New Watch List Entries

COH - Coach Inc.

EXPD - Expeditors Intl.


Active Watch List Candidates

AKAM - Akamai Technologies

AMBA - Ambarella Inc.

EWG iShares Germany ETF

SWKS - Skyworks Solutions

WBA - Walgreens Boots Alliance



New Watch List Candidates:

Coach, Inc. - COH - close: $41.24

Company Info

COH has experienced a rough couple of years. Shares were trading near $80 back in 2012 and they bottomed out in the $33-34 region last year. The big drop was thanks to multiple factors. Investors expectations were pretty high after years of incredible growth. Then COH started to struggle. They had luxury items had started to lose their appeal. Suddenly everyone had a Coach bag so it was no longer a coveted item. Today the company is trying to turn things around.

The company is still suffering from lost market share and falling sales. Their comparable store sales are terrible. Yet after months of bearish reports it looks like all the bad news might be factored in. Wall Street analysts are starting to upgrade the stock because they see the Coach brand finally stabilizing.

Technically shares just started to bounce from support near $40.00. I am suggesting we launch small bullish positions if COH can close above $42.00. However, please note that I consider this a more aggressive, higher-risk trade. We'll try and keep a relatively tight stop loss on this trade.

Breakout trigger: Wait for a close above $42.00
Then buy calls the next day with a stop at $39.65.

BUY the 2016 Jan $45 call (COH160115C45) current ask $2.55

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

Chart of COH:

Originally listed on the Watch List: 03/15/15


Expeditors Intl. - EXPD - close: 48.04

Company Info

EXPD is showing relative strength. The stock is up +8% in 2015 versus an S&P 500 that is virtually flat (-0.3%). Meanwhile the Dow Jones Transportation Average is down -2%.

EXPD is part of the services sector. According to the company, "Expeditors is a global logistics company headquartered in Seattle, Washington. The company employs trained professionals in 186 full-service offices and numerous satellite locations located on six continents linked into a seamless worldwide network through an integrated information management system. Services include the consolidation or forwarding of air and ocean freight, customs brokerage, vendor consolidation, cargo insurance, domestic time-definite transportation services, purchase order management, warehousing and distribution and customized logistics solutions."

The first half of 2014 was forgettable. EXPD delivered mediocre results with earnings a penny above or below estimates and revenues in-line with expectations. Business improved in the second half of last year. EXPD beat earnings estimates by four cents in the third quarter and by two cents in the fourth quarter. Revenues were up almost +11% in Q3 2014 and up +8.8% in the fourth quarter. Both were above Wall Street estimates.

Bradley Powell, Senior Vice President and CFO commented on the fourth quarter, "During the 2014 fourth quarter we saw strong year-over-year increases in both air and ocean freight volumes. Despite the 10 basis point reduction in overall net revenue margin, airfreight and ocean freight net revenues both managed double digit increases, up 10% and 11%, respectively, as overall net revenue increased 9%."

EXPD has been relatively resistant to any profit taking during the market's decline in March. I'm partially tempted to buy calls here at current levels. However, I'm not convinced the market sell-off is over. Therefore I'd rather use the market's weakness to our advantage. Broken resistance near $46.00 should be support for EXPD. We'll list a buy-the-dip entry point at $46.25 with a stop loss at $43.75.

Buy-the-dip: Buy calls if EXPD dips to $46.25

BUY the 2016 Jan $50 call (EXPD160115C50) current ask $2.85

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

Chart of EXPD:

Originally listed on the Watch List: 03/15/15


Active Watch List Candidates:



Akamai Technology - AKAM - close: 70.81

Comments:
03/15/15: The S&P 500 just produced its third weekly decline in a row so I'm not giving up on a buy-the-dip entry for AKAM yet. However, investors might want to consider a close above $72.00 as an alternative entry point to launch bullish positions (we would need to adjust our option strike and stop loss).

Earlier Comments: March 8, 2015:
If you surf the Internet then you're probably seeing content delivered by AKAM's technology. They help customers speed up online content and have a fast-growing security business.

The company is part of the technology sector. They provide cloud services for delivering content across the Internet. Customers include 47% of the Global 500 companies.

AKAM describes itself as "the global leader in Content Delivery Network (CDN) services, Akamai makes the Internet fast, reliable and secure for its customers. The company's advanced web performance, mobile performance, cloud security and media delivery solutions are revolutionizing how businesses optimize consumer, enterprise and entertainment experiences for any device, anywhere."

Last year was a strong one for earnings and revenue growth. AKAM beat Wall Street estimates on both the top and bottom line the past four quarters in a row. They raised guidance twice. AKAM's average revenue growth last year was +24.5%. Their most recent report was on February 10th where AKAM delivered a profit and revenue number above expectations. Several analyst firms raised their price target on AKAM following its Q4 results.

Management hosted an investor day in late February. They expect sales growth to be in the high teens for 2015. They forecasting sales to hit $5 billion by 2020 compared to about $2 billion in 2014. AKAM reported that their cyber security business is surging with +191% growth last year.

This week AKAM disclosed in their 10-K filing that they were conducting an internal probe into their sales practices in a foreign country. They didn't say which country. This is a potential risk if the U.S. government decides to do their own investigation but the stock didn't really react that much to the news.

It is worth noting that there has been some speculation that AKAM is a buyout target. One analyst suggested that Amazon.com (AMZN) could be a suitor.

After a big rally in February the upward momentum in AKAM has stalled. Shares look like they could see a correction lower. If that occurs then prior resistance near $65.00 should be significant support. We want to be ready to take advantage of the weakness.

Tonight I'm suggesting a buy-the-dip trigger to buy calls if AKAM dips to $65.25. We'll start this trade with a stop at $59.75.

Buy-the-dip trigger @ $65.25
Start with a stop at $59.75

BUY the 2016 Jan $75 call (AKAM160115C75)

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

Originally listed on the Watch List: 03/08/15


Ambarella, Inc. AMBA - close: 68.44

Comments:
03/15/15: We were expecting traders to buy the dip but we wanted to see a dip near $60.00 first. AMBA did not show any weakness with shares up four out of the last five days and now up four weeks in a row.

We didn't want to chase it last week and still don't want to chase it now. Let's give it another week and we'll re-evaluate our entry point strategy.

Earlier Comments: March 8, 2015:
2014 was a great year for AMBA with significant sales growth. The company is part of the technology sector. They're probably best known for making the low-power, HD video and image processing semiconductors that go inside GoPro's (GPRO) action cameras.

According to the company, "Ambarella, Inc. (AMBA), is a leading developer of low-power, high-definition (HD) and Ultra HD video compression and image processing solutions. The company's products are used in a variety of professional and consumer applications including security IP-cameras, sports cameras, wearable cameras, flying cameras and automotive video processing solutions. Ambarella compression chips are also used in broadcasting TV programs worldwide."

Looking at the last four quarters for AMBA the company beat Wall Street's earnings estimates on both the top and bottom line. They guided higher the last three quarters in a row. 2014 Q2 revenues were up +24.7%. Q3 revenues grew +42.8%. Their most recent earnings report was March 3rd. AMBA announced their Q4 2014 revenues soared +61.8% to $64.7 million, above estimates for $59.3 million. Their Q4 earnings surged +161% to $0.68 a share. That's 19 cents above expectations. Q4 gross margins were 64.3% versus 64.1% a year ago.

AMBA's CEO Fermi Wang commented on their results saying, "Our strong fourth quarter and fiscal year results reflect the steady expansion of our product offerings and customer growth across our core markets, as well as early growth in new markets. During the fourth quarter we had strong year-over-year growth in our wearable, IP Security and automotive aftermarket revenues."

AMBA expects a lot more growth and opportunity in the body-worn security cameras (think police officers), consumer home security cameras, intelligent cameras for the automobile market, as well as cameras for drone. The company guided Q1 revenues in the $64-68 million range versus analysts' estimates of $59 million. They're growth to remain above 50%. Multiple analysts raised their price target on AMBA's stock after these strong Q4 results.

The stock soared to new record highs thanks in part to short covering. The most recent data listed short interest at 37% of the small 29 million share float. The point & figure chart is bullish and forecasting a long-term target of $107.00. AMBA's growth should continue. They don't just provide video chips to GoPro but they're also selling them to GoPro rivals like Xiaomi.

We don't want to launch positions yet. The stock looks short-term overbought and the market's weakness could be used to our advantage. Tonight I am suggesting a buy-the-dip entry point at $60.00. We'll start this trade with a stop loss at $54.00. More conservative traders could cross their fingers and hope for a dip close to $58-59 as an entry point instead of $60.

Buy-the-dip trigger @ $60.00
Start with a stop at $54.00

BUY the 2016 Jan $75 call (AMBA160115C75)

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

Originally listed on the Watch List: 03/08/15


iShares MSCI Germany - EWG - close: 29.19

Comments:
03/15/15: Hmm... I'm losing a little enthusiasm for the EWG. The German DAX stock market index hit new all-time highs last week. Yet the EWG struggled to post a gain. Granted the EWG does not track the DAX index but I expected better performance from this ETF.

One issue that could be hurting the EWG is the currency difference between the U.S. dollar and the European euro. One way to account for that would be using a currency-hedged ETF, and there are several of them. Check out charts on HEWG, DBGR, and DXGE. These are currency-hedged ETFs and they're soaring. Unfortunately they have really low volume and do not have options available to trade. If these interest you, do your homework!

I'm not giving up on the EWG just yet.

Earlier Comments: February 22, 2015:
The EWG is an exchange traded fund (ETF) that mimics the MSCI Germany index. This includes small, mid, and large-cap companies.

The U.S. market has enjoyed several years worth of QE programs that helped fuel market gains. Now that the U.S. QE program is over Europe is about to start on their own QE program. The European Central Bank (ECB) will start its quantitative program in March this year. The central bank will purchase about €60 billion a month through September 2016 but they've already announced that they will extend this deadline if they need to.

This is significant. After years of promising to do something about the Eurozone economy and fight the threat of deflation the ECB is finally acting. They might be too late to fend off deflation but investors seem to have hope that Europe can turn things around.

Germany should be a prime beneficiary of this program. The ECB's QE will continue to pressure the euro lower and that makes Germany's exports more competitive. Investors are have already starting betting on an improvement in the Germany market with a significant bounce in the EWG.

Today the EWG has broken through technical resistance at its simple 200-dma. Now it's about to challenge resistance near the $30.00 mark. Tonight I am suggesting investors wait for the EWG to close above $30.00 and then buy calls the next morning with a stop loss at $26.85.

FYI: If you want a broader European ETF I did consider the VGK but about half of its holdings are British and Swiss companies and may not see the same benefit from a weaker euro.

Breakout trigger: Wait for EWG to close above $30.00
Then buy calls the next morning with a stop at $26.85 .

BUY the 2016 Jan $30 call (EWG160115c30)

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

Originally listed on the Watch List: 02/22/15


Skyworks Solutions - SWKS - close: 92.92

Comments:
03/15/15: SWKS continues to show relative strength and just posted its fifth weekly gain in a row. We didn't want to chase it last week so we don't want to chase it now. Wait for a pullback. Currently our suggested entry point is $85.00.

Earlier Comments: March 1, 2015:
SWKS is in the semiconductor industry. They're probably best known for being a supplier to Apple Inc. (AAPL).

According to the company, "Skyworks Solutions, Inc. is empowering the wireless networking revolution, connecting virtually everyone and everything, all the time. Our highly innovative analog semiconductors are linking people, places, and things spanning a number of new and previously unimagined applications within automotive, broadband, cellular infrastructure, the connected home, industrial, medical, military, smartphone, tablet and wearable markets."

The stock has been soaring from its 2013 lows. That's because business is booming. SWKS has beaten Wall Street's earnings estimates and raised guidance for the last four earnings reports in a row. Their sales growth is accelerating with sales up +13.1%, 34.6%, 50%, and 59.4% over the last four quarters (results are year over year).

SWKS' most recent report was January 22nd. Earnings were $1.26 a share on revenues of $805.5 million. Management guided higher and expects Q2 results of $1.12 a share on revenues of $750 million. That's versus Wall Street estimates of $1.04 and revenues of $707 million.

Today shares of SWKS are at all-time highs. We don't want to chase it. I suspect the market could see a pullback soon. We want to be ready to take advantage of any pullback. Tonight I am suggesting a buy-the-dip trigger to buy calls at $83.00. We'll try and limit our risk with a stop loss at $79.00.

NOTE: I would start with small positions. SWKS could be volatile after such strong gains.

Buy-the-dip trigger @ $85.00, use a stop at $79.00

BUY the 2016 Jan $100 call (SWKS160115c100)

03/08/15 adjust the trigger from $83.00 to $85.00
03/08/15 adjust the option strike from the 2016 $90 to the January $100 calls
Option Format: symbol-year-month-day-call-strike

Originally listed on the Watch List: 03/01/15


Walgreens Boots Alliance - WBA - close: $83.72

Comments:
03/15/15: On Friday it was announced that WBA is being added to the NASDAQ-100 index on March 23rd. That should be bullish for the stock. There is a lot of money that tracks the NASDAQ-100 so funds will be forced to buy WBA.

WBA ended the week at new highs. More aggressive traders may want to consider buying calls if WBA can close above $84.50 or $85.00. Tonight I am not giving up on a buy-the-dip entry point at $80.00 (yet).

Earlier Comments: March 1, 2015:
Drug store stocks have been healthy this year. Both CVS and WBA are trading near all-time highs. WBA is now an international competitor after completing its merger with Boots.

According to a company press release, "Walgreens Boots Alliance (WBA) is the first global pharmacy-led, health and wellbeing enterprise in the world.

The company was created through the combination of Walgreens and Alliance Boots in December 2014, bringing together two leading companies with iconic brands, complementary geographic footprints, shared values and a heritage of trusted health care services through pharmaceutical wholesaling and community pharmacy care, dating back more than 100 years.

The company employs over 370,000 people and has a presence in more than 25 countries; it is the largest retail pharmacy, health and daily living destination in the USA and Europe. Including its equity method investments, Walgreens Boots Alliance is the global leader in pharmacy-led, health and wellbeing retail with over 12,800 stores in 11 countries. The company includes the largest global pharmaceutical wholesale and distribution network with over 340 distribution centers delivering to more than 180,000† pharmacies, doctors, health centers and hospitals each year in 19 countries. In addition, Walgreens Boots Alliance is the world's largest purchaser of prescription drugs and many other health and wellbeing products.

Its portfolio of retail and business brands includes Walgreens, Duane Reade, Boots and Alliance Healthcare, as well as increasingly global health and beauty product brands, such as No7 and Botanics. More company information is available at www.walgreensbootsalliance.com."

This stock has been showing significant relative strength. Their last earnings report was back in December and they beat analysts' estimates on both the top and bottom line. That was before Walgreens had finished its merger. Expectations are building for margins to improve thanks to synergies between the two companies. In the prior quarter synergies were about $140 million. The company is estimating synergies could reach $650 million in fiscal 2015.

The trend is obviously bullish. The point & figure chart is forecasting at $95.00 target. You could argue that WBA is a buy right now with last week's breakout past resistance near $80.00. However, instead of chasing new highs I am suggesting a buy-the-dip trigger to buy calls at $80.00. More conservative traders could aim lower and hope for a dip near $78 or $79 instead.

Buy-the-dip trigger @ $80.00, use a stop at $74.75

BUY the 2016 Jan $90 call (WBA160115c90)

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

Originally listed on the Watch List: 02/22/15