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FTI - $64.75 - FMC Technologies

After a nice continuation dip on Monday FTI rebounded out of the box on Tuesday hitting our breakout trigger. I had hoped for a little more decline to trigger our breakdown entry at $60 but it did not happen. FTI has rebounded to resistance at $65 and appears to be coiling for a breakout. This stock can move fast once a trend develops.

The insurance put for $1.10 will remain our protection. I am not planning on exiting that coverage at this time. We saw lightning strike in multiple places in the prior week and I want to err on the side of caution. However, if we were to get hit by a disaster I would exit the put ONLY on a touch of $56.50.

Profit stop: Exit put only on a touch of $56.50

Company info:

FMC Technologies, Inc. provides mission-critical solutions for the energy, food processing and air transportation industries. The Company designs, manufactures and services machinery and systems for its customers through four business segments: Energy Production Systems, Energy Processing Systems, FoodTech and Airport Systems. Energy Production Systems segment designs and manufactures systems, and provides services used by oil and gas companies involved in land and offshore, including deepwater, exploration and production of crude oil and gas. Energy Processing Systems segment designs, manufactures and supplies high-pressure valves and fittings for oilfield service customers. FoodTech segment designs, manufactures and services food processing and handling systems to the food industry. Airport Systems segment is a global supplier of passenger boarding bridges, cargo loaders, and other ground support products and services.

Earnings update on May 9th
The Houston-based machinery manufacturer earned $47 million, or 67 cents a share, compared with breakeven a year ago. Analysts polled by Thomson First Call were estimating earnings of 45 cents a share, in the most recent quarter.
First-quarter revenue rose 27.5% from a year ago to $869.3 million. Analysts were estimating revenue of $819.3 million.
For fiscal 2006, the company increased its earnings guidance to $2.60 to $2.80 a share from $2.20 to $2.40 a share. Analysts surveyed by Thomson First Call are estimating earnings of $2.43 a share.
Its inbound orders in the first quarter increased 74.9% to $1.1 billion from the prior-year quarter. Order backlog climbed to $2.2 billion in the quarter on strong subsea inbound orders.
Energy systems revenue, which contributed 78.2% to total revenue, increased 34.1% to $679.9 million from a year ago. FoodTech business segment revenue rose 10.2% to $123.3 million and airport systems revenue rose 5.4% to $68.2 million.
"We are pleased with the outstanding performance in first quarter. Our results were driven by our subsea systems business as well as our surface systems and fluid control businesses," the company said.

Breakout trigger $63.50 Hit 5/23
Position: Oct $65 Call FTI-JM @ $5.80
Position: June $60 PUT FTI-RL @ $1.10

Entry $63.50 (5/23)

TIE - $38.22 - Titanium Metals

We have tried to play TIE before but have been unsuccessful. The recent drop coupled with the 2:1 split has lowered the barrier to admission by reducing the option premiums. I believe TIE is readying a breakout over resistance at $38 and that could trigger short covering and a sprint back to its highs. TIE is not related to the energy business other than making products used in the oil and gas sector. It should be somewhat immune to any future fluctuations in energy prices. Global demand for titanium should be the driving factor and a recent report stressed that demand was rising rapidly.

I elected to add TIE as a play today due to the potential impending breakout. The last time I saw this setup on TIE was back in April and the breakout ran for $40 pre-split.

TIE has split 2:1 THREE times in the last 12 months.

Company info:

Titanium Metals Corporation (TIMET) is a producer of titanium sponge, melted products and a variety of mill products for aerospace, industrial and other applications. For the commercial aerospace industry, the Company supplies titanium products to manufacturers of commercial airframes. Outside of aerospace markets, the Company manufactures a range of products for customers in the chemical process, oil and gas, consumer, sporting goods, automotive, power generation and armor/armament industries. Approximately 15% of the Company's sales revenue, during the year ended December 31, 2005, was generated by sales into industrial and emerging markets. TIMET markets and sells its products in the United States, the United Kingdom, France and Italy.

Buy December $45 Call TIE-LI currently $5.70 (no LEAPS)

Insurance put:
5/28 Buy July $30 PUT TIE-SF currently $1.60 ONLY if TIE trades at $34.

Entry $38.22 (5/28)

 

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