New Watch List Entries

BCR - C.R.Bard Inc

DECK - Deckers Outdoor Corp.


Active Watch List Candidates

NEM - Newmont Mining

WAG - Walgreen Co


Dropped Watch List Entries

IP has been removed.



New Watch List Candidates:


C. R. Bard Inc. - BCR - close: 149.48

Company Info

C.R. Bard (a.k.a. BARD) is "a leading multinational developer, manufacturer, and marketer of innovative, life-enhancing medical technologies in the product fields of vascular, urology, oncology, and surgical specialty. BARD markets its products and services worldwide to hospitals, individual health care professionals, extended care facilities, and alternate site facilities. BARD pioneered the development of single-patient-use medical products for hospital procedures; today BARD is dedicated to pursuing technological innovations that offer superior clinical benefits while helping to reduce overall costs (source: company website)."

Thus far 2014 has been a bit of a roller coaster ride for BCR investors. That is a bit surprising considering that BCR has significantly beaten Wall Street's earnings estimates two quarters in a row. The company saw its Q2 revenues rise +8.8% to $827 million. BCR's Q2 profit soared +29.6% to $2.06 a share. Management then raised guidance and the stock broke out past major resistance near $150.00.

The broader market's recent weakness has pulled BCR back toward the $150 area, which should be support. If the stock bounces we want to be ready to hop on board.

Wait for a close above $152.00 and then buy calls the next morning with a stop loss at $146.95. I am not setting an exit target tonight but I'll note that the point & figure chart is bullish and forecasting at long-term target of $194.

Breakout trigger: Wait for a close above $152.00
Then buy calls the next day with a stop at $146.95.

BUY the 2015 Jan $160 call (BCR150117C160) current ask $5.20

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

Chart of BCR:

Weekly Chart of BCR:

Originally listed on the Watch List: 08/03/14


Deckers Outdoor Corp. - DECK - close: 88.74

Company Info

The 40-year old Deckers Corp. is headquartered in California. The company considers itself "a global leader in designing, marketing and distributing innovative footwear, apparel and accessories developed for both everyday casual lifestyle use and high performance activities. The Company's portfolio of brands includes UGG®, Teva®, Sanuk®, TSUBO®, Ahnu®, MOZO®, and HOKA ONE ONE®. Deckers Outdoor products are sold in more than 50 countries and territories through select department and specialty stores, 126 Company-owned and operated retail stores, and select online stores, including Company-owned websites."

DECK might also be an exception to the struggling retail space this year. The company just reported its 2015 fiscal year first quarter on July 24th. Spring happens to be the worst season for DECK's sales but they still turned in a strong report. Wall Street was expecting a loss of $1.29 a share. DECK reported a loss of $1.07. Revenues soared +24.3% from a year ago to $2.11.5 million, significantly above expectations. Their Q1 gross margins were 41.% Management raised their 2015 guidance and expect gross margins to rise to 49%. DECK is still planning on adding 30 to 35 new stores this year. Management is also forecasting +18% sales growth for the year. Altogether it was a bullish report and shares soared to new multi-year highs and almost tagged $95 a share.

The post-earnings profit taking is normal. Prior resistance in the $87.50-90.00 zone should be support. Seeing DECK rebound from its 10-dma on Friday is encouraging if you're bullish. If you're bearish, well, it could be a painful year. The long-term trend is bullish with a strong pattern of higher lows. The most recent data listed short interest at 19% of the small 33.4 million share float. If the up trend continues it could pressure more shorts to cover.

I am cautious on the broader market so we want to be patient with our entry point on DECK. I am suggesting we wait for DECK to close above $91.25 and then buy calls the next morning with a stop loss at $86.90. I'm suggesting a target in the $110-115 zone.

If the market continues to sink then we'll see if DECK will retest its long-term trend of higher lows and re-evaluate our entry point.

Breakout trigger: Wait for a close above $91.25
Then buy calls the next day with a stop at $86.90.

BUY the 2015 Jan $100 call (DECK150117C100) current ask $4.10

- or -

BUY the 2016 Jan $100 call (DECK160115C100) current ask $12.40

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

Chart of DECK:

Weekly chart of DECK:

Originally listed on the Watch List: 08/03/14


Active Watch List Candidates:



International Paper Co. - IP - close: 47.45

Comments:
08/03/14: IP has produced two very volatile weeks in a row. Last week shares plunged back toward technical support at its 200-dma. We are removing IP as a watch list candidate. It seems unlikely that shares will meet our entry point requirement any time soon.

Trade did not open.

08/03/14 removed from the newsletter, suggested trigger (a close above $52.00) was not met
07/27/14 adjust trigger to a close above $52.00 (instead of above 51.00)

Originally listed on the Watch List: 07/13/14


Newmont Mining Corp. - NEM - close: 25.20

Comments:
08/03/14: Gold retreated last week but NEM did not see the same decline. Shares of NEM actually managed a fractional gain. We'd be better off to say NEM was unchanged on the week.

NEM's earnings results on July 29th were slightly ahead of expectations but not dramatic enough to move the stock either direction. I do not see any changes from my prior comments. We want to wait for NEM to close above $26.75 before launching positions.

Earlier Comments: July 13, 2014:
According to the company website, Newmont Mining Corporation is primarily a gold producer, with significant assets or operations in the United States, Australia, Peru, Indonesia, Ghana, New Zealand and Mexico. Founded in 1921 and publicly traded since 1925, Newmont is one of the world's largest gold producers and is the only gold company included in the S&P 500 Index and Fortune 500. Headquartered near Denver, Colorado, the company has around 32,000 employees and contractors worldwide.

NEM also produces copper and silver but they are the second biggest gold producer on the planet by production. The biggest gold producer is Barrick Gold Corp. (ABX) and NEM almost merged with ABX in April this year but discussions fell apart. NEM investors either want the company to resume talks with ABX or break itself up to unlock shareholder value. That seems unlikely but JPMorgan believes the deal talks with ABX may not be dead.

I like NEM more for the technical set up on the charts. It's true that gold has been in rally mode, currently up six weeks in a row and up +10% for the year. Yet the gold miners have been outperforming and the GDX gold miner index is up +29% this year. NEM is only up +12.5% this year but it could play catch up if shares break out from its base.

The stock has been building a base in the $21-26 zone for months. I am suggesting we wait for NEM to close above $26.75 and then buy calls the next morning with a stop loss at $23.75. I would consider this a more aggressive, higher-risk trade because gold and the gold miners can be a volatile group. You may want to limit your position size to reduce your risk.

Breakout trigger: Wait for a close above $26.75
then buy calls the next morning with a stop at $23.75.

BUY the 2015 Jan $30 call (NEM150117c30)

- or -

BUY the 2016 Jan $30 call (NEM160115c30)

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

Originally listed on the Watch List: 07/13/14


Walgreen Co - WAG - close: 70.53

Comments:
08/03/14: The stock market's widespread decline last week weighed heavily on WAG. Shares fell from $73 on Monday to an intraday low of $68 on Friday. However, it's worth noting that Friday's session is technically a bullish reversal pattern.

I am suggesting we be patient and stick to the plan. Wait for a close above $74.00.

Earlier Comments: July 27, 2014:
According to WAG's press release the company describes itself, "As the nation's largest drugstore chain with fiscal 2013 sales of $72 billion, Walgreens (www.walgreens.com) vision is to be the first choice in health and daily living for everyone in America, and beyond.

Each day, in communities across America, more than 8 million customers interact with Walgreens using the most convenient, multichannel access to consumer goods and services and trusted, cost-effective pharmacy, health and wellness services and advice. Walgreens scope of pharmacy services includes retail, specialty, infusion, medical facility and mail service, along with online and mobile services. These services improve health outcomes and lower costs for payers including employers, managed care organizations, health systems, pharmacy benefit managers and the public sector.

The company operates 8,215 drugstores in all 50 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands. Walgreens digital business includes Walgreens.com, drugstore.com, Beauty.com, SkinStore.com and VisionDirect.com. Take Care Health Systems is a Walgreens subsidiary that manages more than 400 in-store convenient care clinics throughout the country."

While most of the retail industry seems to be struggling with slowing consumer sales this year, it's a different story for WAG. The company just reported a great month in June. Revenues surged +8.9% to $6.3 billion. That's up from $5.8 billion in June 2013. Granted WAG does have a few more stores today (about 117 more stores) the real key was same-store sales. WAG calls them comparable store sales and June's were +7.5%. That is impressive.

WAG is also building its Balance Rewards Program, which ended the last quarter with 81 million members. The company hopes to develop a strong, consistent customer base that continues to visit their locations on a regular basis.

Lately WAG has been in the news regarding its Alliance Boots merger. WAG spent $6.5 billion back in 2012 to buy a 45% stake in Alliance Boots, which is an international drug wholesaler and retailer. WAG has an option in 2015 to buy the rest of the company for $9.5 billion. If they acquire 100% of Boots then WAG could choose to do an "inversion", which is a hot topic right now.

There is a lot of confusion about just how an inversion works. Essentially WAG could move its corporate headquarters out of the U.S. and by doing so lower its tax bill. Barclays estimated that WAG could save $783 million in the first year of an inversion. Another analysts estimated WAG could save $4 billion in the first five years after an inversion. WAG is getting a lot of pressure to not do it. At the same time WAG's board has a responsibility to its shareholders and an inversion is currently legal.

Whether WAG does an inversion or not the company seems to be running on all cylinders. The stock is in a long-term up trend and appears to be finishing a four-week consolidation.

Tonight I'm suggesting we wait for WAG to close above $74.00 a share and then buy calls the next morning with a stop loss at $69.40. Our long-term target is the $90-100 zone. Currently the Point & Figure chart is bullish with a $103 target.

Breakout trigger: Wait for a close above $74.00
then buy calls the next morning with a stop at $69.40

BUY the 2015 Jan $80 call (WAG150117C80)

- or -

BUY the 2016 Jan $80 call (WAG160115C80)

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

Originally listed on the Watch List: 07/27/14