there is little doubt the recent pullback should be viewed as a correction.

Trying to time the markets is futile. Despite the ups and downs of stock prices, if investors stay focused on the long-term, then they can reach their goals.

Two Town Crier “50” stocks are in the news.

• Intuit Inc. (INTU; $77.84) has a new user interface for those doing their taxes on TurboTax this year. In the past, the program was too convoluted with random questions. The company also decided to get serious about its cloud product, announcing that QuickBooks Online now has 561,000 businesses paying for it.

In the tax season through Feb.15, Intuit saw TurboTax sales increase 7 percent, to 14 million units, boosted by 11 percent growth in TurboTax Online. Intuit last week added 5.2 percent to its shares after trumpeting growth in TurboTax and QuickBooks.

Intuit recorded revenue of $782 million, 12 percent lower than a year earlier but higher than the consensus of $778.9 million for the second quarter ending Jan. 31.

The lower sales were due to processing delays and changes in Intuit’s tax offerings that will shift revenue into the third quarter, which ends in April. The government also changed dates for reporting.

As a result of the third-quarter revenue shift, management revised its third-quarter forecasts to net income between $3.46 and $3.51 per share and sales of $2.33 billion to $2.4 billion.

TheStreet Ratings team deems Intuit stock a buy, as do additional brokers, but 10 other brokers recommend a hold. The median price is $78, with a high of $85. The dividend yield is 1 percent.

• Agilent Technologies Inc. (A; $57.01) cut its fiscal-year guidance because of disappointing performances from its Electronic Measurement business. The stock is trading at a significant discount, but Electronic Measurement will be spun off later this year.

The Santa Clara-based Agilent is the world’s premier measurement company and a technology leader in chemical analysis, life sciences, diagnostics and communications.

Agilent shares declined 8 percent to $55.25 after the company’s prediction of second-quarter earnings per share of 71-73 cents came in lower than analysts’ estimates. Revenue remained flat at $1.68 billion.

The Q1 figures confirm two important trends: Agilent’s Life Sciences and Diagnostics Group continues to perform, with revenues up 6 percent, and financial discipline remains a major earnings driver.

Investors should not be surprised, because the company has seen eight negative revisions in the past few weeks. Its current-year earnings have moved lower over the past 30 days.

Stifel Nicolaus research recently downgraded Agilent stock from a buy to a hold. The median price is $64, with a high of $67. The dividend yield is 0.90 percent, or 53 cents per share.

Clyde Noel is a Los Altos Hills resident and longtime investor in stocks.

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