by Ian Harvey
IMPORTANT NOTE: There is no stop-loss or pre-determined sell price recommended – this is left to the discretion of the individual trader.
Thursday, August 27, 2015
Option Trade – Big Lots, Inc. (NYSE:BIG) Calls
**OPTION TRADE: Buy the BIG Sep 2015 45.000 call (BIG150918C00045000) at approximately $0.55. Sell price is left to your own judgment.
Big Lots, Inc. (NYSE: BIG), a United States-based discount retailer, will report its second-quarter results before the market opens on August 28. Analysts expect quarterly earnings of $0.34 per share, up from $0.31 during the same period last year. The stock is up 6.6% on the year.
BIG has struggled over the last couple of months, but shares appear to have formed a solid level of support around $41.75. If the company is able to deliver a solid set of quarterly numbers, the stock should build some momentum and erase some of its recent losses.
It has been a mixed earnings season for retailers, but it is believed that BIG is in good shape to deliver another solid report, and top analyst estimates for the third straight quarter.
Consumer confidence remains OK, but it has started to waver a bit. This bodes well for discount retailers, since consumers are likely to tighten up spending a little, and look for the best value for their money.
Big Lots has been in the process of implementing a restructuring to its business in order to compete with lower overhead online retailers. Big Lots is part of a bigger retail picture of companies that are all in the process of trying to come with online-in-store hybrid models. The company is trying to appease investors by driving traffic to its stores by offering consumables, targeting its customer base selectively, and deploying capital back to shareholders.
In addition to this the company has been managing its stock well, allocating capital to shareholders and reducing the share count consistently to help bolster the company's earnings.
Looking ahead, as the company continues with strategic growth efforts, its financial performance will continue to improve in the quarters ahead. Increased focus on key growth generating categories such as food and furniture has been positively affecting the company's performance.
Analysts are certainly favoring Big Lots -- out of 15 analysts, 11 rate it a Buy, 4 indicate a Hold while 0 suggest a Sell. The highest target is $61 and the lowest is $45. The 12-month mean target is $54.83, which means upside potential of 33.76% over the current price.
There are many initiatives in place that will continue to boost the company’s comps and revenues going forward.
Wednesday, August 26, 2015
Option Trade – Dollar General Corp. (NYSE:DG) Calls
**OPTION TRADE: Buy the DG Sep 2015 77.500 call (DG150904C00077500) at approximately $0.85. Sell price is left to your own judgment.
Dollar General Corp. (NYSE: DG), a discount retailer in America, is scheduled to announce its Q215 earnings results tomorrow, Thursday, August 27th. Analysts expect the company to announce earnings of $0.94 per share and revenue of $5.13 million for the quarter. Dollar General Corp. has set its FY16 guidance at $3.85-3.95 EPS. The stock is up 13.0% on the year.
Consumer confidence dropped a bit in July, but confidence remains at pre-recession levels, and strong enough to warrant a bullish outlook on the retail sector. Dollar General is coming off a strong first-quarter, and if the company hits the consensus for the second quarter it would mark a year-over-year earnings increase of 13.2%.
Shares are trading near a 52-week high, but the valuation is not a major concern, with a P/E of 22.3.
Looking ahead, analysts expect the company to continue growing earnings, and have pegged the company to grow earnings by 15% in 2017 versus 2016.
There has been plenty of analyst action regarding Dollar General lately. One analyst has rated the stock with a sell rating, four have assigned a hold rating, fourteen have issued a buy rating and two have issued a strong buy rating to the company’s stock. Dollar General Corp. currently has an average rating of “Buy” and a consensus price target of $82.25.
Citigroup Inc. reissued a “buy” rating and issued a $94.00 target price (up from $91.00) on shares of Dollar General Corp. in a research note on Wednesday, July 15th. Deutsche Bank reaffirmed a “buy” rating and set a $85.00 price objective on shares of Dollar General Corp. in a research report on Monday, August 17th.
Expect DG shares to move higher following an upbeat Q2 report.
Wednesday, August 26, 2015
Option Trade – GameStop Corp. (NYSE:GME) Calls
**OPTION TRADE: Buy the GME Sep 2015 46.500 call (GME150904C00046500) at approximately $0.80. Sell price is left to your own judgment.
GameStop Corp. (NYSE: GME), a video-game retailer, will report its second-quarter results tomorrow, August 27th. GameStop will post its quarterly results after the market closes, with analysts forecasting earnings of $0.24 per share, up from $0.22 during the same period last year. The stock is up 37.4% since the start of the year.
GameStop has moved sharply higher this year, and despite the stock appreciating 37% on the year, the valuation remains attractive. GME has a P/E of just 12.7, so there is still plenty of upside potential if quarterly earnings fall in-line or slightly higher than the consensus.
Previous concerns over the impact of mobile and PC games were overblown, and enthusiasm has returned to GameStop. The second half of the year has a solid lineup of new games being released, which should keep earnings and revenues moving in the right direction for GameStop. Among some of the highly anticipated titles scheduled for release during the latter part of the year are Rise of the Tomb Raiders, Call of Duty Black Ops III and Star Wars Battlefront.
Also, the Street, on the whole, is strongly bullish about the stock, with 11 out of the 18 analysts listed on Bloomberg that provide coverage to the stock, rate it a Buy. The remaining seven rate it a Hold. The consensus target price for the stock currently has a value of $48.14.
The most bullish outlook for the stock is given by David G Magee of SunTrust Robinson Humphrey with a target price of $58 and a Buy rating. As well, GameStop‘s stock had its “buy” rating reissued by investment analysts at Wedbush in a research report issued to clients and investors last Wednesday. They presently have a $52.00 price target on the stock.
Expect a solid earnings report which will send shares higher, and help this option trade.
Wednesday, August 26, 2015
Option Trade – Avago Technologies Ltd (NASDAQ:AVGO) Calls
**OPTION TRADE: Buy the AVGO Sep 2015 135.000 call (AVGO150918C00135000) at approximately $0.85. Sell price is left to your own judgment.
Avago Technologies Ltd (NASDAQ: AVGO), a designer, developer and global supplier of a range of analog semiconductor devices with a focus on III-V based products, is scheduled to report earnings for the third quarter of fiscal year 2015 (3QFY15) today, August 26th, 2015 after the market closes.
Even though the semiconductor manufacturer is expected to report in-line earnings the future looks good, with the Broadcom acquisition. Avago agreed to acquire Broadcom Corporation (NASDAQ:BRCM) for $37 billion to be paid in both cash and stock. Once the deal is completed, the resulting company would become a dominant force in the semiconductor industry with enterprise value of $77 billion and estimated revenue of $15 billion. The resulting synergies from the merger are expected to result in savings of $750 million.
Furthermore, analysts are predicting improved performance from the company’s wireless business, which contributes nearly 35% in revenue. The segment is expected to post strong growth, mainly over the strength of the upcoming iPhone; however, it will likely be offset to some extent over the expected weakness in the wired infrastructure.
The Street is mostly bullish on Avago stock. According to Bloomberg, 19 analysts rate the stock a Buy, two recommend a Hold, and two suggest a Sell. The 12-month consensus price target is $162.75. BMO Capital Market is the most bullish on the stock with an Outperform rating and price target of $185. Also, Avago was upgraded to ‘Buy ‘from ‘Outperform ‘by Credit Agricole analysts on Tuesday. The broker also set its price target on the stock at $150.
Avago has given an impressive performance in the past quarters, and with the upcoming merger providing strong future prospects, coupled with the recent weakness in the stock price, has made Avago an attractive option call.
Wednesday, August 26, 2015
UPDATE AND INCREASE on Option Trades – Ambarella Inc (NASDAQ:AMBA), Apple Inc. (NASDAQ:AAPL) and GoPro Inc (NASDAQ:GPRO) CALLS
We have been provided with an opportunity to buy the following at a much cheaper price. I understand that the market this morning has once again pushed up the prices but should not increase the prices much more than suggested below.
This will mean that you need to check the price before executing the trade.
By obtaining a much cheaper price for the options will allow you to take a loss on yesterday’s entry but will be covered by today’s entry price, once the increase occurs. Having said that I hope that gains will be made on all trades mentioned below:-
**OPTION TRADE 1: Buy the AMBA Aug 2015 98.000 call (AMBA150828C00098000) at approximately $0.30. Sell price is at your own judgment.
**OPTION TRADE 2: Buy the AAPL Aug 2015 112.000 call (AAPL150828C00112000) at approximately $0.19. Sell price is at your own judgment.
**OPTION TRADE 3: Buy the GPRO Aug 2015 53.000 call (GPRO150828C00053000) at approximately $0.12. Sell price is at your own judgment.
Tuesday, August 25, 2015
Option Trade – Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA) Calls
**OPTION TRADE: Buy the ULTA Sep 2015 185.000 call (ULTA150918C00185000) at approximately $0.85. Sell price is left to your own judgment.
Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ: ULTA), a beauty retailer, which provides one-stop shopping for prestige, mass and salon products and salon services in the United States, will issue its Q215 quarterly earnings data on Thursday, August 27th. Analysts expect the company to announce earnings of $1.12 per share and revenue of $869.33 million for the quarter. Ulta Salon, Cosmetics & Fragrance has set its Q2 guidance at $1.07-1.12 EPS.
The CEO of Ultra, Mary Dillon, has an intricate understanding of what is doing well in retail and why – which has helped rally the company to new highs -- the company continues to hit on all cylinders.
The company has an "incredible omnichannel" and "fabulous same-store sales," and the overall view is that the stock is headed higher.
On Monday, Ulta Salon (ULTA) shares were reiterated by Telsey Advisory Group to Outperform according to the research report released to the investors. The brokerage firm has raised the Price Target to $200 from a previous price target of $185.
Wall Street analysts have given Ulta Salon, Cosmetics & Fragrance, Inc. a rating of 1.5 on a consensus basis. Out of 14 analysts covering Ulta Salon, 10 have issued a strong buy.
The company shares have rallied 77.78% in the past 52 Weeks. On August 18, 2015 the shares registered a one year high of $176.77 and a one year low was seen on August 20, 2014 at $94.81. The 50-day moving average is $165.52 and the 200 day moving average is recorded at $153.26. S&P 500 has rallied 5.56% during the last 52-weeks.
Tuesday, August 25, 2015
Option Trade – Abercrombie & Fitch Co. (NYSE:ANF) Puts
**OPTION TRADE: Buy the ANF Sep 2015 16.500 put (ANF150904P00016500) at approximately $0.95. Sell price is left to your own judgment.
Abercrombie & Fitch Co. (NYSE: ANF), is scheduled to report its second-quarter results before Wednesday's market open. Analysts are expecting the company to loss $0.11 per share on revenue of $796.63 million while the Street's consensus estimate is calling for a loss of $0.08 per share on revenue of $811.27 million.
Abercrombie continues to suffer from unfavorable exchange rates in its international operations while the domestic core customer no longer views the brand as "highly relevant or desirable." In addition, the customers who still shop at the brand are "more than willing" to wait for "deeper" discounts before making purchases.
Comps will be "materially negative" as the company will continue feeling the negative shifts from "poor fashion choices" as its brands struggle "to find relevancy."
Store checks revealed a "boring" series of offerings which resulted in a "weak" back-to-school performance. Meanwhile, the company also suffered from declining tourist traffic at key stores.
Tuesday, August 25, 2015
Option Trades – Ambarella Inc (NASDAQ:AMBA), Apple Inc. (NASDAQ:AAPL), GoPro Inc (NASDAQ:GPRO) and Netflix, Inc. (NASDAQ:NFLX) CALLS
**OPTION TRADE 1: Buy the AMBA Aug 2015 98.000 call (AMBA150828C00098000) at approximately $0.65. Sell price is at your own judgment.
**OPTION TRADE 2: Buy the AAPL Aug 2015 112.000 call (AAPL150828C00112000) at approximately $0.70. Sell price is at your own judgment.
**OPTION TRADE 3: Buy the GPRO Aug 2015 53.000 call (GPRO150828C00053000) at approximately $0.45. Sell price is at your own judgment.
**OPTION TRADE 4: Buy the NFLX Aug 2015 110.000 call (NFLX150828C00110000) at approximately $2.00. Sell price is at your own judgment.
Positive news from Best Buy (NYSE: BBY), owner of the biggest U.S. electronics chain, this morning, with their earnings report, has sparked an opportunity to benefit from companies that are associated with the stores in certain areas.
Companies that provide electronics such as mobile phones and strong health and fitness sales are benefiting from this surge in Best Buy’s stock due to its’ report.
The sale of televisions and mobile phones has helped to offset shrinking sales of tablets and personal computers.
The strong showing in an otherwise quiet sales season suggested those shoppers' appetites for big-ticket gadgets might be growing and Best Buy has picked up market share from some competitors of late, improving results even when the rest of the sector is struggling.
Electronics stores have struggled to wring more revenue out of consumers able to compare prices online, while sales of gadgets such as cameras, GPS navigation aids, and even tablets and PCs have weakened as smartphones get larger and their developers squeeze more features into a single device.
Best Buy's shares, which have lost 24 percent in the past six months, jumped 11.3 percent in premarket trading this morning. The company's revenue rose 0.8 percent in the second quarter ended Aug. 1, surprising analysts who expected a fall of 2 percent on average.
Best Buy has cut jobs, closed stores and streamlined its management structure in an effort to boost profit and margins and compete better with online and big-box retailers. Improving job markets and low fuel prices has boosted consumer spending on big-ticket items such as TVs and other appliances.
Best Buy has exited operations in China and consolidated those in Canada, leaving it largely dependent on U.S. sales. U.S. sales rose for the fourth straight quarter, accounting for nearly 93 percent of total sales. Same-store sales in the region rose 2.7 percent, helped by demand for appliances and higher mobile prices.
Revenue rose to US$8.53 billion in the quarter, compared with the average analyst estimate of US$8.29 billion.
Ambarella Inc (NASDAQ: AMBA), Apple Inc. (NASDAQ: AAPL), GoPro Inc (NASDAQ: GPRO) and Netflix, Inc. (NASDAQ: NFLX) have all surged this morning pre-market and are now set for a rebound.
Apple was upgraded at Wells Fargo to outperform from market perform this morning as well. Correction appears overdone, as CEO offered some visibility for the current quarter, Wells Fargo said. And this may be on the cards for the other companies that are being recommended for an option trade.
Monday, August 24, 2015
Option Trade – Xilinx, Inc. (NASDAQ:XLNX) Puts
**OPTION TRADE: Buy the XLNX Aug 2015 40.000 put (XLNX150828P00040000) at approximately $0.40. Sell price at your own judgment.
Not many sectors are having a tougher summer than semiconductors. The benchmark PHLX Semiconductor (SOX) index actually started to fall in late May and has already sunk back to levels last seen in October. And the Market Vectors Semiconductor ETF (NYSE: SMH) is down 17% just since June 1.
With such a bleak outlook, one that certainly stands out is Xilinx, Inc. (NASDAQ: XLNX), that designs, develops, and markets complete programmable logic solutions, and is currently trading 17.09% below its 52-week-high.
Xilinx Inc. has dropped 0.45% in the last five trading days, and has dropped 5.05% during the last 3-month period.
Many analysts have commented on the company rating. In the latest research report, Pacific Crest lowers the target price on the shares.
And analysts at Zacks have given a short term rating of sell on Xilinx, Inc. with a rank of 4. The company has received an average rating of 2.47 from 19 brokerage firms.
Baird decreased the price target from $46 to $44, whilst Jefferies reiterated their Hold stance on the same day, and decreased their price target from $43 to $42.
5 analysts have rated the company as a strong buy. The company has been rated as hold from 12 Wall Street Analysts. 1 analyst have suggested buy for the shares. A sell call was given by 1 analyst. According to 16 Analysts, The short term target price has been estimated at $ 43.75.
On a different note, the Company has disclosed insider selling activities to the Securities Exchange, The (Sr. Vice President) of Xilinx Inc, Rangasayee Krishna sold 25,025 shares at $42.54 on July 15, 2015. The Insider selling transaction had a total value worth of $1,064,564.