Hello readers,
I apologize for missing the last few days. I have been really busy with some other projects. So, to make it up to you, I have three picks for today. I will be doing a Buy Pick of the Day, a Long Play, and an Overnight Trade of the Day. I think these three picks will get us right back into the swing of things. I am available all day for questions, and I hope to get some good conversations going today. Look out for the other two picks throughout the day.
Buy Pick of the Day: American Commerical Lines Inc. (ACLI)
Analysis: There is not a whole lot of analysis needed here. ACLI is a straight up trade. The best of its kind. Here is what we can see this morning. We have a market that is ready to open higher. We have stocks that have been beaten down into a bloody pulp for the most part of the past few weeks. Then, we have ACLI, who just reported an EPS that is nearly 2000% higher than expected. The company’s stock is up over 22% in pre-market trading. What do you think will happen on open. The thing is going to skyrocket for at least the first thirty minutes.
It will not be a small sky rocket either. This one is going to jump very quickly. Why? This is because everyone is going to want to get involved in it very quickly. That kind of earnings beat is amazing, and it can lift a stock 40% in a day. This one is up only 22%. In the 19s, the stock is jump hitting its upper bollinger band. This means that it has a lot more room to pop through. 
Yet, the even greater reason is low volume. This stock is extremely low volume, meaning it gets little interest for most of the days of the year. When thousands rush into a stock with very little outstanding shares…BOOM! This one blows up. Everyone will be scrambling to get the few shares available. That is why you buy very early and get out as quickly as possible.
This type of trade is applicable to a lot of stocks…not just ACLI. The criteria I have just listed does not happen everyday obviously, but I would venture to guess once a month something like this happens, so be on the look out for it.
The only other advice I have is don’t get too greedy on ACLI. The problem with these trades is the rug can get pulled out from under you at any point. Just as much as these have that lowly upper volatility. They can pounce back down at any point in time too. So, take the gains you want and get out. Look at it as any other trade we do here at The Oxen Report.
Get in right away and get out!
Entry: We want to buy this one at market price right at the open. It is going to shoot up very quickly.
Exit: We want to sell at a 2-3% gain from our entry price.
Stop Loss: No stop loss set until at least thirty minutes into session, which will be at 3% below entry price, if needed.
Long Play of the Day: Hansen Medical Inc. (HNSN)
Analysis: I am a big fan of what is going on in earnings for medical supplies. A lot of these companies are turning
extremely nice profits, and I think HNSN is poised to make a run up until their earnings come out Thursday night. Tomorrow, the earnings of Boston Scientific are set to be release, which if positive should give a boost to their entire industry, including Hansen. Then, Friday will be the day of reckoning for the stock after earnings.
Hansen is projected to hit a negative EPS of 0.28. Yet, the company has improved their EPS over the past four quarters. This estimate is only 0.04 higher than last quarter, while most medical suppliers have been jumping EPS 100%, even more. I think the estimate is way too low, and it is presenting a great trade for us over the next few days.
Twelve out of fifteen of the recent medical supplies companies reported beating EPS estimates with surprises. Hansen, if in that category, which I think it will be, will be looking at some big swings. First off, the stock has high beta – over 2. We like that because it allows the needed volatility in the stock to make it move in large quantities. Secondly, the stock is in the pits right now. It is 66% off its 52 week high, and it is trading right at its lower bollinger band. Some good earnings from Boston followed by good earnings at home could produce 8-9% easy.
Get into this one by the end of the day, and ride this baby up and away.
Overnight Trade of the Day: Coming later today…
Good Investing,
David Ristau
