New Watch List Entries

UNP - Union Pacific

WLP - WellPoint Inc.


Active Watch List Candidates

VFC - V.F. Corp.


Dropped Watch List Entries

BZH and WDC have graduated to our active play list.

HIG met our entry point requirement on Friday and has been moved to the new trades section.



New Watch List Candidates:


Union Pacific - UNP - close: 100.98

Company Info

UNP is in the transportation industry. They are one of the biggest railroads in the nation covering 23 states across the western two-thirds of the United States. UNP is also the only railroad that serves all six major Mexico-U.S. gateways.

Wall Street is bullish on the railroads. Rail traffic has been consistently growing. A Barclays analyst recently said, "asset-based transportation networks thrive in periods of stronger economic expansion and modestly rising inflation. With second quarter results ripe to usher in more bullish sentiment in the space, we expect valuations could have further to run as markets discount a more robust outlook."

Another analyst, Mr. Spracklin with RBC, recently said, "We continue to favor the rail sector, as we consider market fundamentals to be supportive of sustainable increases in both freight rates and volume levels for the next three to five years... Our positive thesis on United Pacific reflects the company's low-risk, high-growth profile, with limited coal exposure, a healthy balance sheet, unparalleled access to Mexico and unique growth opportunities in chemicals and intermodal."

Technically shares peaked a few weeks ago around its 2-for-1 stock split in June. It looks like the post-split depression might be over already. UNP has been consolidating sideways and currently looks ready to move higher again.

Wait for shares of UNP to close above $101.50 and then buy calls the next morning. I'm suggesting a short-term target of $115 for the 2015 calls and a target of $124 for the 2016 calls. Currently the point & figure chart is bullish and projecting at $135 target.

FYI: UNP is scheduled to report earnings on July 24th. More conservative investors may want to wait until after the earnings report before considering new positions.

Breakout trigger: Wait for a close above $101.50
then buy calls the next morning with a stop loss at $98.40.

BUY the 2015 Jan $105 call (UNP150117C105) current ask $3.05

- or -

BUY the 2016 Jan $110 call (UNP160115c110) current ask $5.45

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

Chart of UNP:

Originally listed on the Watch List: 07/06/14


WellPoint Inc. - WLP - close: 110.16

Company Info

WellPoint is one of the nation's leading health benefits companies. We believe that our health connects us all. So we focus on being a valued health partner and delivering quality products and services that give members access to the care they need. With nearly 67 million people served by our affiliated companies including nearly 37 million enrolled in our family of health plans (source: WLP website).

Healthcare stocks have been market leaders. Both the XLV healthcare ETF and the XHS healthcare services ETF are at all-time highs. One of the factors driving this move has been Obamacare. Love it or hate it the Affordable Care Act has generated more customers for the healthcare industry. The latest data would suggest about eight million people have signed up for Obamacare. It would appear that 60% of the people that have signed up did not previously have insurance.

A lot of insurance/healthcare firms expect their participation in the Obamacare program to either be a breakeven or end up with negative margins. WLP has been forecasting their Obamacare business should see 3% to 5% margins.

WLP has also done well focusing on the Medicaid business. They are currently the largest participant in Medicaid and they believe it will continue to grow for them at a double-digit rate.

Technically shares of WLP are hitting all-time highs. Shares produced a big rally higher in May and spent most of June consolidating gains in the $105-110 zone. Now WLP is on the verge of a breakout. Thursday's intraday high was $111.01. I am suggesting we wait for WLP to close above $111.00 and then buy calls the next morning with a stop loss at $104.75. Our long-term target is the $130.00 area. Currently the Point & Figure chart is bullish and forecasting at $149.00 target.

FYI: Investors should note that WLP is due to report earnings on July 30th.

Breakout trigger: Wait for a close above $111.00
then buy calls the next morning with a stop loss at $104.75

BUY the 2015 Jan $120 call (WLP150117C120) current ask $3.15

- or -

BUY the 2016 Jan $125 call (WLP160115c125) current ask $6.65

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

Chart of WLP:

Originally listed on the Watch List: 07/06/14


Active Watch List Candidates:



V.F. Corp. - VFC - $63.37

Comments:
07/06/14: VFC is slowly drifting higher. Shares are now up three weeks in a row yet they remain below resistance at $64.00.

I would not be surprised to see VFC drift sideways until the company reports earnings on July 18th. Readers may want to avoid launching positions on the 18th and wait for the dust to settle following the earnings announcement.

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