New Watch List Entries

AAP - Advance Auto Parts

CRR - CARBO Ceramics

SUNE - SunEdison


Active Watch List Candidates

EVEP - EV Energy Partners

HIG - Hartford Financial Group

MSFT - Microsoft Corp.

VFC - V.F. Corp.


Dropped Watch List Entries

XOM met our entry point requirements on Friday and has been moved to the new play section.



New Watch List Candidates:


Advance Auto Parts Inc. - AAP - close: 129.80

Company Info

AAP is in the services sector. The company is one of the largest auto parts retailers in the nation. They recently bought General Parts International for $2.08 billion in a cash deal that closed early this year. That added 1,233 Carquest stores and 103 Worldpac branches.

AAP believes they will be able to achieve about $190 million in synergies over the next three years. Analysts believe that AAP, now even bigger, will be able to negotiate better prices with wholesalers and rev up its supply-chain efficiencies.

The company delivered strong gains in the first quarter in spite of the lousy weather. That's a feat many retailers failed to accomplish with same-store sales up +4%. The company is also seeing improvement in its gross margins.

While the U.S. economy is slowly improving we are not seeing significant wage inflation. Consumers are still looking for bargains. That means more older cars on the road and more consumers buying auto parts to keep their older cars running.

Technically shares of AAP are poised for a bullish breakout over resistance near $130.00. Tonight I am suggesting an intraday trigger to buy calls at $131.00 (don't wait for a close above this level). If triggered our long-term target is the $150 area.

I am listing the 2015 calls. AAP does have 2016 calls but the bid/ask spreads are too wide.

Start with a stop loss at $123.25.

Breakout trigger: Buy calls at $131.00

BUY the 2015 Jan $140 call (AAP150117C140) current ask $5.60

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

Chart of AAP:

Originally listed on the Watch List: 06/22/14


CARBO Ceramics Inc. - CRR - close: 141.86

Company Info

CRR is part of the basic materials sector. The company operates in the oil field services industry. Their main product is ceramic proppants. These are resin-coated ceramic and resin-coated sand proppants used in the process of hydraulic fracturing of natural gas and oil wells in "tight oil" formations (a.k.a. shale).

Normal sand is a cheaper proppant but ceramic proppants from CRR deliver better results in the fracking process. The U.S. fracking industry is picking up speed. We're also seeing other countries start to develop their own fracking industries. CRR's sales should grow worldwide.

Technically CRR is in a significant up trend and coiling for a bullish breakout past resistance near $142.00. If shares do breakout it could see a sharp move higher thanks to short interest at almost 22% of the very small 19.7 million share float.

I am suggesting an intraday trigger at $143.50. Do not wait for a close above this level since CRR might spike higher. We will try and limit our risk with a stop loss at $134.90. Our target is the $160-170 zone. Currently the P&F chart is bullish with a $168 target.

Breakout trigger: Buy calls at $143.50

BUY the 2015 Jan $160 call (CRR150117C160) current ask $8.60

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

Chart of CRR:

Originally listed on the Watch List: 06/22/14


SunEdison, Inc. - SUNE - close: 22.38

Company Info

Based in Belmont, California, SunEdison claims 50 years of scientific research and over 750 patents in their solar PV technology. Solar energy stocks as a group have had a volatile year if you look at the TAN solar ETF but investors are returning as money looks for growth, especially as the price of oil rises.

Shares of SUNE were not immune to the group's spring sell-off but they held up better than most. SUNE is certainly outperforming the broader market with almost 70% gains this year already and that's after consolidating sideways the last three months.

SUNE is a high-growth, momentum play. Analysts are expecting the company's earnings to rise +60% this year and surge +140% in 2015. The stock got a big boost this past week after Deutsche Bank upgraded their price target on SUNE from $13 to $35. They believe SUNE is on track to deliver significant multiple expansion and positioned to grow. This is bad news for all the shorts in this stock. The most recent data listed short interest at 27% of the 250 million share float. Further gains could fuel more short covering.

Due to the high amount of short interest I am suggesting an intraday trigger to buy calls at $23.00. More conservative investors might want to consider a slower approach and wait for a close above $23.00 instead as your entry point. I'm not setting an exit target tonight but the point & figure chart is bullish and suggesting at $29.50 target.

We will start with a stop loss at $18.95.

Breakout trigger: Buy calls at $23.00

BUY the 2015 Jan $25 call (SUNE150117C25) current ask $2.89

- or -

BUY the 2016 Jan $30 call (SUNE160115c30) current ask $3.80

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

Chart of SUNE:

Originally listed on the Watch List: 06/22/14


Active Watch List Candidates:



EV Energy Partners - EVEP - close: 38.05

Comments:
06/22/14: After a five-week climb shares of EVEP saw their rally stall this past week. We are currently on the sidelines. I do not see any changes from my earlier comments.

Earlier Comments:
EVEP is in the energy industry. They are a master limited partnership and one of the largest operators of onshore oil and gas assets. They have properties in the Utica Shale, Barnett Shale, the Appalachian Basin, the Mid-Continent area, the San Juan Basin, the Monroe Field in Louisiana, the Permian Basin, Central and East Texas, and Michigan.

Shares of this company have spent the last several months building a bottom. If the market turns more volatile then investors could turn to EVEP to capture the stock's 8% dividend yield. If oil prices continue to climb it should also give EVEP a boost.

More aggressive investors may want to consider bullish positions now. I am suggesting we wait for EVEP to close above $40.25 and then buy calls the next morning with a stop loss at $35.75.

Breakout trigger: Wait for a close above $40.25
then buy calls the next day with a stop at $35.75.

BUY the 2015 Jan $40 call (EVEP150117C40)

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

Originally listed on the Watch List: 06/15/14


The Hartford Financial Services Group - HIG - close: 36.02

Comments:
06/22/14: Shares of HIG were little changed for the week. If the trend of higher lows continue we could see the stock challenge resistance near $36.50 soon.

Earlier Comments: June 8, 2014:
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)

- or -

BUY the 2016 Jan $40 call (FFIV160115C40)

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

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


Microsoft Corp. - MSFT - close: 41.68

Comments:
06/22/14: MSFT spent the week consolidating sideways just under resistance near $42.00. The stock looks like it's building up steam for a bullish breakout higher. There is no change from my earlier comments.

Earlier Comments:
Shares of semiconductor giant Intel (INTC) soared on Friday (June 13th) when the company surprised investors by raising its revenue guidance the night before. INTC said they were seeing stronger sales of PCs. That's right. They said PCs. The sale of personal computers has been falling for several quarters as consumer spend the money on laptops, tablets, and smartphones. To be fair INTC did say they were seeing stronger sales of PCs to businesses but it's still good news for INTC but it could be great news for MSFT.

INTC hinted that when MSFT stopped supporting the Windows XP operating system in April this year it has sparked an upgrade cycle. XP has been around for years. One analyst estimated that 25% of the PCs currently connected to the Internet are running XP. That's a huge number of computers and now they're at risk for virus and hacking attempts that MSFT will no longer try to patch.

As businesses and consumers upgrade their PC it should mean strong sales for MSFT's Windows 8 operating software. This upgrade cycle could last a while.

Currently shares of MSFT are in a long-term up trend (see chart) and they closed near 14-year highs on Friday. There is short-term resistance at $41.65. I am suggesting we wait for MSFT to close above $42.00 and then buy calls the next day with a stop loss at $38.40.

I am listing the 2015 and 2016 calls but my preference is for the 2016s.

Breakout trigger: Wait for a close above $42.00
then buy calls the next morning with a stop loss at $38.40.

BUY the 2015 Jan $45 call (MSFT150117C45) current ask $1.06

- or -

BUY the 2016 Jan $45 call (MSFT160115C45) current ask $2.60

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

Originally listed on the Watch List: 06/15/14


V.F. Corp. - VFC - $62.15

Comments:
06/22/14: If VFC doesn't start showing more strength we'll probably drop it soon. The stock is bouncing from last Friday's lows but the rebound didn't make it very far.

Overall I don't 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