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, 21st April, 2016
Option Trade – AutoNation, Inc. (NYSE:AN) Calls
**OPTION TRADE: Buy the AN May 20 2016 48.000 call at approximately $1.50. Sell price is left to your own judgment.
AutoNation, Inc. (NYSE: AN), an automotive retailer in the United States, is scheduled to post its Q116 quarterly earnings results tomorrow, Friday, April 22nd. Analysts expect AutoNation to post earnings of $0.93 per share and revenue of $5.29 billion for the quarter.
The company continues to actively pursue acquisitions and new store opportunities with a focus on enhancing brand representation within its existing markets and markets that can be supported by its existing management infrastructure.
Moreover, AutoNation said it will continue to be selective and prudent in its capital with a focus on investing to produce strong returns and long-term shareholder value.
For the full year 2015, AutoNation completed the acquisition of 22 stores generating about $1 billion in annual revenue.
In the first quarter of 2016, the company is on track to complete the previously announced acquisition of the 12 store Allen Samuels Auto Group in Texas, which generates about $800 million in annual revenue.
AutoNation is positioned to benefit from the recovery in the auto market, backed by its optimal brand and market mix as well as a disciplined cost structure. Rising average age of cars and trucks in the U.S., a robust consumer credit environment, and an increase in new product offerings from automotive manufacturers are leading to a strong sales environment.
In addition, the company is poised to benefit from the expansion of its business through acquisitions.
Zacks Investment Research raised AutoNation from a “hold” rating to a “buy” rating and set a $51.00 price target on the stock in a research note on Tuesday, April 5th.
Also, Bank of America reaffirmed a “buy” rating and issued a $78.00 price target.
There are seven analysts that have issued a buy rating to the stock. AutoNation has a consensus rating of “Buy” and an average target price of $64.00.
The stock has a market capitalization of $5.22 billion and a price-to-earnings ratio of 12.52. The company has a 50 day moving average of $48.12 and a 200 day moving average of $54.35. AutoNation, Inc. has a 52-week low of $40.45 and a 52-week high of $66.63.
Thursday, 21st April, 2016
Option Trade – Microsoft Corporation (NASDAQ:MSFT) Calls
**OPTION TRADE: Buy the MSFT May 20 2016 57.500 call at approximately $0.60. Sell price is left to your own judgment.
Microsoft Corporation (NASDAQ: MSFT), which is engaged in developing, licensing and supporting a range of software products and services, is scheduled to release its next earnings report today after closing bell.
The company has beaten Wall Street expectations for four consecutive quarters and could be in line to do something similar this week. The consensus among Wall Street analysts is for Microsoft to report revenue of $22.1 billion, which would represent growth of 1.7 percent year-over-year, with earnings per share of 63 cents, up 3.9 percent. Microsoft's own revenue guidance for the quarter was in the range of $21.1 billion to $22.3 billion.
Microsoft shares have been growing steadily for the last eight months, and have risen 11.85 percent since Microsoft's last earnings report in January, compared with an 11.55 percent rise in the S&P 500.
It is expected that when Microsoft Corporation reports its third-quarter earnings, the software giant will hope to show that the gains it has made in cloud computing — in addition to offering cross-platform support — will offset the negative effect from the PC market's continued decline.
Like other tech giants, the company has suffered from weak PC demand, though analysts believe declines should ease by the end of 2016. As a result, Microsoft has transitioned to the cloud with MS Azure and Office 365, both expected to bolster revenues for the quarter. Last quarter, the company posted a 70% increase in Office 365 revenues. Similarly, analysts are expecting an increase in search revenue as well as new operating system Windows 10. As of March 30, Windows 10 had a 270 million user installed base, up 145% from Window’s 7 users. The OS success stems in part from the ability to run on any device.
Related to the cloud, analysts expect an increase in profit margin from cloud services, as the company reported higher per customer sales vs that of software licenses. Furthermore, Microsoft is ensuring it stays a viable competitor in the cloud sector by focusing on SaaS (software as a service) rather than just data centers, integrating with Amazon’s AWS by making Azure Linux OS compatible, marking a shift from a Windows-only strategy. Analysts expect this move to reflect positively in the earnings report.
Microsoft has followed suit of many other tech companies and partnered with BMW using Azure technology to power BMW’s Connected App, which could have self-driving capabilities in the future.
68% of analysts who have rated the company in the past 3 months are bullish on the stock. The average 12-month price target between these analysts is $57.93, marking a 4% potential upside from where shares last closed.
The latest target price increase was by research analysts at Nomura raising the stock price from $35.00 to $36.00. The firm currently has a “buy” rating on the software giant’s stock. Nomura’s target price would indicate a potential downside of 36.24% from the company’s previous close.
Microsoft has a 52-week low of $39.72 and a 52-week high of $56.85. The company’s 50-day moving average price is $53.90 and its 200-day moving average price is $52.81. The company has a market capitalization of $444.66 billion and a PE ratio of 39.79.
Wednesday, 20th April, 2016
Option Trade – American Express Company (NYSE:AXP) Puts
**OPTION TRADE: Buy the AXP May 20 2016 60.000 put at approximately $0.50. Sell price is left to your own judgment.
Payment processor American Express Company (NYSE: AXP), together with its subsidiaries, providing charge and credit payment card products and travel-related services to consumers and businesses worldwide, will report earnings after the bell today.
As for Q1, analysts think AXP stock will earn $1.35 per share, 8.8% less than the year-ago quarter. Analysts expect revenue to come in mostly flat at $7.99 billion, up just 0.5% from Q1 2015.
AXP is actually losing shares while Visa and Mastercard reliably crank out higher and higher revenues with each passing year.
Amex saw revenue fall 4.2% in 2015, and Wall Street projects revenue to fall 1.2% in both 2016 and 2017 as well. American Express has lost a few major merchants and a whole lot of small business merchants over time because of the high cut it takes with each swipe of the plastic. The “discount rate” is the vigorish that these companies set aside for themselves on every transaction, all around the globe.
Large investors and analysts are also becoming wary of AXP. FineMark National Bank & Trust cut its stake in shares of American Express Company by 3.8% during the fourth quarter. The institutional investor owned 17,274 shares of the payment services company’s stock after selling 690 shares during the period. FineMark National Bank & Trust’s holdings in American Express Company were worth $1,202,000 at the end of the most recent reporting period.
Also, there are four investment analysts that have rated the stock with a sell, and twenty-two having issued a hold rating, whereas there are only eight having assigned a buy rating to the company’s stock.
Vetr downgraded American Express Company from a “strong-buy” rating to a “buy” rating and set a $78.29 price objective for the company. Goldman Sachs downgraded American Express Company from a “buy” rating to a “neutral” rating and decreased their price target for the stock from $89.00 to $72.00. Jefferies Group currently has a “Hold” rating and a $58.00 target price on the stock.
The company had a trading volume of 4,797,709 shares. The stock has a 50 day moving average of $59.91 and a 200-day moving average of $65.16. American Express Company has a 12 month low of $50.27 and a 12 month high of $81.92. The company has a market capitalization of $61.28 billion and a P/E ratio of 12.59.
Tuesday, 19th April, 2016
Option Trade – QUALCOMM, Inc. (NASDAQ:QCOM) Puts
**OPTION TRADE: Buy the QCOM May 20 2016 50.000 put at approximately $1.00. Sell price is left to your own judgment.
Qualcomm, Inc. (NASDAQ: QCOM), which is engaged in providing third-generation (3G), fourth-generation (4G) and next-generation wireless technologies, will post its fiscal second-quarter report tomorrow, after the market closes, but the result is not looking good. Analysts are predicting a 23% drop in revenue to $5.34 billion, and the consensus forecast calls for earnings of $0.96 per share, down almost a third from what it earned in the same quarter last year. And even if Qualcomm can post better-than-expected earnings, it is still likely to be a big drop compared to last year.
Moreover, Qualcomm investors have become more pessimistic in just the past few months. Recently, they've cut their forecast for fiscal second-quarter earnings projections by $0.06 per share, and they've reduced their full-year earnings calls for this year and next by 2% to 3%.
Qualcomm's fiscal first-quarter results in late January showed the continuing downward trajectory that the company's business has seen. Revenue was down 19%, accelerating from the previous quarter's decline, and net income fell by 24%.
QCOM has been the subject of a number of research reports. BMO Capital Markets decreased their price objective on shares of Qualcomm and set a “market perform” rating for the company. Vetr downgraded shares of Qualcomm from a “strong-buy” rating to a “buy” rating. Topeka Capital Markets decreased their price objective on shares of Qualcomm and set a “hold” rating for the company.
Director Marc I. Stern sold 25,000 shares of the firm’s stock in a transaction on Friday, February 5th. The stock was sold at an average price of $45.15, for a total transaction of $1,128,750.00. Following the transaction, the director now directly owns 5,393 shares in the company, valued at $243,493.95.
The stock has a 50 day moving average price of $51.45 and a 200 day moving average price of $51.11. QUALCOMM has a 1-year low of $42.24 and a 1-year high of $71.32. The company has a market cap of $76.33 billion and a P/E ratio of 16.96.
Tuesday, 19th April, 2016
Option Trade – Intel Corporation (NASDAQ:INTC) Calls
**OPTION TRADE: Buy the INTC May 20 2016 32.000 call at approximately $0.60. Sell price is left to your own judgment.
Intel Corporation (NASDAQ: INTC), a designer and manufacturer of digital technology platforms, will report first quarter 2016 earnings results after the bell today, April 19.
As a chip maker, Intel stock just didn’t seem that attractive compared to some of the big names in the Internet industry. But that doesn’t change the fact that the company is running a solid business. And going forward, Intel’s value could make it attractive again.
After all the hype, investors want their companies to make money. On that front, Intel delivers exceptional results. Despite all the concerns on the slowing down of the PC market, Intel has been beating Wall Street’s expectations again and again.
This time around, Intel is expected to report solid earnings again.
Overall expectations are quite high for Intel stock. Revenue in the first quarter of 2016 is expected to increase 8.40% year-over-year to $13.86 billion. Wall Street analysts are also predicting $0.48 in earnings per share (EPS), which would be 17.07% higher compared to the first quarter of last year.
There are several positive driving factors:-
1. Intel, on the computing front, is likely to benefit from the enterprise deployment of Windows 10 later this year. In the meantime, the company has been introducing new products for both consumer and enterprise customers to keep people interested in notebooks.
2. On the data center side, Intel has new Xeon chips and SSDs. It also has new capabilities with Altera integration though integrated products may not hit the market for some time. It is also growing its capabilities in software defined infrastructure. These initiatives should help it grow in the data center and take share in the fast-growing cloud computing segment. Since the cloud segment is really large, Intel may be able to maintain its own growth rates.
3. There is also a lot of opportunity in the Internet of Things (IoT) segment. The recent acquisitions of Arynga and Yogitech will help it get into the connected car. Other areas it is investing in include 3D body-scanning, biometric sensors, wearables and IoT infrastructure. The market is still relatively nascent, but The World Economic Forum reportedly forecasts the number of embedded devices to grow at a CAGR of 21.6% from 22.9 billion in 2016 to 50.1 billion by 2020.
Intel should top estimates again this quarter, with data center and other segments largely offsetting the continued softness in computing.
As already mentioned INTC stock has a pretty solid track record when it comes to earnings beats. In the past four quarters, Intel has beaten analysts’ estimates in three of them. And even when it didn’t beat estimates in the first quarter last year, its EPS came in at $0.41—exactly the same as what Wall Street was expecting.
This time, even the declining PC market might not be that bad for Intel’s business. As Microsoft Corporation (NASDAQ:MSFT) launched “Windows 10” last year, adoption of the new operating system has been faster than all previous generations. This should have led to higher demand for new Intel-equipped PCs.
At the end of the day, Intel stock is inexpensive right now. Trading at $31.65 per share, INTC stock has a forward price-to-earnings multiple of just above 12X.