My Own Analyst

Question on T

Igor asks:

I bought AT&T a while back as dividend generator. The stock has been on the run lately and I am sitting on 16.9 % gain which is great for the value stock. Is it time to take profits and hopefully buy it back on the dip?

I have liked T as an alternative to bonds.  I don't include it in my model because their balance sheet is somewhat aggressive.  There is no reason to take profits at this time in my view based on chart or valuation.

ESL Flying

I almost trimmed ESL as part of the trades today, as my target of 85.50 leaves it looking less than average.  Now that it cleared 60 resist, though (post-October highs), I want to point out that the next test is 61.50, which is old support. 

ST Trades

CHS traded as high as 11.42 - looking for 11.50 there.  Our newer trades are off to an ok start now - SKX is up since I noted it, while TJX is down.

I want to take the XLF option trade off as XLF touches 13.50 resistance.  We are at 13.46/.47, with the Jan 13 call now .62 bid.  Let's just close that one out.  I remain bullish on XLF but want to close the trade now with success given its my first official option recommendation.

EZPW Posts Strong Quarter and Guides Well

EZPW had a much better report than last quarter, when it missed the consensus barely due to a ticking up in credit losses.  Sales and EPS both came in about 3% of the consensus.  The company also provided good guidance for FY12 - 3.05-3.10 compared to a 3.01 consensus.  This represents 20% growth - not bad for a stock trading at 10PE with very little debt.

While I was pleased with everything I heard for the most part and expect the market to react well, I need to point out that the guidance was boosted by $50mm of acquisitions over the past 40 days.  When I do the math, it suggests that the guidance was just ok, not really an improvement, especially when I consider that the company is making several strategic investments (mainly related to an e-commerce effort). 

30 looks to be a key level, a pivot-point of sorts on the stock.  My target will go up a little on the higher guidance (45-->46), and optically this will look good to investors that like to see earnings momentum.  I think that this stock should trade 34-37 right now, but that is asking for too much, too soon.  More realistically, though, I think the stock can work to 33 pretty quickly.  I think that people were spooked out of the stock by an irresponsible analysts multiple target reductions and a "sell" rating last month, and he now looks to be wrong.

More thoughts on Housing

I am getting bullish on home construction.  I will share a link soon to an article that I submitted to TradeKing highlighting the builders.  The better way to play, though, is LOW, MLI and maybe LAYN.  I wanted to share this upbeat view, though it's out of the government:

http://www.bloomberg.com/news/2011-07-03/home-prices-very-unlikely-to-fall-further-u-s-s-donovan-says.html

 

File this under "contrarian" and "turnaround"!

CHS - Upside so far

CHS hired a strange CFO today, which bugs me (she comes from SuperValue - SVU).  The good news is that the company reported strong sales trends this quarter in prepared remarks at the annual meeting...

SCS: What Does it Mean for KBALB?

After the close, furniture-maker Steelcase reported a strong quarter.  From the press release: 

Organic revenue growth in the first quarter was broad-based and totaled 23 percent over the prior year after adjusting for the negative impact of $(35) million associated with the deconsolidation of IDEO, approximately $10 million related to favorable currency translation effects and $5 million from a dealer acquisition completed during the current quarter.

Orders grew 25%... Sounds good for KBALB...

 

TIE Reports - Implications for HAYN

TIE had some profitability issues, but the sales boomed.  They confirmed the same thing that CRS, ATI and RTI have said regarding aerospace and other markets, suggesting HAYN should have a great quarter.  It has pulled all the way back in this soft market, making it unlikely we see "55-58" before the report tonight, but I still like the stock for a trade.  EZPW is open too.

BCR Report Summary and What it Means for SYNO

Just a quickie on BCR, which is small in the Conservative Growth/Balanced Model.  The quarter was a little ahead of expectations, but full-year guidance is unchanged.  This is a fantastic company, very balanced and well run.  The position is small because it's extended and overbought and was too close to my target (which I just raised to 130 but had been 122).  Plus, their EPS growth is more than 50% related to share repurchase and the balance impacted by an acquisition.  With that said, I expect to be adding again to it later in the year, valuation permitting.

BCR competes with SYNO in SYNO's key product, Veritas, and serves as a good proxy of market growth.  They reported 50% growth year-over-year in their products, and I think this bodes well for SYNO.  I had trimmed SYNO in what was probably a bone-headed move in retrospect.  I have a new respect for the chart there after a huge buyer ran it up.  That's one I would like to make bigger (though it's not bad at 5.8%).  18.40 on 2/24 seemed ahead of itself...

Question on ALGT

Igor asks:

ALGT lost a lot of ground this afternoon. Can't find any news. Is it just because of oill prices ? Good buy opportunity?

I was looking for news too - all I saw was that Barclays raised their target from 55 to 64.  Thank God they didn't cut it!

You are probably aware that tomorrow is options expiration.  There are a large number of 40 puts open (758) - not sure if that plays a role or not.