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Buy Pick: SONC

Courtesy of David at The Oxen Group

Today’s Buy Pick: SONC

Sonic Chart,SONCTomorrow [now today], Sonic Corp. (SONC) looks to be a very bullish for tomorrow. In after hours, Sonic reported very positive earnings, beating expectations on revenue and EPS. The reason we like Sonic is because the company should be able to move up significantly. First, the market looks pretty positive for tomorrow. The Fed’s expected announcements should be extremely positive for the market as they should confirm rates and give bullish news on the economy.

Futures are already up strongly for the Dow and S&P as they expect good news from the Fed. Even if the Fed news is not extremely bullish, the market should move SONC up higher before the announcement, which should come sometime in the early afternoon. Sonic’s earnings beat EPS by 0.04, even though the company did see a dip in profits and sales. However, the company was highly criticized for their pricing in the last quarter and introduced a cheaper menu to draw in customers. Typically, when a company reports strong earnings, The Oxen Group does not like to recommend it because the stock will move down from a gap up. However, with Sonic, the stock has a low volume, which means that the stock should be flooded with more investors, making it easier for the rise.

Further, Sonic has strong technical indicators that should also help the stock move up. It is slightly oversold, undervalued, and towards its lower bollinger band – it has a lot to room move up. After the stock gaps up, and moves down, with a bullish market, Sonic earnings should continue to advance the stock.

Entry: Recommended entering 10-25 minutes
Exit: 2-4% increase
Resistance: Upper resistance 9.50

Table of David’s Results

Date   Stock Entry Exit %Change
5/29/2009   GPS 16.99 17.67 4.00%
5/30/2009   TM 80.77 81.72 1.18%
6/2/2009   SRS 18.06 18.6 3.00%
6/3/2009   DUG 16.68 17.35 4.00%
6/4/2009   TLAB – SS 5.95 5.84 2.00%
6/5/2009   XOP 35.84 35.85 0.00%
6/8/2009   BLK 164.76 168.87 2.50%
6/9/2009   USD 20.3 21.12 4.00%
6/10/2009   SINA 30.17 31.07 3.00%
6/11/2009   SRS 18.39 19.3 5.00%
6/12/2009   NSM 13.23 13.56 2.50%
6/15/2009   ERY 18.32 19.05 4.00%
6/16/2009   SKF 41.21 42.85 4.00%
6/17/2009   SRS 20.17 20.97 3.81%
6/18/2009   DIG 28.36 29.21 3.00%
6/19/2009   RGR 11.88 12.34 3.87%
6/22/2009   TYH 86.42 81.85 -5.28%
6/23/2009   ADI 23.32 23.34 0.01%

 

 


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  1.  when trading sonc, etc  do you use stops? if so how do set them?


  2. oldgoat, David does not use stops, but when the profit hits his target, he would take it, in this case:  Exit: 2-4% increase. If it doesn’t hit the target (or in the range), he’s out at the end of the day.  I think he would get out based on what the market’s doing at the time, so, if the stock is a 2% increase and the market starts dropping, he would probably take it but if the market is strong, he might let it run.  – Ilene


  3. From David:  "Well we use limit sells, but what you said yeah. So we sell only if a price hits a limit, configuring the highest percentage. Then, if it doesn’t look to be getting there we will take a lower %."