“Cut-to-the-Chase” Recommendations
- Week Beginning -
Monday, August 06, 2018

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.


You may also wish to read Stock Options Made Easy Trading Philosophy

ALSO "Trading Capital Management"



Options Trade - - United Parcel Service, Inc. (NYSE:UPS) Calls

Thursday, August 09, 2018

** OPTION TRADE: Buy UPS SEPT 21 2018 125.000 CALL at approximately $0.80. Sell price is left to your own judgment.

(or alternatively : Place a pre-determined sell at $1.60.

Also include a protective stop loss of $0.35.)

United Parcel Service, Inc. (NYSE:UPS), a package delivery company, had an explosive rally following the company’s July earnings report. Since then, however, UPS stock has been stuck in a consolidation period that now looks increasingly likely to resolve to the upside.

UPS is an entrenched leader, along with rival FedEx Corporation (NYSE:FDX), and it at worst can co-exist with Amazon. E-commerce growth overall should continue to increase demand; there’s enough room for multiple players in the global market.

Meanwhile, the sell-off and benefits from tax reform mean that UPS now is trading at just 15x the midpoint of its guidance for 2018. And the stock yields a healthy 3.4%.

Looking at the multiyear weekly chart, the longer-term uptrend remains intact … supported by a simple trend line as well as the 200-week moving average. The recent post-earnings rally has pushed the stock back to the upper end of the trading range.

Since the post-earnings rally from July 25 UPS stock has moved sideways in a tight and well-defined range - like a bullish wedge or bull flag pattern. The stock is simply consolidating after a strong one-day move and right at critical multi-quarter horizontal resistance around the $120 area.

Influencing Factors

United Parcel Service announced its second-quarter results on July 25. The logistics giant surpassed Thomson Reuters–surveyed analysts’ adjusted earnings estimate of $1.93 by $0.01.

UPS’s second-quarter adjusted EPS of $1.94 was up 22.8% YoY (year-over-year) from $1.58 in the second quarter of 2017. On a GAAP basis, UPS’s EPS in the quarter reached $1.71. The company’s EPS rose 8.2% YoY from $1.58 in the second quarter of 2017.

United Parcel Service (UPS) stock opened at $112.25 on July 25, slightly down from the previous day’s closing price. The market was satisfied with the company’s second-quarter results, which were strongly supported by higher volumes triggered by e-commerce sales.

On the earning’s release day, UPS stock closed at $120.00, up 6.7%. However, it declined from that level. On July 27, the stock’s closing price was $118.70.

 Moving Forward…..

UPS’s CFO Richard Peretz noted, “UPS is focused on executing our strategic imperatives for improved efficiency and high-quality growth.” He continued, “We remain confident in our ability to achieve our full-year adjusted earnings per share target.”

The company expects its 2018 adjusted diluted EPS to be $7.03–$7.37.

United Parcel Service expects its B2C (business-to-consumer) volumes to outpace its B2B (business-to-business) volumes for the rest of 2018. The logistics giant expects positive trends in manufacturing, technology, and automotive sectors in 2018. With higher fuel costs, the company expects increased fuel surcharge revenues in the second half of 2018.

In the US Domestic Package segment, United Parcel Service plans to open its second-largest domestic ground hub in Atlanta. Based on full capacity, the ground hub is expected to sort more than 100,000 pieces per hour. This is expected to be more than double the hub-sorting capacity added by the logistics giant in 2017. The Atlanta hub’s operations are expected to begin in the middle of the third quarter.

UPS’s pricing actions in the segment along with advanced network projects are expected to drive efficiency, resulting in higher yields. The company’s forecast for the real US GDP’s annual growth remains at 3.0% for 2018. The company believes that the US tax reforms should boost consumer confidence and increase retail sales.

Analysts and Hedge Funds Opinions

Zacks Investment Research upgraded shares of United Parcel Service from a hold rating to a buy rating in a research report released on Friday. Zacks Investment Research currently has $133.00 target price on the transportation company’s stock.

According to Zacks, “Shares of United Parcel Service have outperformed its industry over the past three months. Ushering in further good news, the company performed well in the second quarter of 2018, reporting better- than-expected earnings per share and revenues. E-commerce growth aided results. Export volumes also rose significantly in the quarter. Additionally, the U.S. Domestic Package unit, which accounts for bulk of the total revenues at UPS, performed well, thereby driving growth.  We are also impressed by the company's efforts to reward shareholders. However, increased costs continue to weigh on the bottom line. Increased investments are likely to pressurize the bottom line going forward.Capital expenditure for 2018 is projected between $6.5 billion and $7 billion. Labor unrest also does not bode well for the stock.”

Several other analysts have recently commented on the company…..

  • Stephens reissued a hold rating and set a $126.00 price target on shares of United Parcel Service in a research report on Monday, April 9th.
  • Robert W. Baird reissued a hold rating and set a $120.00 price target on shares of United Parcel Service in a research report on Tuesday, April 10th.
  • BMO Capital Markets dropped their price target on United Parcel Service to $121.00 and set a market perform rating for the company in a research report on Friday, April 27th.
  • Bank of America raised United Parcel Service from a neutral rating to a buy rating in a research report on Monday, May 14th.
  • Finally, Loop Capital raised their price target on United Parcel Service to $139.00 and gave the stock a buy rating in a research report on Wednesday, May 30th.

Two analysts have rated the stock with a sell rating, ten have issued a hold rating and nine have assigned a buy rating to the stock. United Parcel Service presently has a consensus rating of Hold and an average target price of $127.27.

In the last year, the company’s stock has delivered an 8.0% return.

Summary

United Parcel Service has a quick ratio of 1.22, a current ratio of 1.11 and a debt-to-equity ratio of 8.12. The firm has a market cap of $102.20 billion, a price-to-earnings ratio of 19.83, a P/E/G ratio of 1.77 and a beta of 1.14. United Parcel Service has a fifty-two week low of $101.45 and a fifty-two week high of $135.53.


Options Trade - - Intel Corporation (NASDAQ:INTC) Calls

Tuesday, August 07, 2018

** OPTION TRADE: Buy INTC OCT 19 2018 50.000 CALL at approximately $1.70. Sell price is left to your own judgment.

(or alternatively : Place a pre-determined sell at $3.40.

Also include a protective stop loss of $0.70.)

Intel Corporation (NASDAQ:INTC), a designer and manufacturer of digital technology platforms, a large-cap value stock and member of the Dow Jones Industrial Average, has seen its shares slowly climb since the company reported solid quarterly earnings results in late July. The chip giant's outlook also looks strong, and it might have recently become the sole cellular modem provider for all of Apple's upcoming iPhones.

Shares of INTC have climbed roughly 115% over the last five years. This trails its industry's nearly 180% surge but does top the S&P 500's 70% upward movement. Over the last two years, Intel stock is up 42%, which lags its industry's 71% surge-driven by the likes of Micron and Nvidia . INTC stock is up just around 7% since the start of the year and currently sits well below its 52-week high of $57.60 per share.

Intel reported adjusted quarterly earnings of $1.04 per share, which not only topped $0.99 per share Consensus Estimate it also marked impressive 44% year-over-year growth. The company also saw its revenues jump 15% to $16.96 billion, just beating estimates.

Looking ahead, Intel raised its full-year revenue outlook to approximately $69.5 billion, up $2 billion from its April guidance. Plus, INTC raised its earnings guidance by $0.30 to $4.15 per share.

Qualcomm said on the company's recent earnings call that it will no longer be supplying modems into Apple's upcoming iPhones. This could mean that Intel will become Apple's only iPhone modem provider.

Influencing Factors

Moving on, INTC stock is currently trading at 11.7X forward 12-month Consensus EPS estimates, which marks a slight premium compared to its industry's 11X but comes in well below the S&P's 17.2X.

Consensus Estimate is calling for Intel's third-quarter revenues to hit $18.09 billion, which would mark a 12% climb from the year-ago period. The company's full-year revenues are projected to jump nearly 11% to $69.47 billion.

INTC's adjusted Q3 earnings are projected to climb by nearly 14% to reach $1.15 per share. Meanwhile, its full-year earnings are expected to reach $4.13 per share, representing over 19% expansion.

Earnings seem to be bolstered by a substantial top-line increase overtaking its growth rate of expenses. Though this has caused a margin contraction, it has made Intel more profitable.

Intel has earned 14 third-quarter earnings estimate revisions over the last 30 days, with 100% agreement to the upside.

Also, INTC has also received 13 full-year and 13 fiscal 2019 upward earnings revisions during this same timeframe, against just two downward changes. 

Over the past 90 days, the Consensus Estimate for INTC's full-year earnings has moved 7.49% higher. This signals that analyst sentiment is improving and the stock's earnings outlook is more positive.

Latest available data shows that INTC has returned about 7.52% since the start of the calendar year.

Analysts and Hedge Funds Opinions

Despite Barclays dropping its rating for the chipmaker from overweight to equal weight on Monday, shares of Intel bounced back to just slightly in the red.

Several other analysts have recently commented on the company…..

  • Sanford C. Bernstein set a $54.00 price objective on shares of Intel and gave the stock a neutral rating in a report on Wednesday, June 6th.
  • BNP Paribas restated a neutral rating and set a $54.00 price objective on shares of Intel in a report on Monday, May 14th.
  • Zacks Investment Research raised shares of Intel from a “hold” rating to a “buy” rating and set a $57.00 price target for the company in a report on Wednesday, June 27th.
  • Wells Fargo & Co reissued an “outperform” rating and set a $65.00 price target on shares of Intel in a report on Friday, April 27th.
  • Bank of America reissued a “buy” rating and set a $65.00 price target on shares of Intel in a report on Wednesday, April 18th.
  • Finally, Cowen assumed coverage on shares of Intel in a report on Thursday, May 17th. They set a market perform rating and a $55.00 price objective on the stock.

Four investment analysts have rated the stock with a sell rating, nineteen have given a hold rating and twenty-three have issued a buy rating to the company. The company has a consensus rating of Hold and a consensus price target of $58.53.

Summary

INTC has a debt-to-equity ratio of 0.35, a quick ratio of 1.15 and a current ratio of 1.57. Intel has a 52-week low of $34.38 and a 52-week high of $57.60. The company has a market capitalization of $232.18 billion, a PE ratio of 14.25, and a PEG ratio of 1.43 and a beta of 1.00.


Options Trade - - Vishay Intertechnology (NYSE: VSH) Calls

Monday, August 06

** OPTION TRADE: Buy VHS SEPT 21 2018 25.000 CALL at approximately $1.10 TO $1.20. Sell price is left to your own judgment.

(or alternatively : Place a pre-determined sell at $2.20.

Also include a protective stop loss of $0.45.)

Vishay Intertechnology (NYSE: VSH), a manufacturer and supplier of discrete semiconductors and passive components, will report earnings tomorrow, before the market opens. The report will be for the fiscal Quarter ending Jun 2018. Based on 3 analysts' forecasts, the consensus EPS forecast for the quarter is $0.48. The reported EPS for the same quarter last year was $0.36.

Tech stocks have seen profits grow double-digits year over year over the last three quarters. A similar winning streak is expected for Vishay Intertechnology. Computer and software makers are thriving on the back of White House's initiative to trim tax rates, while high-end gaming, emergence of Internet-of-Things (IoT) and automation are driving demand for chips.

The prospect of a cut in personal taxation is also a major driving force for big tech firms. With more cash in hand, investors have more room to invest. At the same time, IoT, which connects various devices to the cloud, is expected to be a huge growth driver for tech majors.

Chip makers, in the meantime, made giant strides as chips are in demand for some of the fastest growing tech industries in the world like e-sports and crypto mining. E-sports, a multiplayer video game for professional gamers, need thousands of semiconductor chips for production. These chips are an essential part of crypto mining as they provide the processing power needed for decoding blockchain algorithms.

As tech companies continue to dominate the equity market, analysts expect tech earnings to be up 23.8% on 10.7% higher revenues in the second quarter, which would follow 31.1% earnings growth on 13.1% revenue rise in the first quarter.

Influencing Factors

Vishay Intertechnology looks to be poised to beat at earnings season. That is because Vishay Intertechnology is seeing favorable earnings estimate revision activity as of late, which is generally a precursor to an earnings beat. After all, analysts raising estimates right before earnings - with the most up-to-date information possible - is a pretty good indicator of some favorable trends underneath the surface for VSH in this report.

The Most Accurate Estimate for the current quarter is currently at 50 cents per share for VSH, compared to a broader Consensus Estimate of 48 cents per share. This suggests that analysts have very recently bumped up their estimates for VSH, giving the stock an Earnings ESP of +2.41% heading into earnings season.

The Consensus Estimate for VSH's full-year earnings has moved 18.47% higher within the past quarter. This means that analyst sentiment is stronger and the stock's earnings outlook is improving.

Based on the latest available data, VSH has gained about 24.82% so far this year. Meanwhile, stocks in the Computer and Technology group have gained about 10.33% on average. This shows that Vishay Intertechnology is outperforming its peers so far this year.

Also, Vishay Intertechnology saw a significant decrease in short interest in the month of June. As of June 29th, there was short interest totalling 13,142,874 shares, a decrease of 23.8% from the June 15th total of 17,251,371 shares. Based on an average daily trading volume, of 2,251,524 shares, the short-interest ratio is presently 5.8 days. Approximately 10.0% of the company’s stock are short sold.

Analysts and Hedge Funds Opinions

Citigroup raised Vishay Intertechnology from a “sell” rating to a “buy” rating in a report on Tuesday, July 3rd.

Several analysts have recently commented on the company…..

  • Bank of America raised Vishay Intertechnology from an “underperform” rating to a “buy” rating and upped their target price for the stock from $20.00 to $24.00 in a research report on Wednesday, May 9th.
  • TheStreet raised Vishay Intertechnology from a “c+” rating to a “b-” rating in a report on Friday, May 11th.
  • Zacks Investment Research raised Vishay Intertechnology from a “hold” rating to a “buy” rating and set a $24.00 price target for the company in a report on Friday, May 11th.
  • Finally, ValuEngine raised Vishay Intertechnology from a “hold” rating to a “buy” rating in a report on Saturday, June 2nd.

One research analyst has rated the stock with a sell rating, one has given a hold rating and four have issued a buy rating to the company. The stock currently has an average rating of “Buy”.

Summary

VSH will likely be looking to continue its solid performance.

Vishay Intertechnology has a current ratio of 4.34, a quick ratio of 3.47 and a debt-to-equity ratio of 0.43. The stock has a market capitalization of $3.57 billion, a price-to-earnings ratio of 17.45, a PEG ratio of 1.67 and a beta of 1.36. Vishay Intertechnology has a 1-year low of $16.65 and a 1-year high of $26.50.






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