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, 25 February, 2016
Option Trade – Magna International Inc. (USA) (NYSE:MGA) Calls
**OPTION TRADE: Buy the MGA Mar 2016 35.000 call (MGA160318C00035000) at approximately $1.25. Sell price is left to your own judgment.
Magna International Inc. (USA) (NYSE: MGA), an automotive supplier, will release earnings tomorrow, February 26th before the open. Analysts forecast earnings per share of $1.12, down exactly $0.14 or 11.11% from 2014’s $1.26 EPS. They expect $1.12 earnings per share, down 11.11% or $0.14 from last year’s $1.26 per share. MGA’s profit will be $460.61M for 7.81 P/E if the $1.12 EPS becomes reality. After $1.13 actual earnings per share reported by Magna International Inc. (USA) for the previous quarter, Wall Street now forecasts -0.88% negative EPS growth.
Magna is cheap. It has a pristine balance sheet with US$2 billion in cash compared to US$1.6 billion in total debt.
The stock of Magna gapped up by $0.16 and has a $54.58 target or 56.00% above yesterday’s $34.78 share price. The 8 months technical chart setup indicates low risk for the $14.39 billion company. The gap was reported on Feb, 18 by Barchart.com. If the $54.58 price target is reached, the company will be worth $8.06 billion more.
Magna received a stock rating upgrade from Citigroup on Monday. In a note to investors, the firm issued a Buy rating. The analysts previously had a Neutral rating on the stock.
Analysts have a consensus target price of $55.92 in the 12-month period. The price objective is 64.00 % higher than the recent closing price of $34.09. Analysts covering the shares maintain a consensus strong buy rating. Zero analysts have rated the stock with a sell rating, two has assigned a hold rating, six says it’s a buy, and seven have assigned a strong buy rating to the company.
Wednesday, 24 February, 2016
Option Trade – Dollar Tree, Inc. (NASDAQ:DLTR) Puts
**OPTION TRADE: Buy the DLTR Mar 2016 75.000 put (DLTR160318P00075000) at approximately $1.20. Sell price is left to your own judgment.
Dollar Tree, Inc. (NASDAQ: DLTR), an operator of discount variety stores offering merchandise at the fixed price of $ 1.00, is expected to report fourth-quarter revenue above estimates on Thursday.
Higher rents, taxes and healthcare costs have made the company's "$1 or less" concept highly attractive to thrifty shoppers. Dollar Tree's results serve as a barometer for the broader spending behavior of low-income customers. While sales more than doubled in the previous quarter, expenses tied to rebranding Family Dollar stores ate into profit and margins.
The company bought out Family Dollar last year.
There are thirteen investment analysts that rate the stock with a buy rating and three have issued a strong buy rating to the company’s stock. The company presently has a consensus rating of Buy and an average target price of $87.35.
Buckingham Research began coverage on shares of Dollar Tree, Inc. in a research note published on Tuesday. The firm issued a buy rating and a $96.00 price target on the stock.
Also, other analysts have shown a positive inclination towards DLTR. Morgan Stanley raised Dollar Tree from an underweight rating to an equal weight rating and raised their price objective for the company from $65.00 to $90.00. Vetr raised Dollar Tree from a buy rating to a strong-buy rating and set a $94.26 price objective for the company. Telsey Advisory Group raised Dollar Tree from a market perform rating to an outperform rating and raised their price objective for the company from $80.00 to $95.00.
BB&T Securities increased its stake in shares of Dollar Tree, Inc. by 30.1% during the fourth quarter, according to its most recent 13F filing with the Securities and Exchange Commission. The institutional investor owned 25,208 shares of the company’s stock after buying an additional 5,831 shares during the period. BB&T Securities’ holdings in Dollar Tree were worth $1,946,000 at the end of the most recent reporting period.
Wednesday, 24 February, 2016
Option Trade – Foot Locker, Inc. (NYSE:FL) Calls
**OPTION TRADE: Buy the FL Mar 2016 70.000 call (FL160318C00070000) at approximately $1.00. Sell price is left to your own judgment.
Foot Locker, Inc. (NYSE: FL), is slated to release fourth-quarter fiscal results on February 26th, and it is expected that the retailer of athletic shoes and apparel will be able to continue with its positive earnings surprise streak in the quarter to be reported.
By continually exploiting opportunities like kids' and women's business, shop-in-shop expansion in collaboration with its vendors, store banner.com business, store refurbishment and enhancement of assortments, Foot Locker is likely to benefit in the quarter to be reported. The company is also well positioned to reap the benefits from the so-called "athleisure" trend that has been sweeping the retail sector as consumers are now opting for more comfortable and athletic style products.
1. Foot Locker has consistently grown sales and profits and exceeded its estimates for the past two years. The stock is attractively valued as compared to its industry and the broader market.
2. Foot Locker benefits from the sales of other successful companies such as Nike (NYSE:NKE) and brands such as Adidas, Jordan, Puma, ASICS, etc., whose products are sold in its brick and mortar stores (Athletic stores segment) and online (Direct to Consumer segment).
3. The footwear category is Foot Locker's strongest product category, which achieved a double-digit sales increase for fiscal Q3. The apparel category achieved a mid-single digit sales increase. Overall, Foot Locker achieved an 8% comp stores sales increase for Q3.
4. The upcoming Summer Olympics set for August 2016 in Rio de Janeiro, Brazil, is likely to act as a catalyst for the company.
5. Foot Locker's strategy for store expansion into new regions will also help the company grow revenue and earnings going forward. The company sees Europe as a good opportunity for expansion.
6. Foot Locker already has a good store presence in countries such as Italy, Germany, Ireland, Portugal, and the Netherlands. However, there is opportunity for expansion in key countries such as France, Spain, and the U.K., where the company operates some stores, but sees more opportunity for growth.
7. Another strategy that Foot Locker is focused on is the expansion of women's stores.
Six analysts have rated the stock with a hold rating, seventeen have given a buy rating and one has assigned a strong buy rating to the company’s stock. The stock presently has an average rating of “Buy” and a consensus price target of $74.28.
Wednesday, 24 February, 2016
Option Trade – Best Buy Co Inc (NYSE:BBY) Puts
**OPTION TRADE: Buy the BBY Mar 2016 30.000 put (BBY160318P00030000) at approximately $1.20. Sell price is left to your own judgment.
Best Buy Co Inc (NYSE: BBY), a multinational, multichannel retailer of technology products, including tablets and computers, televisions, mobile phones, large and small appliances, entertainment products, digital imaging and related accessories as well as and technology services, is expected to
report fourth-quarter sales below analysts' estimates on Thursday.
The dismal holiday sales performance raises concern as it compelled management to lower the fourth-quarter sales outlook. Best Buy now expects enterprise revenues to fall about 4% as against the previous expectation of a decline in low-single digits. The company expects domestic revenues to decline approximately 5% in the fourth quarter instead of the prior estimates of its remaining flat year over year.
In January, Best Buy reported a drop in sales in nine-week holiday season ended Jan. 2, due to weak demand for mobile phones, and estimated fourth quarter sales to also fall.
Tuesday, 23 February, 2016
Option Trade – First Solar, Inc. (NASDAQ:FSLR) Puts
**OPTION TRADE: Buy the FSLR Feb 2016 61.000 put (FSLR160226P00061000) at approximately $1.50. Sell price is left to your own judgment.
NOTE: As there is a short expiry time for this trade I suggest that you put in place a stop-loss of $1.00.
First Solar, Inc. (NASDAQ: FSLR), an Arizona-based energy company, is slated to report fourth-quarter 2015 earnings results today, February 23rd, 2015 after the market closes.
The energy corporation is expected to record a significant decline in revenue and earnings, amid the turmoil that has engulfed the whole energy market.
Analysts across the Street expect First Solar to experience a modest decline in its revenue and earnings in 4QFY15. The energy company is expected to report sales revenue of $929.81 million, down from 4QFY14 revenue of $1.01 billion. If actual financial results are in line with the consensus estimate, the company may record a decline of about 27% sequentially.
The net adjusted earnings of the company are expected to stand at $78.78 million ($ 0.78 per share). This represents a 77% decline sequentially, and a 59% drop year-over-year (YoY).
In 3QFY15, First Solar recorded net income of $348.28 million ($3.41 per share), beating consensus estimate of $157.17 million ($1.56 per share) by a huge margin. The earnings were also higher than the preceding quarter’s net income of $52.49 million (57 cents per share) and a profit of $62.06 million (61 cents per share) over the same period last year. Over the past six quarters, the company has only missed analysts’ expectations twice.
Also, in 3QFY15, First Solar also experienced decent growth in its sales revenue. Compared to the revenue of $889.31 million in 3QFY14, the company posted revenue of $1.27 billion in the last quarter. In 2QFY15, the energy corporation posted revenue of $896.22 million.
Though First Solar did a good job at beating consensus estimates, it was not able to outperform analysts’ revenue projection in four of the last six quarters.
As FSLR rests largely on capital deployment and longer-term growth potential, any drop in share price from an earnings miss or downward revision in 2016 guidance will present a buying opportunity if accompanied by capital deployment plans or positive developments in the product mix/margin outlook.