Earnings Deliver a Buy and a Sell


Jack Adamo Image Jack Adamo Editor, Jack Adamo's Insiders Plus

As earnings continue to roll out, the news has generated enough infomation to spark a sell for one stock and boost enthusiasm for another, observes Jack Adamo of Insiders Plus.

A large majority of earnings reports from all sectors were bad, and while ours were generally better, some of them disappointed as well.

I won't sell a stock for having a bad quarter or because I don't like the market, but if I have specific reasons that give me pause aside from those, that may tip the balance. That is the case with Avon Products (AVP).

I did not and do not expect a quick turnaround at Avon, and I expected the recent dividend cut. That's why it wasn't in the High Income Portfolio, despite its stated 6.8% yield. Those factors didn't influence this choice. I also still expect the company to come back, despite all its problems.

The new CEO, Sherilyn S. McCoy, certainly has credentials. She has a Master's Degree in chemical engineering from Princeton, an MBA from Rutgers, and previously handled the marketing for Johnson & Johnson's (JNJ) skin care division.

That said, after this quarter, the company is dangerously close to blowing some loan covenants, and while I have no doubt they'll be granted waivers, given Avon's assets, I'd rather take our 6.6% loss and have the cash in this climate.

I wouldn't procrastinate on this.