“Cut-to-the-Chase” Recommendations
- Week Beginning -
Monday, January 06, 2020

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"



Option Trade – Snap Inc. (NYSE:SNAP) Calls – Doubling-Down

Friday, January 10, 2020

** OPTION TRADE: Buy SNAP JAN 20 2020 17.000 CALL at approximately $0.60.

Buy 2X the amount of contracts previously purchased on September 18, 2019.

This will now make the cost for each contract approximately $0.90 - $0.95.

Sell price is left to your own judgment.

Prior.....

We executed an options trade on Snap Inc. (NYSE:SNAP), formerly Snapchat, Inc., operating the popular multimedia messaging app, on Wednesday, September 18, 2019.

At the time the cost for SNAP JAN 20 2020 17.000 CALL was approximately $2.00.

The Change…..

Yesterday saw Jefferies analyst Brent Thill upgrade the Snapchat parent to "buy" from "hold," and lifted its price target to $21 from $17 -- a nearly 26% premium to the night before close. The brokerage firm expressed optimism over user growth and advertising revenue, saying it expects the latter to double over the next three years. Additionally, Jefferies said it expects Snap to be "non-GAAP profitable by FY20."

"We believe Snap stock has more room to run in 2020," Thill wrote in a research note to clients. He thinks accelerating user growth and an improved ad platform will drive 30%-plus revenue growth over the next three years.

Cowen and Company’s analyst John Blackledge also expressed optimism toward Snap, raising its rating to "outperform" from "market perform," and boosting its target price by $4 to $20.

He says Snap has spent much of the past year restructuring and developing new products for Snapchat that are drawing in more advertisers.

He adds that those improvements put Snap in a stronger position to attract "a meaningful part" of advertiser spending outside of Facebook (FB) and Alphabet (GOOGL) properties.

Snapchat is a smartphone app that uses the camera for manipulating and enhancing photos and videos that can be sent to other users. The messaging platform appeals to the under-30 crowd and competes mostly with the Instagram platform of Facebook.

Overall, most analysts remain on the sidelines when it comes to SNAP. Prior to yesterday, 15 of 27 brokerages called the stock a tepid "hold," while its average 12-month price target of $18.30 is a slim 4.8% premium to current levels.

Looking Ahead.....

When Snap reports fourth-quarter results on Feb. 4, Thill thinks it will achieve a break-even point for the first time on the basis of earnings before interest, tax, depreciation and amortization, or EBITDA.

"And we now expect Snap to be non-GAAP profitable by (end of) FY20," he said. "Our view is supported by proprietary survey work and data checks, which indicate that Snapchat's strengthening ecosystem can drive upside to user and revenue growth in 2020."

Earnings.....

Snap ended its third quarter with 210 million daily active users, after adding 7 million new users. That beat Wall Street expectations of 4 million new users.

For 2020, Blackledge estimates Snap will report a 36% gain from last year in revenue, to $2.3 billion. He expects the company to show a profit of $163 million on an EBITDA basis.


Option Trade – Advanced Micro Devices, Inc. (NASDAQ:AMD) Calls

Thursday, January 09, 2020

** OPTION TRADE: Buy AMD FEB 21 2020 50.000 CALLS at approximately $2.65.
Sell price is left to your own judgment.

The Santa Clara, Calif.-based company Advanced Micro Devices, Inc. (NASDAQ:AMD), a global semiconductor company, saw further share price increase as analysts praised the chipmaker's suite of new products unveiled at the Consumer Electronics Show.

AMD late on Monday unveiled what it calls the world’s highest performance desktop and ultrathin laptop processors. It also announced four new desktop and mobile GPUs, including AMD Radeon RX 5600 series, a processor that promises up to 20% faster gaming performance and 10% faster performance on certain kinds of e-sports games.

“From heart-pounding e-sports competitions to eye-popping AAA blockbusters, today’s games demand more performance, higher frame rates and lower latency than ever before,” said Scott Herkelman, corporate vice president and general manager.

Specifically, AMD is touting its abilities to work with games played in 1080p, a higher resolution that offers more realistic movement and colors but also eats up more memory and power usage.

“There are 90 million active users on Steam, and over 64% of gamers who participated in a recent Steam survey reported playing at 1080p," said Herkelman. "We’re committed to providing all 1080p gamers with the raw horsepower and incredible features that enable the absolute best gaming experiences with all settings maxed out."

Analysts’ Response.....

Analysts responded positively to the announcements, saying they should help the company extend its recent momentum and market-share gains against Intel.

The announcements “underscore AMD’s ability to deliver its roadmap of next-generation products,” analysts at Jefferies said in a note to clients, adding that AMD “is both out-executing and gaining share over” Intel.

Bank of America/Merrill Lynch, meantime, said in its own research note that it was “encouraged by AMD’s product announcements, particularly in notebook CPUs,” a product category that could support margin expansion.

Morgan Stanley also took a positive, albeit more conservative tact, noting that it will be important for AMD to show strong server results “to keep that momentum going, given the relatively high valuation.”

Expected Earnings.....

AMD reports fourth-quarter results on Jan. 29.

The computer chipmaker is seen earning 31 cents a share in the fourth quarter. That's 281% more than the S&P 500 company made in the fourth quarter of 2018.

And for revenue analysts think AMD's top line will hit $2.1 billion in the fourth quarter, up 48% from the same period a year ago. Hopes are high for a semiconductor demand boom, and analysts think AMD started benefiting in the fourth quarter.

Influencing factors.....

AMD also unveiled Athlon 3000 series mobile processors, bringing the capabilities of Zen architecture and Radeon Graphics to conventional notebooks. The processors are scheduled to be available across OEMs in early 2020 globally.

The company also announced availability of AMD Ryzen Threadripper 3990X desktop processor featuring 128 threads and 64 cores, from Feb 7, 2020.

The new Ryzen Threadripper processor, priced at $3,990, is developed on Zen core architecture utilizing 7nm process technology. Higher core count of Threadripper 3990WX is expected to provide AMD a competitive edge against Intel in the high-end desktop market (HEDT) considerably.

AMD is benefiting from robust adoption of the company’s EPYC server and embedded processors, and Ryzen desktop and mobile processors.

Also, Microsoft’s Surface Laptop 3 15” variant utilizes AMD’s Ryzen Surface Edition processor for advanced graphics performance.

Moving Forward.....

The emergence of high-end cloud computing, thinner laptops, and demand for fast processing will bode well for the newly introduced CPUs.

Also, increasing adoption of AI techniques and ML tools and initiatives to boost workplace productivity are primarily responsible for driving high-end desktops and laptops processors.

Product innovation and roll out of processors utilizing 7nm technology will help AMD increase market share further against Intel, going forward.

The new processors are anticipated to help the company to capitalize on emerging BYOD market, enterprise productivity and ed-tech verticals, in the days ahead.

Other Analysts.....

Rosenblatt Secrurities' Hans Mosesmann reiterated his Buy rating, while increasing his target to a new industry-high of $65. Mosesmann made AMD his top semiconductor pick for 2020, and cited coming next generation gaming consoles forthcoming for both Microsoft and Sony as tailwinds for the stock as 2020 winds into its second half.

Nomura's David Wong expects AMD to "continue to strengthen its competitive position" this year, and raised his price target all the way from $40 to $58.

Summary…..

Also remember, Lisa Su, CEO of Advanced Micro Devices, took over a struggling semiconductor firm trading in the low single digits, and within four years led that firm to the best stock price performance for the year across the entire S&P 500; then repeated as champion in year five.

Shares of AMD ran 73% higher in 2018 as the S&P 500 gave up 6%. AMD ran 148% in 2019, as the S&P 500 gave us 29%.