Texas Instruments Incorporated (NASDAQ:TXN) currently manufactures the CPU for Amazon.com, Inc. (NASDAQ:AMZN)’s Kindle Fire HD, as well as Barnes & Noble, Inc. (NYSE:BKS)’s Nook HD+. However, the strength in wireless will be short-lived, as competitors QUALCOMM, Inc. (NASDAQ:QCOM) and Broadcom Corporation (NASDAQ:BRCM) continue to manufacture processors for the newest smartphone and tablets.
Ahead of Monday’s earnings call, analysts at Sanford Bernstein, Stifel Nicolaus, and Susquehanna all downgraded Texas Instruments Incorporated (NASDAQ:TXN) to “hold” from “buy” based on valuation and anticipated slowdown in business. Susquehanna has the lowest price target for Texas Instruments Incorporated (NASDAQ:TXN) at $30.
Wall Street continues to view competitors QUALCOMM, Inc. (NASDAQ:QCOM) and Broadcom Corporation (NASDAQ:BRCM) more favorably than Texas Instruments within the semiconductor space. For an in-depth report on Qualcomm, reference my article Forget Apple and Google, Buy this Fast-Growing Tech Stock.
I recommend that readers sell Texas Instruments ahead of Q1 results, as reduced guidance for full-year 2013 will cause the stock to trade lower.
Yum! Brands, Inc. (NYSE:YUM)
Tuesday, April 23, 2013 after market close; EPS $0.58 / Revenue $3.09B
Yum! Brands, Inc. (NYSE:YUM) is an international quick service restaurant operator with more than 37,000 restaurants in 120 countries. Investors have traditionally considered Yum! a growth stock with its emerging markets exposure in large countries such as China.
Market participants have repeatedly failed to gather upward momentum in Yum! Brands, Inc. (NYSE:YUM)’s share price, as new concerns in China have caused the stock to attract more sellers than buyers. I originally wrote back on March 12 that I was looking for more visibility before considering an investment.
On April 10, Yum announced that March same-store sales declined a massive 13% over concerns related to the Avian flu. The Chinese public are concerned that the deadly virus may have entered the chicken food supply, therefore refraining from eating at Yum’s KFC restaurant locations.
Wall Street has mixed views on the outlook for Yum! Brands, and my investment experience indicates that it’s better to stay safe on the sidelines versus becoming a hero by putting both feet in the water. Analysts tend to be overly optimistic (i.e. bias towards management) and exuberant during times of business stress, which could lead to unwanted losses on your hard-earned capital.
Aside from China, the Associated Press is reporting that Yum! is planning to revamp its Taco Bell menu in order to stay competitive and introduce healthier menu items, a trend set by competitors McDonald’s Corporation (NYSE:MCD) and newcomer Burger King Worldwide Inc (NYSE:BKW).
I recommend that readers sell Yum! Brands ahead of Tuesday’s earnings release.
Foolish Bottom Line
While the broader market may go higher, lower, or sideways from here, Fool readers do not have to be market forecasters in order to manage their individual stock positions.
In my opinion, a deterioration in business fundamentals warrants the sale of Caterpillar, Texas Instruments, and Yum! Brands ahead of first quarter earnings.
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The article 3 Stocks That Must Be Sold This Week originally appeared on Fool.com and is written by John Macris.
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