New Watch List Entries

FFIV - F5 Networks

HIG - Hartford Financial Group


Active Watch List Candidates

VFC - V.F. Corp.


Dropped Watch List Entries

DVA, AAL, HAL, and PKG have graduated to our active play list.

EXPE hit our entry point with Friday's close. We have moved it to our new play this weekend.



New Watch List Candidates:


F5 Networks - FFIV - close: 111.36

Company Info

FFIV is in the technology sector. The company sells networking equipment and software. The company is seeing a strong turnaround after introducing a new good/better/best pricing model for its products last year. Customers have responded well to the strategy. FFIV said products in this pricing model saw a +83% increase in sales quarter over quarter.

FFIV is also seeing strong sales demand from its telecom customers. The company also announced that it's seeing double-digit growth in America, Europe, Middle East, Africa and Japan. FFIV's most recent earnings report beat Wall Street's estimates on both the top and bottom line. Management then raised their guidance (for FFIV's third quarter).

On Friday FFIV traded up to $112.50 before trimming its gains. I am suggesting we wait for shares to close above $112.50 and then buy calls the next morning with a stop loss at $104.75. Our long-term target is the $135 region. Currently the point & figure chart is bullish and forecasting at $138 target.

Breakout trigger: Wait for a close above $112.50
buy calls the next day with a stop loss at $104.75

BUY the 2015 Jan $120 call (FFIV150117C120) current ask $7.75

- or -

BUY the 2016 Jan $130 call (FFIV160115C130) current ask $12.30

Option Format: symbol-year-month-day-call-strike

Chart of FFIV:

Originally listed on the Watch List: 06/08/14


The Hartford Financial Services Group - HIG - close: 36.23

Company Info

Financial stocks helped lead the market higher last week. If this bull market continues then the financials should remain part of the leadership group. HIG has been making progress in its transformation. The company is focusing more on its property and casualty insurance business, its Group Benefits business, and its mutual fund business. They just recently sold their Japan annuity company, which has reduced the company's risk profile.

This turnaround has been productive. Their most recent earnings report came in 25 cents better than Wall Street estimates with a profit of $1.18 per share. This net income of $495 million compares to a $241 million loss in Q1 2013. HIG has also been making improvements in its insurance combined ratio, which is essentially their gross margin on their insurance business. They've also been buying back stock.

Technically the three-week bounce from HIG's rising 200-dma has pushed shares toward resistance near $36.50. This is also the top of a five-month consolidation range. A breakout here should signal the next leg higher.

Tonight I am suggesting we wait for HIG to close above $36.75 and then buy calls the next morning with a stop loss at $33.75. Our long-term target is the $45.00 region.

Breakout trigger: Wait for a close above $36.75
buy calls the next day with a stop loss at $33.75

BUY the 2015 Jan $40 call (HIG150117C40) current ask $0.90

- or -

BUY the 2016 Jan $40 call (FFIV160115C40) current ask $3.00

Option Format: symbol-year-month-day-call-strike

Chart of HIG:

Originally listed on the Watch List: 06/08/14


Active Watch List Candidates:



V.F. Corp. - VFC - $63.37

Comments:
06/08/14: VFC eked out a small gain for the week. Shares are still struggling with resistance near the $64.00 level. A look at the daily chart shows traders are still buying dips at the rising 20-dma. I do not see any changes from my earlier comments.

Earlier Comments: May 18, 2014:
VFC is in the consumer goods sector. The company makes apparel and footwear for sale in the U.S. and Europe. Products include handbags, luggage, backpacks, accessories. Major brands include The North Face, Vans, Timberland, Kipling, Jansport, Reef, Smartwool, Eastpak, Wrangler, Lee, just to name a few.

After big gains in 2013 shares of VFC have been consolidating sideways. The company split their stock 4-for-1 back in December 2013. VFC guided lower back in February but the market reaction was a one-day event. Shares have since recovered. Their most recent report was bullish with VFC beating estimates. That's significant since so many apparel makers blamed the weather on a terrible Q1.

There has been growing speculation that VFC might be Lululemon (LULU) or another athletics apparel brand. Normally the acquiring company's stock goes down on a merger announcement but lately Wall Street has been sending the acquirer's stock higher on positive M&A news.

Technically shares look poised to breakout from their five-month consolidation. The Point & Figure chart is already bullish and forecasting an $80 target.

I am suggesting we wait for VFC to close above $64.25 and then buy calls the next day with a stop loss at $59.75. Our long-term target is the $75.00 region.

Breakout trigger: Wait for a close above $64.25
buy calls the next day with a stop loss at $59.75

BUY the 2015 Jan $70 call (VFC150117C70)

- or -

BUY the 2016 Jan $70 call (VFC160115C70)

Option Format: symbol-year-month-day-call-strike

Originally listed on the Watch List: 05/18/14