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Ford Continues to Rise

Tuesday, April 29th, 2008

Ford Motor’s (F, $8.21, up $0.71) stock has been active over the past few trading sessions after better-than-expected earnings and news that billionaire Kirk Kerkorian will expand his stake in Ford to 5.6%.

Last Thursday, Ford Motor said it recorded a $100 million profit which pushed the stock up 12% to close at $8.40. Then on Friday, Bear Stearns (BSC, $10.60, down $0.12) downgraded the stock and it promptly closed at $7.50. Volume was heavy both days as 241 million shares traded on Thursday and another 227 million shares traded on Friday. Average trading volume is about 61 million shares. Bear Stearns wasn’t the only firm that issued a downgrade as three other different analysts downgraded the stock despite what appears to be a turnaround story.

Yesterday the stock traded another 170 million shares on news Kerkorian’s investment company, Tracinda Corporation, is offering $8.50 per share in cash for up to 20 million additional shares. Tracinda already owns 100 million Ford shares which it began accumulating in early April at an average cost of $6.91 a share. If this latest offer is accepted, Kerkorian’s stake will increase from 4.7% to 5.6%. A takeover is unlikely because the Ford family controls 40% of the voting rights.

I’m not a big believer in Ford or any auto stocks at the moment due to the uncertainties ahead that face the auto industry. GM (GM, $21.94, up $0.56) and Toyota (TM, $101.96, down $0.10) are ahead of Ford when it comes to design and technology but the economy continues to weaken and gas is going through the roof. Given the risk/ reward scenarios, I’d rather invest elsewhere.

Rick Rouse
Rick@OptionsMentoring.com

Tags: Ford, Kirk Kerkorian
Posted in Hot Stocks | No Comments »

Tax-Refund Plays

Monday, April 28th, 2008

Refund checks hit consumers bank accounts today and here a few stocks that could trade higher over the next few weeks. Of course, there’s no guarantee that these stocks will trade higher but if consumers do decide to spend their rebates here’s where they may go:

Best Buy (BBY, $45.32, up $0.23)
Home Depot (HD, $29.78, unchanged)
Kohl’s (KSS, $50.09, down $0.56)
Kroger (KR, $26.40, unchanged)
Sears Holdings (SHLD, $100.46, up $0.71)
Wal-Mart (WMT, $57.72, up $0.07)
Wendy’s (WEN, $28.96, up $0.65)

Kroger and Sears are offering discounts and other incentives for people who turn rebates into gift cards. Home Depot is running advertising campaigns that suggest ways for you to spend your money and Kroger expects many people could “stock up” with food prices continuing to climb.

The rebates went out a week earlier then planned and there’s no doubt people are looking forward to the rebate to help with rising gas and food costs. Some may pay down credit cards but more than likely most people are planning to spend a good portion of their refund.

Rick Rouse
Rick@OptionsMentoring.com

Tags: Home Depot, Kroger, Wendy's
Posted in Hot Stocks | No Comments »

Deal or No Deal?

Monday, April 28th, 2008

The weekend has come and gone without a deal getting done between Microsoft (MSFT, $29.83) and Yahoo (YHOO, $26.80). Microsoft had given Yahoo’s board of directors until Saturday to agree to its proposal or face a the possibility of a tender offer and proxy battle. Although Microsoft hasn’t revealed its next move, I would expect some kind of response within the next day or two.

The stakes are high for both sides and Microsoft has already hired a major proxy solicitation firm. It has also been reported that the company has prepared its own board of directors to replace Yahoo’s board, so we’re likely to see Microsoft pursue the deal.

On the other hand, questions abound as to if this deal is what’s best for Microsoft. It has been leaked that Microsoft’s higher executives do not want this deal to go through and mergers are always a tough thing to get done anyway.

If Yahoo is successful in fending off Microsoft then shareholders are going to want to see results. Will Yahoo’s stock hold up if Microsoft walks away and what will happen to Microsoft’s shares?

In the meantime, the one company that is benefiting the most is Google (GOOG, $544.06) which is the same company that both Microsoft and Yahoo are trying to catch.

Rick Rouse
Rick@OptionsMentoring.com

Tags: Deal or No Deal, GOOG, merger, MSFT, YHOO
Posted in Google, Yahoo / Microsoft | No Comments »

Monday's Happenings

Monday, April 28th, 2008

MasterCard (MA, $237.39) and Visa (V, $75.10) report earnings this morning. Both of these companies had huge IPO’s. MasterCard become public two years ago at $40 and is up six-fold since its debut. Visa went public March 19th and closed at $56.50 on its first day of trading. In early-morning trading, Visa is up nearly 3%, or $1.90, to $77.00. MasterCard is up $2.05.

Plum Creek Timber (PCL, $42.65) is a timber company and operates as a REIT (real estate investment trust). A month ago, the company lowered its earnings outlook as residential construction activity remained week. Plum Creek pays a 4% dividend.

Sohu.com (SOHU, $61.84) was up $2 Friday ahead of earnings. I expect strong earnings from them this morning and believe they are one of the better China Internet plays out there. The May 70 calls (UZKEM, $2.90) were heavily traded on Friday and could get a big pop with a good report.

Also, William Wrigley Jr. Co. (WWY, $62.45) is up 26% to $79 before the bell as Mars candy, with the help of Warren Buffett, is buying the gum maker for $23 billion.

Rick Rouse
Rick@OptionsMentoring.com

Tags: Buffett, MA, Plum Creek Timber, real estate investment trust, REITs, SOHU, V
Posted in Hot Stocks | No Comments »

Tick-Tock Tick-Tock

Friday, April 25th, 2008

The clock is ticking on Yahoo (YHOO, $26.59, down $0.71) to accept Microsoft’s (MSFT, $29.73, down $2.07) bid. The deadline is Saturday and we’re likely will see some high action drama. The stakes are high for both sides but the real pressure is on Yahoo which really has no other options.

If Microsoft doesn’t get a deal done the company could go “hostile” with its bid. A takeover is considered “hostile” if Yahoo’s board rejects the offer and Microsoft continues to pursue the deal or if Microsoft would have made a bid without informing Yahoo’s Board beforehand then it would also have been considered a hostile takeover bid.

So what does this all mean? Yahoo’s isn’t opposed to a merger but wants a higher price. Both companies reported less-than-stellar earnings results so there is no leverage there on either side. Microsoft has said it will not raise its offer and Yahoo wants a higher one. It looks like its going come down to who’s word is the strongest and I’d go with Microsoft.

If that happens, then Yahoo could fall below $20. If Microsoft pulls out or goes hostile its stock could also slip as well. Here’s where it gets really interesting. The put volume in Yahoo is exploding and we are only halfway through the trading session.

Take a look at the action in the Yahoo May Puts:

May 25 Put (YHQQE, $1.04, up $0.40) up 63%, 32,000 contracts traded
May 22.50 Put (YHQQX, $0.54, up $0.24) up 70%, 16,000 contracts traded
May 20 Put (YHQQD, $0.24, up $0.12) up 100%, 23,000 contracts traded

Before I close, let’s throw this out there. What if Microsoft pulls out of the deal sending Yahoo’s shares down below $20? If that were to happen the stock could fall even further to the low to mid-teens where Microsoft could then aggressively buy Yahoo’s shares in the open market for half the price.

I can’t wait to see how this all unfolds.

Rick Rouse
Rick@OptionsMentoring.com

Tags: hostile bid, merger, MSFT, option, YHOO
Posted in Yahoo / Microsoft | No Comments »

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SCOTT H.
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PETER G.
Rick & Team, GREAT Call on NKE for my two trading accounts:
1) Entry at .65, out at 1.45, 1.55 Profit = $415
2) Entry at .60, out at 1.75, 1.50 Profit = $485

LAWRENCE O.
Hey Rick! Here is an update on what your picks have done in my accounts.

1) Great call on the JoyG March 55. I bought when you said, then bought again on one of the dips. Booked 80+% profit. Made enough to pay for your service for years to come.

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3) Took profit on your Imax March 12.5. 20 cent trailing stop at 1.90 yesterday. Not sure what the profit on that was, but profit is profit.

I see that you took a loss on some of these. It’s all good. I look to trade your “ideas” not your exact calls. I THANK YOU! For your ideas and commentary. Keep up the good work. And keep those ideas coming.

C.J.
Loving this subscription so far! I got into the BRK feb 76 calls the day you talked about right before the split...now up over 300% (0.70 to 2.475)! Keep the good picks coming and let's see some OSIS and EMC upside soon! Just wanted to share my positive enthusiasm on your newsletter...it gives us individual investors great ideas on not only the options market, but also the broader equity market! Case in point is BRK...I can't always read the breaking business news but its easy to read your twice daily updates on my smartphone...helped me get some BRK shares immediately after the split which I will hold for the long haul! Thanks again!

SHAUN
Aloha Rick - Thank you so much for the great CL pick. I am not sure if there was buy-out/merger news or what but at 3PM today Colgate-Palmolive absolutely EXPLODED to the upside, and my calls turned into green candy when they went from 1.40 to 3.8 in a matter of seconds! I even sold a few for over 4.0! Much thanks and keep the solid picks up my friend, honestly. Only a fool would scoff at 267% gains... Peace!

MICHAEL K.
I like the fact that you ask for comments from subscribers. Good customer service. By the way, am enjoying the service so far. Some good
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PARAG P.
Woo hoo! Out for 50% on WMT this am. Making up for my depression for getting out of pcln for a 30% gain monday :( you the man! any word on the manual? My friend Mike ( who I sent to your service) told me he emailed you about your integrity in reporting fills. I echo that sentiment big time.. keep it up! Cheers!

JAY P.
Hi Rick, as a new member all I can say is, 'show off' LOL, with PCLN.

MIKE
Rick, I am a new subscriber to your service, and I want to say I am impressed. I am impressed by your results, but more than that I am impressed by your reporting of your fills. You could have easily said you got that Wal-Mart call today for 80 cents, instead you reported 98 cents! Good job and keep it up, I watched the reporting of the fills first, and then I subscribed. Thank You.

TRISH D.
Hi, good morning. I jumped the gun a little on this one (PCLN). But still made $1,675.00 profit!! Very happy!! Keep up the good work!! Thanks.

MIN L.
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NOEL
I got into the Nike 60 Call at 1.85, sold at 5.00, also bought a 55 put at 1.05, but got stopped out at .35. What a ride! $2830.00 in the black even with the put. It's right at 100% return. I hope earnings season coming up is going to look like this trade.

TODD F.
Nice call on Nike. I think I'll go buy a pair with my profits! : ) I did the straddle for safety but still made 62% on the trade. Not bad for less than 24 hours. If Goldman is right, then the Nov 70s or 75's could be a steal today.

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NOEL
“Limit order was set at 1.60 on RIMM so it sold. I may have left some money on the table but you can't go broke making a profit. That was a fun trade. Thank you. Good call. I’ve been watching and trading Rick's advice since March. It’s usually a fun ride, but I give him heck when it's wrong to. :) ”

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ED
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GREG
“Rick – Wow what a day! I got in at the Dendreon calls at $2.25. Thanks to for your advice. I appreciate that. This company has a lock on this type of therapy and no one else in the world is close. Kind of reminds me of the type of companies that Peter Lynch and Warren Buffet suggest that investments be made in. Companies that can build a moat around their business model, that allows them to charge a premium for their product or service. In other words - a monopoly.”

KEN
“Hi Rick, Thank you so much for the Dendreon trade, I made almost $10,000 with that trade with a little over $2,000 investment. You have shown me the power of options trading. Again, thank you so much for all your inputs.”

GARETT
“Hi Rick, thanks for the encouragement to play the dendreon calls! did freaking great! Got in the first lot at $1.44 on 3-24-09, sold at $2.45, 70% not bad. Bought it back at $2.30 on 4-7-09 closed out on 4-14-09 for 454% gain! Wow! I love it when that happens. So, thanks the encouragement to get back in when others were saying sell, sell, sell. Keep up the good work.”

TERENCE
“Rick – Thanks for Dendreon – it has made all the headlines today! I missed on RIMM earlier, but I’ve been holding onto DNDN calls since 3rd week March. Of course today it all paid off today, as DNDN rocketed up.”

Archive for April, 2008

Ford Continues to Rise

Tax-Refund Plays

Deal or No Deal?

Monday's Happenings

Tick-Tock Tick-Tock