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BLDR GMXR
   

New Long Plays

Builders FirstSource - BLDR - close: 21.37 chg: +0.60 stop: 20.25

Company Description:
Headquartered in Dallas, Texas, Builders FirstSource is a leading supplier and manufacturer of structural and related building products for residential new construction. The company operates in 11 states principally in the southern and eastern United States and has 62 distribution centers and 50 manufacturing facilities, many of which are located on the same premises as our distribution facilities. Manufacturing facilities include plants that manufacture roof and floor trusses, wall panels, stairs, aluminum and vinyl windows, custom millwork and pre-hung doors. Builders FirstSource also distributes windows, interior and exterior doors, dimensional lumber and lumber sheet goods, millwork and other building products. (source: company press release or website)

Why We Like It:
BLDR is one of the few (if any) home improvement retailers that closed higher on Friday. The stock dipped to its 100-dma and then marched higher throughout the rest of the session. We suspect that Friday's bounce may herald the end of its two-week consolidation of its mid-December rally. Short-term technical oscillators like the RSI and stochastics are bullish. Plus, the P&F chart is bullish with a $25.00 target. The company is based in Dallas and is probably a big beneficiary of the post-Katrina rebuilding process taking place along the gulf coast. The company blew away estimates at their last earnings report back in October. We are going to suggest a trigger to go long at $21.75. If triggered we will target a rally into the $23.50-24.00 range by its January earnings report. We do not want to hold over the earnings report even if we think it will be positive. There is some resistance around $22.45 so more conservative traders may want to adjust their strategy.

Picked on January xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 01/26/06 (unconfirmed)
Average Daily Volume: 205 thousand

New Short Plays

GMX Resources - GMXR - close: 36.00 chg: -1.42 stop: 38.51

Company Description:
GMX RESOURCES INC. is an independent natural gas producer, headquartered in Oklahoma City, Oklahoma. GMXR has interests in 86 gross/51.98 net producing wells and 25,831 gross acres with 13,936 net acres (3Q05) in Texas, Louisiana & New Mexico. GMXR also has a large inventory of development prospects in North Carthage Field of East Texas as follows: YE05 internally projected Cotton Valley Sand (CVS) proved undeveloped wells 229 gross/ 138 net and 282 gross/ 164 net CVS probable locations on 40 acre density. The Company's strategy is to develop its resource play with multiple rigs, which should significantly increase production, grow its natural gas reserves and continue to build shareholder value. (source: company press release or website)

Why We Like It:
GMXR has weathered the volatility in the natural gas markets pretty well over the last few weeks. The stock has pretty much ignored the ups and downs in the natural gas futures during the month of December in favor of its own non-stop climb higher. The stock peaked on December 28th on some positive analyst comments and then promptly reversed course. The Wednesday-Thursday pattern is a two-day bearish reversal pattern. Friday did see a bounce from the 21-dma near the $35 level and the bounce may not be over yet. However, we suspect that GMXR can consolidate back down to its 50-dma. The biggest risk here is a short squeeze. The latest data puts short interest at 12.8% of its 9.95 million shares outstanding. We are going to suggest shorts here with a stop loss at $38.51. More conservative traders may want to wait for a new decline under $35.00 before initiating positions. Our target will be the $30.50-30.00 range. We do not want to hold over the late January earnings report.

Picked on January 01 at $36.00
Change since picked: + 0.00
Earnings Date 01/29/06 (unconfirmed)
Average Daily Volume: 256 thousand

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Starbucks - SBUX - close: 30.01 change: -0.50 stop: 31.01

Company Description:
Starbucks Corporation is the leading retailer, roaster and brand of specialty coffee in the world, with more than 10,000 retail locations in North America, Latin America, Europe, the Middle East and the Pacific Rim. The Company is committed to offering the highest quality coffee and the Starbucks Experience while conducting its business in ways that produce social, environmental and economic benefits for communities in which it does business. In addition to its retail operations, the Company produces and sells bottled Frappuccino coffee drinks, Starbucks DoubleShot coffee drink, and a line of superpremium ice creams through its joint venture partnerships. The Company's brand portfolio provides a wide variety of consumer products -- innovative superpremium Tazo teas and exceptional compact discs from Starbucks Hear Music enhance the Starbucks Experience through best-of-class products. The Seattle's Best Coffee and Torrefazione Italia Coffee brands enable Starbucks to appeal to a broader consumer base by offering an alternative variety of coffee flavor profiles. (source: company press release or website)

Why We Like It:
The king of coffee joints has seen its upward momentum in its stock price stall and reverse course. The September to December (really November) rally struggled to get past the $32.00 level. Now shares have broken down below the 50-dma and are on the verge of sinking below the $30.00 mark. Technicals are naturally turning bearish. We are going to suggest a trigger at $29.90, which is under Friday's low of 29.94. If triggered we will target a decline into the $28.05-27.55 range near the 100-dma (27.56). We do not want to hold over the January earnings report.

Picked on January xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 01/25/06 (unconfirmed)
Average Daily Volume: 5.6 million

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