With just one week to go in the year it will be interesting to see where everything heads but there are a few things that do look pretty good.
Anything can happen this week so risk as little as possible, stocks can be easily manipulated
FDX gave great earnings Wednesday and, unless there’s an oil spike, should move up to around $110 before hitting any significant resistance. YELL broke it’s 50 dma of $45.50, closing above it and looks poised to challenge the 200 dma of $49, especially if FedEx continues to roll.
I like Yellow for a long-term play and think it’s very undervalued with a group low p/e of 9. Revenues and earnings look to be up 25% this year after doubling in 2004 when the stock opened the year at $30. Although the stock may have gotten ahead of itself at $64 in March, it was mostly driven down by energy costs which were ultimately passed on without problems to their clients.
Also helping our transport picks (but dooming the country) is a possible strike at UPS. I really doubt it will get that far but it will certainly scare some money out of this $84Bn company that is bound to find its way into some other shippers.
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I found a fun stock to trade – BBH is a Biotech basket and has options and it really jumps around on news! I think this one is just about to pop back over $210 so I like the Jan $210 calls for $2.50 looking for $3.50.
NOK has a nice new line of phones coming out but I am a little nervous since it is already up over 10% since my initial pick. I am going to wish hard for a pullback to $17.50 before buying in again.
BA should get yet another boost with a $10Bn order from Singapore Airlines but the price is a little stretched for an entry here.
ABS’s deals are all off so look for that one to collapse today. Unlike the shareholders of WFMI, the Albertson’s shareholders understand that it is just a supermarket and even a p/e of 18 is a lot. The stock ran up from $20 on speculation so expect most of that to come out today. If it gets held up at the 200 dma of $22, that would be a great place to short it.
CAT is in an interesting place, I would rather it came down a bit but it looks very strong.
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I was asked about NT recently – The stock is very attractive at its 200 dma of $2.90 but not so much at $3.10 which is sitting just below the 50 dma. Money is coming back into this sector and the company has improving margins that should bring it to profitability next year, so expect several upside surprises.
No one is short on this stock though so there won’t be any covering rallies but there are plenty of neutral analysts who will upgrade if things start looking better.
My big concern in this stock is that they have been getting acquisitive which can hammer the stock in short-term runs so I don’t recommend the stock unless you are very patient (years).
The cheap price and low volatility of the stock also makes it poor for options, both on the buy and sell side – in short, there is not enough promise in this stock for me to tie up my capital.
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AIG is doing better than I expected, on strength of new insurance lines we discussed. I wish I had caught it yesterday but I think it has legs to go past $70.
SNDK is also ready for takeoff but may have trouble breaking $65.50.
PTEN picked the worst possible time to restate earnings and should retest $33 at least today below that is a clear line to $30!
Good trading,
– Phil
