Option Investor
New Plays
Printer friendly version
New Plays
Long Plays
Short Plays
GWR None

Play Editor's note: The markets reacted favorably to the GDP news and the FOMC commentary on interest rates, inflation, the housing sector, and the economy. Unfortunately, the markets have a habit of reversing their first reaction to an FOMC decision. We are cautiously adding new positions to the newsletter but traders should keep one eye on the exit door in case stocks reverse course.

New Long Plays

Genesee - GWR - close: 28.19 change: +0.45 stop: 26.49

Company Description:
GWI is a leading operator of short line and regional freight railroads in the United States, Canada, Mexico, Australia and Bolivia. GWI railroads operate in 26 US states and two Canadian provinces and serve 12 U.S. ports. GWI operates more than 5,900 miles of owned and leased track and approximately 3,700 additional miles under track access arrangements. (source: company press release or website)

Why We Like It:
The railroad industry turned in a very strong rally today. The Dow Jones railroad index soared 3.7%. Shares of GWR lagged some of its peers with a 1.6% gain but the stock produced a technical breakout past resistance near $28.00 and its simple 200-dma. We are suggesting long positions on the breakout. We'll put our stop under the recent low. We have about eight trading days before the company reports earnings and as usual we plan to exit before the report. More conservative traders might want to wait for more confirmation and use a trigger above $28.50 or above potential resistance at the October 2006 highs near $29.00. Our target is $32.00-32.50.

Picked on January 31 at $28.19
Change since picked: + 0.00
Earnings Date 02/13/07 (confirmed)
Average Daily Volume: 221 thousand


Hansen Natural - HANS - cls: 38.09 chg: +0.23 stop: 37.49

Company Description:
Hansen Natural Corporation markets and distributes Hansen's Natural Sodas, Signature Sodas, fruit juice Smoothies, Energy drinks, Energade energy sports drinks, E20 Energy Water, Sparkling Lemonades and Orangeades, multi-vitamin juice drinks in aseptic packaging, Junior Juice juice, iced teas, lemonades and juice cocktails, apple juice and juice blends, Blue Sky brand beverages, Monster Energy brand energy drinks, Lost Energy(TM) brand energy drinks, Joker Mad Energy(TM), Unbound Energy and Ace(TM) Energy brand energy drinks, Rumba(TM) brand energy juice, and Fizzit(TM) brand powdered drink mixes. (source: company press release or website)

Why We Like It:
If you look at the bigger picture shares of HANS have been trading sideways for months since the August gap down. More recently the trend has been a stair-step pattern higher. If you look at the last couple of weeks HANS has been consolidating in a narrow trading range. Volume has dried up as investors wait for the next move. We suspect the next move is higher. More aggressive traders may want to go long on a new relative high over $39.00. We see potential resistance at $40.00, which is near the top of its gap down. Therefore we're suggesting readers use a trigger to buy the stock at $40.05. Investors should know that HANS received a delisting notice from the NASDAQ a couple of weeks ago. The company was expecting it as says it is working with the NASDQ to remedy any problems. Obviously the risk here is that NASDAQ may choose to delist the stock, which would prompt plenty of larger investors to dump their shares. If we are triggered at $40.50 our target is the $44.00-45.00 range.

Picked on January xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 03/05/07 (unconfirmed)
Average Daily Volume: 3.1 million

New Short Plays

None today.

Premier Investor New Play Archives