New Watch List Entries

BRCD - Brocade Communications

HBI - Hanesbrands Inc.

PII - Polaris Industries Inc.


Active Watch List Candidates

CHKP - Check Point Software

FSLR - First Solar Inc.


Dropped Watch List Entries



New Watch List Candidates:


Brocade Communications - BRCD - close: 10.80

Company Info

BRCD is in the technology sector. They make products for computer networking. According to the company website, "Brocade leads the industry in providing comprehensive network solutions that help the world’s leading organizations transition smoothly to a virtualized world where applications and information reside anywhere. As a result, Brocade facilitates strategic business objectives such as consolidation, network convergence, virtualization, and cloud computing. Today, Brocade solutions are used in over 90 percent of Global 1000 data centers as well as in enterprise LANs and the largest service provider networks."

The stock is a long way from the Internet bubble days where BRCD traded near $130 a share back in 2001. When the bubble popped shares spent years trading under $10 a share. Now the stock appears to be recovering as the company builds on its earnings momentum.
BRCD has beaten Wall Street's earnings estimates four quarters in a row. This past week saw two analyst firms upgrade their price targets on BRCD thanks to improvement in revenue growth and margins.

Technically BRCD just spent the last three weeks consolidating sideways above the $10.00 level, which as prior resistance is now new support. The 2014 high is potential resistance at $11.00. Tonight I'm suggest we wait for BRCD to close above $11.00 and then buy calls the next day.

Breakout trigger: Wait for a close above $11.00
Then buy calls the next morning with a stop at $10.35

BUY the 2016 Jan $12 call (BRCD160115c12) current ask $1.28

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

Chart of BRCD:

Originally listed on the Watch List: 09/28/14


Hanesbrands Inc. - HBI - close: 108.55

Company Info

HBI is in the consumer goods sector. With almost 56,000 employees in more than 35 countries the company is growing into a global apparel giant.

According to a company press release "HanesBrands is a socially responsible leading marketer of everyday basic apparel under some of the world's strongest apparel brands in the Americas, Asia and Europe, including Hanes, Champion, Playtex, DIM, Bali, Maidenform, Flexees, JMS/Just My Size, Wonderbra, Nür Die, Lovable and Gear for Sports. The company sells T-shirts, bras, panties, shapewear, men's underwear, children's underwear, socks, hosiery, and activewear produced in the company's low-cost global supply chain."

HBI has also been making acquisitions. They recently announced the completion of its DBApparel acquisition. HBI commented on the deal saying, "the purchase of DBA is Hanes' second major acquisition in its core innerwear categories in the past year, making it one of the largest innerwear companies in the world. Maidenform, a leading seller of bras, shapewear and panties primarily in the United States under brands such as Maidenform and Flexees, was acquired Oct, 7, 2013. By contrast, DBApparel is a leading seller of bras, hosiery and underwear primarily in Europe under such strong European consumer brands as DIM, Playtex, and Wonderbra."

Shares of HBI have also been on the war path. The stock popped to new all-time highs back in April when HBI beat EPS estimates and raised their guidance. The stock soared again in June on the announcement of the DBA merger. HBI reported earnings again in July that beat estimates and management raised their guidance again.

Technically shares have been consolidating sideways the last three weeks under resistance near $110. We want to be ready to hop on board if shares breakout again. I am suggesting a trigger to buy calls if HBI trades at $110.50. This is an intraday trigger.

Breakout trigger: $110.50 (stop @ 104.95)

BUY the 2015 Jan $115 call (HBI150117c115) current ask $3.30

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

Chart of HBI:

Originally listed on the Watch List: 09/28/14


Polaris Industries Inc. - PII - close: 152.17

Company Info

PII is considered part of the consumer goods sector. They are a leader in the powersports industry. The company manufacturers all manner of off-road vehicles, motorcycles, snowmobiles, electric (low-speed) vehicles, a new three-wheeled vehicle called the slingshot, and more. Altogether the company has sales of more than $4 billion a year.

More importantly sales have been improving. The stock soared back in July when PII beat estimates on both the top and bottom line and then raised their 2014 guidance. Now after several weeks of consolidating sideways PII is breaking out to new all-time highs. The point & figure chart is bullish and suggesting a long-term target of $206.

I am suggesting we wait for PII to close above $153.50 and then buy calls the next morning.

Breakout trigger: Wait for a close above $153.50
Then buy calls the next morning with a stop at $146.00

BUY the 2016 Jan $170 call (PII160115c170) current ask $11.60

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

Chart of PII:

Originally listed on the Watch List: 09/28/14


Active Watch List Candidates:



Checkpoint Software Tech. - CHKP - close: 69.76

Comments:
09/28/14: CHKP has seen a three-week decline. Yet the pullback has been mild. If you prefer buying on a dip then this might be your entry point. We're suggesting a close above $72.50 before initiating positions.

Earlier Comments: September 14, 2014:
CHKP is another technology stock and it is similar to AKAM in that both have beaten earnings estimates every quarter this year and both are trading near 14-year highs. While AKAM facilitates Internet traffic, CHKP seeks to guard its clients against Internet hazards.

The company describes itself as, "the worldwide leader in securing the Internet, provides customers with uncompromised protection against all types of threats, reduces security complexity and lowers total cost of ownership. Check Point first pioneered the industry with FireWall-1 and its patented stateful inspection technology."

"Today, Check Point continues to develop new innovations based on the Software Blade Architecture, providing customers with flexible and simple solutions that can be fully customized to meet the exact security needs of any organization. Check Point is the only vendor to go beyond technology and define security as a business process. Check Point 3D Security uniquely combines policy, people and enforcement for greater protection of information assets and helps organizations implement a blueprint for security that aligns with business needs. Customers include tens of thousands of organizations of all sizes, including all Fortune and Global 100 companies. Check Point's award-winning ZoneAlarm solutions protect millions of consumers from hackers, spyware and identity theft."

It feels like a week doesn't go by that we don't hear about another major hacking scandal in the business world. It's not going away and corporations have to constantly update their cyber defense. CHKP has been working cyber security since 1993.

Shares of CHKP spent much of this year consolidating gains from 2013. However, the last week of August produced a crucial breakout past resistance near $70.00. Tonight I am suggesting a trigger to buy calls if CHKP can close above $72.50. We'll start with a stop at $69.45. The point & figure chart is bullish and currently forecasting an $89.00 target. We'll start with a long-term target in the $95-100 zone (our target to exit the 2015 calls will be lower).

Breakout trigger: Wait for a close above $72.50
Then buy calls the next morning with a stop at $69.45

BUY the 2015 Jan $75 call (CHKP150117C75)

- or -

BUY the 2016 Jan $80 call (CHKP160115c80)

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

Originally listed on the Watch List: 09/14/14


First Solar, Inc. - FSLR - close: 67.97

Comments:
09/28/14: FSLR saw a big drop last Monday and spent the rest of the week consolidating sideways. If we see a pullback toward the 200-dma near $62.00 we might re-evaluate our entry point. Meanwhile our suggested entry point is a close above $75.00.

Earlier Comments: September 21, 2014:
FSLR was founded in Arizona back in 1999. Since then the company has grown into a global leader for photovoltaic (PV) solar energy solutions. They have installed more than eight gigawatts (GW) of solar energy around the world.

The acceptance and application of solar energy around the world is growing. FSLR is trying to capitalize on that trend. The company recently announced they're expanding into India.

It has been a bumpy ride for FSLR investors this year with big swings up and down. That's probably thanks to the volatile nature of FSLR's earnings reports. The company has announced some pretty big hits and misses this year. In spite of all the volatility shares of FSLR are up +29.7% in 2014 and they look poised to breakout to new multi-year highs soon.

A rally past $74.00 would generate a new buy signal on the point & figure chart. It could also spark some short covering since the most recent data listed short interest at 12% of the 73.3 million share float.

I am suggesting we wait for FSLR to close above $75.00 and then buy calls the next morning with a stop loss at $69.40. Our long-term target is the $95-100 zone.

Breakout trigger: Wait for FSLR to close above $75.00
Then buy calls the next morning with a stop at $69.40

BUY the 2016 Jan $80 call (FSLR160115C80)

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

Originally listed on the Watch List: 09/21/14