A Bullish Trend That's Not Overextended
VICR $ 9.30 +0.00 -- VICOR Corp.
Why We Like It:
I looked at hundreds of stocks this weekend. There were plenty hitting new 52-week highs but a lot of them looked pretty extended and overbought. We are expecting a market correction in January and that makes launching new bullish positions now somewhat dangerous. Traders should start with very small position sizes or just wait until the January correction occurs before launching new trades.
I like VICR for a number of reasons. The trend is up but shares aren't over done and it's just now starting to breakout from a recent consolidation. Shares should have support at $8.50 and again at $8.00. The long-term trend is higher and the Point & Figure chart is bullish with a $16.00 target. The company has been beating Wall Street's earnings estimates the last three quarters, which is normally a good sign.
I'm suggesting bullish positions now. You can use the 2010 July calls, which are the longest options available or you can buy the stock. At this point I prefer the stock because the spreads on the calls are a little wide but I'm listing both. Our twelve-month target is the $13.50-14.00 zone (one reason I prefer the stock over the option). Remember, if the market dips in January VICR will probably dip with it. We may get a better entry point about four weeks from now. We'll use a stop loss at $7.45.
Vicor Corporation designs, develops, manufactures and markets modular power components and complete power systems based upon a portfolio of patented technologies. Headquartered in Andover, Massachusetts, Vicor sells its products primarily to the communications, information technology, industrial control and military electronics markets
(source: company press release or website)
Use the 2010 July calls (Entry point - now, at current levels)
Buy the stock instead of the option (entry @ 9.30)
BUY CALL JUL 2010 $10.00 strike (VQV-GB) current ask $1.40
Chart of VICR: