Earnings Predictions
for the
Week Beginning July 02, 2018

Trading Capital Management!

The "Scared Rabbit" Syndrome Maybe Less Effective This Week! 

by Ian Harvey

July 01, 2018

Share

A Quick Review of Last Week’s Market…..

The past week has seen many traders and investors suffering from a case of the “scared rabbit” syndrome! Each time President Donald Trump made some detrimental statement in regard to trade the market went into convulsions and whip-sawed dramatically; to eventually realize that there was little basis in the headline that had caused the fracas.

As mentioned earlier last week in the article - “Trading Over-Reaction!” - Trump playing the ‘Art of the Deal’ with China,” -- start scary, and then walk back the threat to a much more digestible place; and this strategy will likely continue in the future, particularly relating to trade and tariffs. Even though the Trump administration likes to start any negotiations heated and very over-done, the actual end result is quite mild – as there is normally a lot of back-pedaling again and again from these wild first negotiating positions.

It seems that investors are looking for something to be worried about. Stocks aren’t far from all-time highs, and for a lot of people that’s hard to justify.

Expectations for the second half of the year is that there will be an averted all-out trade war, economies domestically and globally will continue to do pretty well, and eventually the “scared-rabbit” syndrome will die down!


“EARNINGS PREDICTIONS for LAST WEEK” – 4 OUT OF 5 WERE WINNERS!

DATE TRADE GAIN
June 26, 2018 JKS AUG 17 2018 14.000 PUT P.P: 75%
June 27, 2018 GIS JULY 20 2018 45.000 PUT P.P: 74%
June 26, 2018 BBBY JULY 20 2018 20.000 PUT P.P: 49%
June 26, 2018 NKE JULY 20 2018 75.000 CALL P.P: 355%

TOTAL potential profit for these 4 trades= P.P: 553%.

Even deducting a total loss on the other option trade – STZ – you would be 453% potential profit in front following the strategy mentioned below –“Trading Capital Management”! Obviously this trade could make a comeback, similar to Etsy (.....read article.....), or even give back some of the capital used to purchase the options.

When To Exit A Trade Based On Earnings?.....

It is also worth considering, when options trading earnings reports – “Do we exit on already existing profits or leave the companies to report their earnings and hope for bigger profit?” 

As most traders realize, there is a 50/50 chance that the company stock price could go either way after reporting earnings – even if the report is good, the stock price could reverse – and if you hold a call option, means depletion of an already good profit if it exists. A similar situation can be found if you hold a put option, and a report is not that sound (and you expect a profit from this) but the stock price can, at times move upwards due to traders bias or other external conditions......READ MORE.....

The Decision Is Yours!

Don’t miss out – check out further options trades recommended for the week ahead by becoming a member of Stock Options Made Easy “Earnings Predictions”.

Before You Trade Consider This Strategy……

"Trading Capital Management" is a key component of your trading strategy. The strategy, on which we base our trades to achieve maximum profit, and to minimize loss, is contingent on using an equal amount of money for each trade.

Many new traders fail to consider the fact that it is wise for portions of their capital to be evenly distributed among the trades they are entering. Even experienced traders may be caught out by investing a higher amount of trading capital in a trade which turns out to be unsuccessful, or under-investing in other trades which succeed and could have covered or surpassed the loss sustained in the losing trade. Think of the adage regarding putting all your eggs (or even a greater percentage of those eggs) in one basket.

The way to maximize your potential profit is to allocate a specific amount of your trading capital that you wish to dedicate to each trade, and then calculate the number of contacts that this figure enables you to enter.

It is not the number of contracts in play, but the amount of money used to execute each trade! 

……continue reading this article……

An Important Note: That these suggestions for options trade considerations require investors/traders to use their own discretion as to when to enter or exit! As well, it is advisable to do further research and due diligence before executing your trade.

It is sometimes best to exit a trade, if there is already sufficient profit accrued, before an earnings report is presented.

GETTING OUT WHILST THE GOING IS GOOD!

GREED CAN BE THE UNDOING OF A GOOD PROFIT!

Options Trades to Consider Based on Expected Earnings Reports:

A SPECIAL NOTE: There are very few companies of significance reporting this week – we have tried to determine the more viable stocks for options trades but advise that you do not over-buy at this stage!

Monday, July 02

Herman Miller, Inc. (NASDAQ: MLHR), the office furniture maker, will report its fiscal fourth-quarter numbers after the market closes. Analysts are calling for earnings of $0.58 per share, down from $0.64 during the same period last year. Last quarter $0.50 earnings per share were reported; but analysts forecast 16.00% EPS growth this quarter.

Management's previously issued guidance aims for net sales of between $590 million and $610 million. Organic revenue growth is projected to hit 4% versus the fourth quarter of fiscal 2017 at the midpoint of this range.

MLHR has lost 16.1% on the year despite a strong economy with low unemployment. However, all is not lost as the stock has begun to recover some of its losses from early in the year. The last quarter’s report, which included Q4 guidance below what analysts had expected, saw the price drop quite dramatically. Shares have since recovered, and now that the lower guidance has already been priced into the stock, the downside is limited as long as the company is able to hit its estimate.

Before that saw the previous three quarters Herman Miller basically in-line with the consensus, and if it can do the same with its Q4 numbers the stock should continue to build on its recent gains.

Recently Herman Miller was upgraded by investment analysts at BidaskClub from a “hold” rating to a “buy” rating. Analysts have a $39.00 price target on the stock.  

Option trade to consider: Buy the MLHR JULY 20 2018 35.000 CALL at approximately $1.00.

Tuesday, July 03

Acuity Brands, Inc. (NYSE: AYI), a provider of lighting and building management solutions and services for commercial, institutional, industrial, infrastructure, and residential applications in North America and internationally, will report third-quarter fiscal 2018 results before the opening bell. The Consensus Estimate for earnings stands at $2.17, reflecting a 0.9% year-over-year increase. Meanwhile, the consensus estimate for revenues is pegged at $906.7 million, implying 1.7% growth.

Acuity Brands’ shares have lost more than 39% in the past year and this is expected to remain at this level or worse.

The overall growth rate of the lighting market over the past few quarters remained muted. This trend is likely to continue in the fiscal 2018 too. Lack of skilled labor and associated higher costs, and pricing pressure in certain end markets are leading to softness in the industry. Acuity Brands expects volatility in demand among certain sales channels and geographies to persist in the next few quarters as well.

Acuity Brands’ gross margin has been impacted due to…..

  • continued weakness in the non-residential construction market. Decline in shipments in the non-residential construction market, primarily for larger projects in which demand remained soft, and lower shipments through the home center showroom sales channel are causes of concern.
  • Price mix has also been negatively impacting its performance as the company had to lower pricing on certain LED luminaires.
  • As well, increased competition, primarily for more basic, lesser-featured products, added to the woes.

Acuity Brands has an average rating of “Hold”, with Roth Capital setting a $105.00 price target on shares of Acuity Brands and giving the company a “sell” rating in a research report on Monday, April 2nd. Also, ValuEngine downgraded shares of Acuity Brands from a “hold” rating to a “sell” rating in a research report on Monday, April 2nd.

Option trade to consider: Buy the AYI JULY 20 2018 115.000 PUT at approximately $4.90.

Wednesday, July 04

“Independence Day”- the market is closed

Thursday, July 05

International Speedway Corp Class A (NASDAQ: ISCA), a hospitality company based in United States, will report earnings before the market opens. Based on analysts' forecasts, an EPS for the quarter of $0.37 is expected. That’s up 23.33 % from last year’s $0.30 earnings per share. If reported the P/E will be 30.20 with $16.34M profit.

International Speedway Corporation is a financially-healthy, dividend-paying company with a great history of performance.

In the past couple of years, ISCA has ramped up its bottom line by over 100%, with its latest earnings level surpassing its average level over the last five years. Not only did ISCA outperform its past performance, its growth also exceeded the Hospitality industry expansion, which generated a 15.65% earnings growth. This is an optimistic signal for the future.

ISCA is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This indicates that ISCA has sufficient cash flows and proper cash management in place, which is an important determinant of the company’s health. ISCA has produced operating cash levels of 0.72x total debt over the past year, which implies that ISCA’s management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings.

ISCA is undervalued when comparing its multiple to the 10.4x industry average.

Since July 1, 2017 ISCA has risen 19.21% and is uptrending. The stock outperformed the S&P 500 by 6.64%.

In the past, ISCA has always maintained its profitability. With upcoming earnings expect this to remain positive.

Option trade to consider: Buy the ISCA JULY 20 2018 45.000 CALL at approximately $1.40.

PriceSmart, Inc. (NASDAQ: PSMT), that owns and operates the U.S.-style membership shopping warehouse clubs in Latin America and the Caribbean, will report earnings after the market closes. Analysts predict $0.69 earnings per share, which is $0.07 up or 11.29 % from 2017’s $0.62 earnings per share. In case of $0.69 earnings per share PSMT’s profit could hit $20.98M.

A strong labor market, rising disposable income, elevated consumer sentiment and strategic efforts are working in tandem for PriceSmart. This San Diego, CA-based company registered comparable sales growth of 3.1% for the five-week period ended June 3, 2018. This follows an increase of 1.9%, 3.5%, 4.4% and 0.5% for April, March, February and January, respectively.

As well, net warehouse club sales for the month of May rose 6.2% year over year to $248.7 million. The company had recorded sales increase of 1.6%, 8.9%, 6.6% and 6.2% in April, March, February and January, respectively.

For the nine months ended May 31, 2018, net sales jumped 5.1% to $2,312.2 million. Further, comparable warehouse club sales were up 3% for the 39-week period compared with the year-ago period.

PriceSmart stock has increased 8% compared with the Retail-Discount Stores industry’s gain of 9% in the past three months. Also, in a month the stock has improved 6.5%, outperforming the industry’s gain of 5%.

The 14-day ADX for PriceSmart was standing at 26.36 – which mean a reading greater than 25 would indicate a strong trend.

PriceSmart has been given an average rating of “Hold” by the nine brokerages that are currently covering the stock. Six investment analysts have rated the stock with a hold rating and two have assigned a buy rating to the company. The average twelve-month price objective among brokers that have covered the stock in the last year is $95.00.

Option trade to consider: Buy the PSMT JULY 20 2018 90.000 CALL at approximately $2.80 TO $3.00.

An Important Note: That these suggestions for options trade considerations require investors/traders to use their own discretion as to when to enter or exit! As well, it is advisable to do further research and due diligence before executing your trade.

If you wish to receive more options trading recommendations similar to this, which will help boost your portfolio strategy, check out the other  memberships available at Stock Options Made Easy.


”Success is simple. Do what's right, the right way, at the right time.”

Option Tip for your Success!

Options traders are not successful because they win.

Options traders win because they are successful.


Best of Trading,
Ian Harvey
Director of Stock Options Made Easy


Share



”Success is simple. Do what's right, the right way, at the right time.”


Option Tip for your Success!
Options traders are not successful because they win.
Options traders win because they are successful.



Back to Stock Options Made Easy Home Page from Earnings Predictions for the Week Beginning July 02, 2018



Search Stock Options
Made Easy



Enjoy Relaxed or Fast-Paced Trading? Choose your Membership Style...

Whether you prefer to take a laid-back approach to your trading,

or to charge ahead in your options trading,

 Stock Options Made Easy Armchair Trader and Cut-to-the-Chase Trader Memberships put everything you need to succeed at your fingertips for just  $39 or $79 per month.







Subscribe to our FREE
newsletter for all the latest options news!


Enter Your Email Address

Enter Your First Name