Kaiser Aluminum - KALU - close: 54.38

Company Description link

Why We Like It:
Resources, commodities, and basic material names are on the move again. While the economic data has been a little mixed lately most are still expecting a stronger second half for 2011 and beyond. Shares of KALU have seen a significant rally and a breakout from a multi-month consolidation in the $46-53 zone. This past week, instead of correcting lower, KALU has digested gains by moving sideways.

I am suggesting small bullish positions now at current levels. More conservative traders could wait for a dip into the $53-52 area instead. I said small positions because shares are still arguably short-term overbought and the spreads on KALU's options are a bit wider than we would prefer.

We will use a stop loss at $49.75. Our long-term targets are $64.00 and $69.00 but that might be a little too optimistic since KALU does not have LEAPS. FYI: The Point & Figure chart for KALU is forecasting a long-term target of $65.00.

NOTE: KALU does not have LEAPS so we are choosing to play the 2011 December calls.

- Suggested Positions -
Jul 11, 2011 - entry price on KALU @ xx.xx, option @ x.xx
symbol: KALU1117L60 2011 DEC $60 call - current bid/ask $ 1.80/ 2.50

Chart of KALU:

Current Target: $64.00, 69.50
Current Stop loss: 49.75
Play Entered on: 07/11/11
Originally listed in the New Plays 07/09/11


Targa Resources - NGLS - close: 35.86

Company Description link

Why We Like It:
NGLS is in the natural gas business. Like many stocks in the energy sector NGLS just experienced a significant rally. However, for NGLS the stock has broken out past major resistance near the $36.00 level and closed at new all-time, record highs. After months of consolidating sideways below this key level NGLS should be poised for more gains.

I do consider this a slightly more aggressive trade. NGLS does not have normal LEAPS. We have to settle for the 2011 December calls. Plus, the spreads are a little bit too wide. We need to keep our position size small to limit our risk. I'm suggesting new positions now with NGLS above $35.00. We'll use a stop loss at $33.75. Our target is $39.75.

- Suggested Positions -
Jul 11, 2011 - entry price on NGLS @ xx.xx, option @ x.xx
symbol: NGLS1117L35 2011 DEC $35 call - current bid/ask $ 1.75/ 2.55

Chart of NGLS

Current Target: $39.75
Current Stop loss: 33.75
Play Entered on: 07/11/11
Originally listed in the New Plays 07/09/11