Arch Coal Inc. - ACI - close: 30.30

Company Description:
St. Louis-based Arch Coal is the second largest U.S. coal producer, with revenues of $2.6 billion in 2009. Through its national network of mines, Arch supplies cleaner-burning, low-sulfur coal to U.S. power producers to fuel roughly 8 percent of the nation's electricity. The company also ships coal to domestic and international steel manufacturers as well as international power producers.

Why We Like It:
Coal names are on the move again. Investors have been buying up both energy names and commodity-related stocks. Meanwhile some of the coal stocks are breaking out. Shares of ACI had been stuck in a year-long trading range but managed to breakout through the top of the range this past month. I am suggesting we take advantage of this bullishness and buy call LEAPS on ACI at current levels. Patient investors could wait and hope for a dip back toward the $28.00 level. Our time frame is twelve months and we're setting our first target at $39.75. Coincidentally the Point & Figure chart is bullish and is forecasting a $39.50 target.

- Suggested Positions -
Buy the 2012 or 2013 January calls with ACI at current levels

Nov 22, 2010 - entry price on ACI @ xx.xx, option @ x.xx
symbol: ACI1221A35 2012 JAN $35 call - current bid/ask $ 3.85/ 3.95

- or -

Nov 22, 2010 - entry price on ACI @ xx.xx, option @ x.xx
symbol: ACI1319A35 2013 JAN $35 call - current bid/ask $ 5.80/ 6.25

Chart of ACI:

Current Target: $39.75
Current Stop loss: 26.75
Play Entered on: 11/22/10
Originally listed in the New Plays 11/20/10


Old Dominion Freight Line Inc. - ODFL - close: 28.53 change: +0.50

Company Description:
Old Dominion Freight Line, Inc. is a less-than-truckload multi-regional motor carrier providing one-to-five day service among six regions in the United States and next-day and second-day service within these regions. Through its four product groups, OD-Domestic, OD-Expedited, OD-Global and OD- Technology, the Company offers an array of innovative products and services that provide direct service to 48 states within the Southeast, Gulf Coast, Northeast, Midwest, Central and West regions of the country. In addition to domestic less-than-truckload services, the Company offers assembly and distribution services as well as container delivery services to and from all of North America, Central America, South America and the Far East. The Company also offers a broad range of expedited and logistical services for both its domestic and global markets.

Why We Like It:
The transportation sector has been showing some relative strength and looks poised to rally into the first quarter. If the GDP numbers show that the economy is slowly improving then it should mean stronger business for the freight companies. I like ODFL because shares have broken out over major resistance in the $26-27 zone and shares just spent three weeks digesting its gains and look ready to begin the next leg higher.

I am suggesting bullish positions now but patient investors might get a better entry point on a dip near $27.50-27.00 (or even $26.50 if the market corrects). We'll start this play with a stop loss at $25.45. Our long-term target is $34.75. I would aim higher but we can only buy 2011 April calls.

- Suggested Positions -
Buy the 2011 April $30 calls on ODFL at current levels ($29-26 zone)

Nov 22, 2010 - entry price on ODFL @ xx.xx, option @ x.xx
symbol: ODFL1116D30 2011 APR $30 call - current bid/ask $ 1.90/ 2.10

Chart of ODFL:

Current Target: $34.75
Current Stop loss: 25.45
Play Entered on: 11/22/10
Originally listed in the New Plays 11/20/10