New Plays, Sunday, 02/27/2005
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New Long Plays
First American - FAF - close: 36.63 chg: +0.85 stop: 35.29
First American Title Insurance Company, the largest subsidiary of The First American Corporation, traces its history to 1889. One of the largest title insurers in the nation, the company offers title services through nearly 1,500 offices and an extensive network of agents throughout the United States and abroad. The company has its headquarters in Santa Ana, Calif. (source: company press release)
Why We Like It:
FAF may be an insurance stock but it's certainly marching to the beat of its own drum. The IUX insurance index has been somewhat volatile the last few weeks with a big rally and subsequent pull back. Shares of FAF ignored most of it and continued steadily climbing higher. If you look at the daily chart you'll see that traders have been buying dips to the simple 50-dma for months. These proved to be attractive entry points before a strong surge higher in the stock price. While there is certainly no guarantee that FAF will do it again the recent bounce from the 50-dma looks like another bullish entry point. Considering the stock's relative strength over the last several months we'll take our chances. Short-term technicals like the RSI and stochastics are turning higher. We want to go long at current levels and target a move to the $39.75-40.00 range. We'll use a stop loss at $35.29 just under the Thursday low.
Picked on February 27 at $36.63
Change since picked: + 0.00
Earnings Date 02/16/05 (confirmed)
Average Daily Volume: 444 thousand
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