5:00pm (EST)
1. Market Summary
2. JDS Uniphase Looking to Rebound
3. Skyworks Solutions Hits Blue-Sky Territory
4. Earnings
5. Week Ahead
= = = = = = = = = = = = = = =
1. Market Summary
The market had a rough outing on Friday in a shortened session following the Thanksgiving holiday and ended mixed for the week. Black Friday is an important day for the retail sector and the shopping malls looked busy, but sovereign debt took center stage once again as both Portugal and Spain move to the forefront following Ireland’s relief package.
Initial reports appear to be good for Black Friday and the National Retail Federation predicted nearly 140 million Americans would go shopping over the weekend. Last year, 134 million people got out. The retail survey also predicted nearly $450 billion will be spent during the holiday season, up 2.4%, from last year.
As far as the PIGS, Portugal wants to install a tough new austerity budget that will supposedly reassure lenders the country could meet its budget-cutting targets on its own, while Spain intends to handle its own deficit-reduction measures and does not feel it needs assistance. Ireland’s rescue package should be approved this week.
The situation between North and South Korea also seems to be reaching a boiling point and this weighed on the market as well. South Korea and the U.S. have responded with military exercises which has pushed the two countries near the “brink of war” and this will be something we will need to play close attention to going forward.
All-in-all, the bulls made a little progress while the bears seemed content on keeping things in a trading range as we head into the final month of trading for 2010.
The Dow started Friday off with a triple-digit loss and traded to a low of 11,067 before finishing with a loss of 95 points, or 0.9%, to close at 11,092. For the week, the index fell 112 points, or 1%, but is still up 6.4% for the year. With strong headwinds still facing the bulls, resistance continues to stand in the way at 11,200 while support remains 11,000-10,800.
The S&P 500 slipped 9 points, or 0.8%, and closed at 1,189. The index had been flirting with a gain for the week but declined 10 points, or 0.9%. Tech is still showing a gain of 6.7% YTD. The 1,200 level continues to cause fits for the bulls while the 1,170-1,175 area has been solid support. A break below this area could lead to a test of 1,150.
The Nasdaq gave back 9 points, or 0.3%, to settle at 2,534 on Friday but finished the week with a gain of 16 points, or 0.7%. The index showed some strength last week and is up 11.7% for the year but has had trouble surpassing our 2,600 target. Support is tight at 2,500 with 2,450 providing backup.
= = = = = = = = = = = = = = =
2. JDS Uniphase Looking to Rebound
JDS Uniphase (JDSU, $12.34, up $0.14) is a provider of communications test and measurement equipment, and optical products, for the telecommunications industry. The company competes against the likes of Alcatel-Lucent (ALU, $2.84, down $0.09), Juniper Networks (JNPR, $34.13, down $0.38), and Cisco Systems (CSCO, $19.49, up $0.03) so competition is fierce. However, they are part of the mobile internet wave we have endlessly been talking about, providing equipment that forms the backbone of wireless networks. There is room for several players in this sector, and given Cisco’s recent disappointing quarterly results, it looks like the smaller guys are taking market share.
Shares of JDSU have been on a wild ride over the past decade, reaching an all-time high of $588 back in December, 2000. It’s been a long, hard fall from grace and the stock’s 52-week range is $7.26-$13.35. After a test down to the $10.60-$10.65 area in early November, shares have looked strong in recent weeks so we wanted to see what has been behind the momentum.
The company recently reported revenue of $411 million and earnings of $0.20 a share for its fiscal 2011 first quarter, versus nearly $300 million, or $0.04 a share, in the first quarter of 2010. This represented year-over-year revenue growth of 38%. JDSU generated $35 million in free cash flow in the quarter which bodes well going forward.
For the current quarter, the company is expected to earn $0.19 a share on revenue of $437 million. While the earnings per share estimate seem a little low given their most recent quarter, revenues should come in at $425-$450 million which would represent a 25%-30% increase in sales. Additionally, if Cisco continues to falter, these estimates could be “conservative” if JDSU can pick-up more market share.
With a market cap of just $2.7 billion, we are actually pretty surprised this company has not been acquired by now. JDSU is reasonably valued and could represent a good buying opportunity as the stock is only trading at 16.7 times this year’s earnings, and 14.4 times next year’s earnings.
We like the risk/reward this stock has to offer and there are a number of ways we think you can play this one. We think a covered call would make a great, safe play while a long-term LEAP option might be worth a look as we think shares could be headed to $15+ over the next 6-12 months.
= = = = = = = = = = = = = = =
3. Skyworks Solutions Hits Blue-Sky Territory
Skyworks Solutions (SWKS, $25.99, down $0.15) is a chip and linear solutions company that operates in two segments, cellular handsets and analog semiconductors. They provide amplifiers, diodes and attenuators to various sectors including automotive, broadband, cellular infrastructure, energy management, industrial, medical, military and offer cellular handset applications.
The company recently reported 4Q earnings of $0.43 a share which beat Wall Street’s expectations by $0.03. For the year, earnings came in at $1.26 a share, and they are projected to earn $1.65 a share in 2011, which represents a 30% growth rate. This gives the stock a forward (Price-to-Earnings) P/E of 15.8. Additionally, their Price Earnings-to-Growth Ratio (PEG) is close to 0.5 and anything below 1 usually indicates a stock is undervalued.
There have been some stock sales recently by executives, but investors don’t seem too concerned as shares hit another 52-week high of $26.17 intra-day on Friday. Stock sales are often done for a variety of reasons, especially near year-end for tax purposes, and for diversification, so we don’t think they sold because of deteriorating fundamentals.
Skyworks will report earnings again in mid-January and they are projected to earn $0.44 a share on revenue of $332 million. For 2011, the company is expected to have $1.3 billion in sales, and in 2012, sales should reach $1.5 billion. The analysts are even onboard with this one, with 4 Strong Buys, 11 Buys, and 3 Holds. There are 2 analysts who have an “Underperform” rating on the shares.
= = = = = = = = = = = = = = =
4. Earnings
Monday: Cascade (CASC, $37.28, down $0.30), Express (EXPR, $14.89, up $0.29), Jos. A. Bank Clothiers (JOSB, $44.18, down $0.07), Smith & Wesson (SWHC, $3.81, down $0.06) and Zoltek Companies (ZOLT, $9.75, down $0.06).
Tuesday: Barnes & Noble (BKS, $14.99, down $0.38), Omnivision Technologies (OVTI, $30.01, up $0.23) and Trina Solar Limited (TSL, $24.33, up $0.09).
Wednesday: Aeropostale (ARO, $26.90, down $0.10), Charming Shoppes (CHRS, $3.84, down $0.07), Collective Brands (PSS, $17.41, down $0.48), Copart (CPRT, $35.89, down $0.15), Jo-Ann Stores (JAS, $46.56, up $0.01), Krispy Kreme Doughnuts (KKD, $5.61, up $0.07), Semtech (SMTC, $23.91, down $0.16) and Zumiez (ZUMZ, $29.98, down $0.23).
Thursday: Coldwater Creek (CWTR, $3.45, down $0.04), Del Monte Foods (DLM, $18.83, up $0.84), Kroger (KR, $23.07, up $0.05), Novell (NOVL, $5.94, up $0.01) Toll Brothers (TOL, $17.85, down $0.36), and VeriFone Systems (PAY, $34.70, down $0.30).
Friday: Big Lots (BIG, $30.92, up $0.08) and Royal Bank of Canada (RY, $54.10, down $0.21).
= = = = = = = = = = = = = = =
5. Week Ahead
The obvious headwinds facing the market has made it difficult for the bulls to grab any kindof momentum and the focus on Monday will be the results from the holiday-shopping season over the weekend as there is no major economic news due out.
On Tuesday, the market will get a look at the Case-Shiller 20-city index for September, along with the Chicago purchasing managers’ index for November. Additionally, the Conference Board will release its survey on consumer confidence.
Wednesday will start the jobs data rolling with the ADP report and the Institute for Supply Management (ISM) will publish its November manufacturing index results. Wall Street also gets an update on construction spending in October and auto sales in November. Also, the Fed will issue its Beige Book for December, and the weekly report on crude inventories is due out.
Thursday, the market will hear from the Labor Department as they give us another weekly look at jobless claims and on Friday they will provide the latest numbers on nonfarm payrolls and the unemployment rate for November. The Commerce Department will also chime in with the figures for October factory orders.
Needless to say, the market will need some good retail numbers and a fantastic jobs report to offset the geopolitical events and Europe debt crisis that are currently holding the bulls in check.
= = = = = = = = = = = = = = =
We will be back Monday morning at 9am (EST) with all of the current trade updates and a fresh outlook.
Tags: call option, how to trade options, momentum options trading, Momentum stocks, option picks, option stock picks, options alerts, options newsletter, options track record, put option, stock options trading, volatile options
This entry was posted
on Sunday, November 28th, 2010 at 5:12 PM and is filed under Company Commentary, Strategies, Weekly Wrap.
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MomentumOptionsTrading.com Weekly Wrap for 11/28/10
5:00pm (EST)
1. Market Summary
2. JDS Uniphase Looking to Rebound
3. Skyworks Solutions Hits Blue-Sky Territory
4. Earnings
5. Week Ahead
= = = = = = = = = = = = = = =
1. Market Summary
The market had a rough outing on Friday in a shortened session following the Thanksgiving holiday and ended mixed for the week. Black Friday is an important day for the retail sector and the shopping malls looked busy, but sovereign debt took center stage once again as both Portugal and Spain move to the forefront following Ireland’s relief package.
Initial reports appear to be good for Black Friday and the National Retail Federation predicted nearly 140 million Americans would go shopping over the weekend. Last year, 134 million people got out. The retail survey also predicted nearly $450 billion will be spent during the holiday season, up 2.4%, from last year.
As far as the PIGS, Portugal wants to install a tough new austerity budget that will supposedly reassure lenders the country could meet its budget-cutting targets on its own, while Spain intends to handle its own deficit-reduction measures and does not feel it needs assistance. Ireland’s rescue package should be approved this week.
The situation between North and South Korea also seems to be reaching a boiling point and this weighed on the market as well. South Korea and the U.S. have responded with military exercises which has pushed the two countries near the “brink of war” and this will be something we will need to play close attention to going forward.
All-in-all, the bulls made a little progress while the bears seemed content on keeping things in a trading range as we head into the final month of trading for 2010.
The Dow started Friday off with a triple-digit loss and traded to a low of 11,067 before finishing with a loss of 95 points, or 0.9%, to close at 11,092. For the week, the index fell 112 points, or 1%, but is still up 6.4% for the year. With strong headwinds still facing the bulls, resistance continues to stand in the way at 11,200 while support remains 11,000-10,800.
The S&P 500 slipped 9 points, or 0.8%, and closed at 1,189. The index had been flirting with a gain for the week but declined 10 points, or 0.9%. Tech is still showing a gain of 6.7% YTD. The 1,200 level continues to cause fits for the bulls while the 1,170-1,175 area has been solid support. A break below this area could lead to a test of 1,150.
The Nasdaq gave back 9 points, or 0.3%, to settle at 2,534 on Friday but finished the week with a gain of 16 points, or 0.7%. The index showed some strength last week and is up 11.7% for the year but has had trouble surpassing our 2,600 target. Support is tight at 2,500 with 2,450 providing backup.
= = = = = = = = = = = = = = =
2. JDS Uniphase Looking to Rebound
JDS Uniphase (JDSU, $12.34, up $0.14) is a provider of communications test and measurement equipment, and optical products, for the telecommunications industry. The company competes against the likes of Alcatel-Lucent (ALU, $2.84, down $0.09), Juniper Networks (JNPR, $34.13, down $0.38), and Cisco Systems (CSCO, $19.49, up $0.03) so competition is fierce. However, they are part of the mobile internet wave we have endlessly been talking about, providing equipment that forms the backbone of wireless networks. There is room for several players in this sector, and given Cisco’s recent disappointing quarterly results, it looks like the smaller guys are taking market share.
Shares of JDSU have been on a wild ride over the past decade, reaching an all-time high of $588 back in December, 2000. It’s been a long, hard fall from grace and the stock’s 52-week range is $7.26-$13.35. After a test down to the $10.60-$10.65 area in early November, shares have looked strong in recent weeks so we wanted to see what has been behind the momentum.
The company recently reported revenue of $411 million and earnings of $0.20 a share for its fiscal 2011 first quarter, versus nearly $300 million, or $0.04 a share, in the first quarter of 2010. This represented year-over-year revenue growth of 38%. JDSU generated $35 million in free cash flow in the quarter which bodes well going forward.
For the current quarter, the company is expected to earn $0.19 a share on revenue of $437 million. While the earnings per share estimate seem a little low given their most recent quarter, revenues should come in at $425-$450 million which would represent a 25%-30% increase in sales. Additionally, if Cisco continues to falter, these estimates could be “conservative” if JDSU can pick-up more market share.
With a market cap of just $2.7 billion, we are actually pretty surprised this company has not been acquired by now. JDSU is reasonably valued and could represent a good buying opportunity as the stock is only trading at 16.7 times this year’s earnings, and 14.4 times next year’s earnings.
We like the risk/reward this stock has to offer and there are a number of ways we think you can play this one. We think a covered call would make a great, safe play while a long-term LEAP option might be worth a look as we think shares could be headed to $15+ over the next 6-12 months.
= = = = = = = = = = = = = = =
3. Skyworks Solutions Hits Blue-Sky Territory
Skyworks Solutions (SWKS, $25.99, down $0.15) is a chip and linear solutions company that operates in two segments, cellular handsets and analog semiconductors. They provide amplifiers, diodes and attenuators to various sectors including automotive, broadband, cellular infrastructure, energy management, industrial, medical, military and offer cellular handset applications.
The company recently reported 4Q earnings of $0.43 a share which beat Wall Street’s expectations by $0.03. For the year, earnings came in at $1.26 a share, and they are projected to earn $1.65 a share in 2011, which represents a 30% growth rate. This gives the stock a forward (Price-to-Earnings) P/E of 15.8. Additionally, their Price Earnings-to-Growth Ratio (PEG) is close to 0.5 and anything below 1 usually indicates a stock is undervalued.
There have been some stock sales recently by executives, but investors don’t seem too concerned as shares hit another 52-week high of $26.17 intra-day on Friday. Stock sales are often done for a variety of reasons, especially near year-end for tax purposes, and for diversification, so we don’t think they sold because of deteriorating fundamentals.
Skyworks will report earnings again in mid-January and they are projected to earn $0.44 a share on revenue of $332 million. For 2011, the company is expected to have $1.3 billion in sales, and in 2012, sales should reach $1.5 billion. The analysts are even onboard with this one, with 4 Strong Buys, 11 Buys, and 3 Holds. There are 2 analysts who have an “Underperform” rating on the shares.
= = = = = = = = = = = = = = =
4. Earnings
Monday: Cascade (CASC, $37.28, down $0.30), Express (EXPR, $14.89, up $0.29), Jos. A. Bank Clothiers (JOSB, $44.18, down $0.07), Smith & Wesson (SWHC, $3.81, down $0.06) and Zoltek Companies (ZOLT, $9.75, down $0.06).
Tuesday: Barnes & Noble (BKS, $14.99, down $0.38), Omnivision Technologies (OVTI, $30.01, up $0.23) and Trina Solar Limited (TSL, $24.33, up $0.09).
Wednesday: Aeropostale (ARO, $26.90, down $0.10), Charming Shoppes (CHRS, $3.84, down $0.07), Collective Brands (PSS, $17.41, down $0.48), Copart (CPRT, $35.89, down $0.15), Jo-Ann Stores (JAS, $46.56, up $0.01), Krispy Kreme Doughnuts (KKD, $5.61, up $0.07), Semtech (SMTC, $23.91, down $0.16) and Zumiez (ZUMZ, $29.98, down $0.23).
Thursday: Coldwater Creek (CWTR, $3.45, down $0.04), Del Monte Foods (DLM, $18.83, up $0.84), Kroger (KR, $23.07, up $0.05), Novell (NOVL, $5.94, up $0.01) Toll Brothers (TOL, $17.85, down $0.36), and VeriFone Systems (PAY, $34.70, down $0.30).
Friday: Big Lots (BIG, $30.92, up $0.08) and Royal Bank of Canada (RY, $54.10, down $0.21).
= = = = = = = = = = = = = = =
5. Week Ahead
The obvious headwinds facing the market has made it difficult for the bulls to grab any kindof momentum and the focus on Monday will be the results from the holiday-shopping season over the weekend as there is no major economic news due out.
On Tuesday, the market will get a look at the Case-Shiller 20-city index for September, along with the Chicago purchasing managers’ index for November. Additionally, the Conference Board will release its survey on consumer confidence.
Wednesday will start the jobs data rolling with the ADP report and the Institute for Supply Management (ISM) will publish its November manufacturing index results. Wall Street also gets an update on construction spending in October and auto sales in November. Also, the Fed will issue its Beige Book for December, and the weekly report on crude inventories is due out.
Thursday, the market will hear from the Labor Department as they give us another weekly look at jobless claims and on Friday they will provide the latest numbers on nonfarm payrolls and the unemployment rate for November. The Commerce Department will also chime in with the figures for October factory orders.
Needless to say, the market will need some good retail numbers and a fantastic jobs report to offset the geopolitical events and Europe debt crisis that are currently holding the bulls in check.
= = = = = = = = = = = = = = =
We will be back Monday morning at 9am (EST) with all of the current trade updates and a fresh outlook.
Tags: call option, how to trade options, momentum options trading, Momentum stocks, option picks, option stock picks, options alerts, options newsletter, options track record, put option, stock options trading, volatile options
This entry was posted on Sunday, November 28th, 2010 at 5:12 PM and is filed under Company Commentary, Strategies, Weekly Wrap. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.