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KCI HOV

New Long Plays

Kinetic Concepts - KCI - cls: 50.64 chg: +0.92 stop: 48.89

Company Description:
Kinetic Concepts, Inc., is a global medical technology company with leadership positions in advanced wound care and therapeutic surfaces. It designs, manufactures, markets and services a wide range of proprietary products that can improve clinical outcomes while helping to reduce the overall cost of patient care. (source: company press release or website)

Why We Like It:
KCI has been relatively resistant to profit taking after peaking near $52.50 back in early February. Shares have been consolidating sideways and appear to have built a new base from which to launch a new leg higher. Shares recently tested technical support at its rising 50-dma and we're going to stick the stop loss just under that low (from last Tuesday). Technical indicators are turning bullish again. We're suggesting long positions now given Friday's bounce. More conservative traders may want to wait for a breakout past $51.20, the March 23rd high, or wait for a new relative high over $52.55. Bear in mind that our short-term target is the $54.75-55.00 range. FYI: The P&F chart is very bullish with a $99 target. We do not want to hold over the late April earnings report.

Picked on April 01 at $50.64
Change since picked: + 0.00
Earnings Date 04/24/07 (unconfirmed)
Average Daily Volume: 962 thousand
 

New Short Plays

Hovnanian - HOV - cls: 25.16 chg: -0.36 stop: 26.76

Company Description:
Hovnanian Enterprises, Inc., founded in 1959 by Kevork S. Hovnanian, Chairman, is headquartered in Red Bank, New Jersey. The Company's homes are marketed and sold under the trade names K. Hovnanian Homes, Matzel & Mumford, Forecast Homes, Parkside Homes, Brighton Homes, Parkwood Builders, Windward Homes, Cambridge Homes, Town & Country Homes, Oster Homes, First Home Builders of Florida and CraftBuilt Homes. (source: company press release or website)

Why We Like It:
The homebuilders have had a rough several weeks. The sub-prime lender implosion pulled the builders down. Negative comments about earnings and guidance from the builders themselves, like Lennar last week, have pulled them lower. Now just this past week the Federal investigation into Beazer homes (BZH) is cutting into investor confidence for the sector. Many believe that the BZH news is just the tip of the iceberg for this industry. If that's the case, and if sales continue to slow, then the group has further to fall. HOV has dropped toward significant support at the $25.00 level. We're suggesting shorts if HOV hits a new low under $24.79. Our suggested entry point will be $24.69. If triggered our target is the $20.50-20.00 range. FYI: HOV does have a very high amount of short interest at almost 35% of the 31.3 million-share float. That does raise the risk of a short squeeze should the stock suddenly move higher!

Picked on April xx at $xx.xx <-- see TRIGGER
Change since picked: + 0.00
Earnings Date 06/07/07 (unconfirmed)
Average Daily Volume: 1.9 million
 

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