NEW BULLISH Plays

Micron Technology - MU - close: 33.94 change: +0.13

Stop Loss: 32.85
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Entry on October -- at $---.--
Listed on October 04, 2014
Time Frame: 8 to 12 weeks
Average Daily Volume = 25.6 million
New Positions: Yes, see below

Company Description

Why We Like It:
Micron is in the technology sector. The company makes memory chips (semiconductors). The company was founded in Boise, Idaho and incorporated back in 1978. The company website describes Micron as "a global leader in the semiconductor industry. For more than 35 years, Micron has dedicated itself to collaborating with customers and partners to engineer technology that drives innovation and transforms what’s possible."

"Micron offers the industry's broadest portfolio of silicon-to-semiconductor solutions—starting with foundational DRAM, NAND, and NOR Flash memory, and extending to SSDs, modules, MCPs, HMCs, and other semiconductor systems. This best-in-class technology powers leading-edge computing, consumer, enterprise server and storage, networking, embedded, automotive, industrial, and mobile products."

"As the only U.S.-based DRAM manufacturer, Micron leverages an expansive global footprint and proven technology leadership to make it easier for customers to try new things and gain competitive advantages in their markets."

The company has been a consistent performer on the earnings front. The last four quarterly reports in a row have seen MU beat Wall Street's estimates on both the top and bottom line. The revenue growth has been tremendous. Their most recent earnings report was September 25th.

Wall Street was expecting a profit of $0.82 a share on revenues of $4.15 billion. MU reported a profit of $0.82 cents with revenues up +48.7% to $4.23 billion.

MU's CEO Mark Durcan commented on the quarter saying, "We are pleased with the company's performance that resulted in record revenue and earnings for the year. Continued favorable market conditions and steady execution led to increases in sales volumes and another quarter of strong operating margins and earnings per share."

MU management then offered a bullish picture for the first quarter of 2014 and raised their revenue guidance thanks to strong demand for both DRAM and NAND memory.

September's earnings results sparked a wave of bullish analyst action. Several firms upgraded their price targets on MU (targets: $41, $43, $45, and $60). Many investors still consider MU cheap with a P/E of 11.8 and a forward P/E near 8.

The stock is currently testing multi-year highs near resistance in the $35.00 area. A breakout might spark a little short covering. The most recent data listed short interest at 10% of the 1.06 billion share float.

Tonight we are suggesting a trigger to open bullish positions at $35.15.

Trigger @ $35.15

- Suggested Positions -

Buy MU stock @ (trigger)

- (or for more adventurous traders, try this option) -

Buy the 2015 Jan $35 call (MU150117c35) current ask $2.37

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

Annotated Chart:

Weekly Chart:


NEW BEARISH Plays

Raven Industries - RAVN - close: 24.26 change: -0.22

Stop Loss: 26.25
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Entry on October -- at $---.--
Listed on October 04, 2014
Time Frame: 8 to 12 weeks
Average Daily Volume = 121 thousand
New Positions: Yes, see below

Company Description

Why We Like It:
RAVN is in the industrial goods sector. It's a small cap that does not get a lot of coverage on Wall Street. The company was founded in Sioux Falls, South Dakota back in 1956. Today they have three main business segments.

Their applied technology segment creates agricultural equipment to boost farm production. Their engineered film business creates high performance plastic films and sheeting. Their Aerostar business uses high-altitude balloons to make "of tethered aerostats, aerospace platforms, Vista radar systems and surveillance solutions, providing complete situational awareness for a multitude of needs." One of the company's more novel products is a line of military decoys that are essentially balloons shaped to look like tanks, jet fighters, and missiles.

Unfortunately business is struggling and the stock has plunged -41% year to date. Falling commodity prices has undermined demand for agricultural equipment. This could be a weak part of the business for the next few quarters. The Aerostar segment is also seeing revenue declines and it's not expected to improve any time soon.

RAVN is actually developing a trend of earnings misses. The company has missed Wall Street's EPS estimates three quarters in a row. They've missed the revenue estimate two of the last three quarters. RAVN management expects the current quarter to see double-digit declines in net income.

The current sell-off has created a sell signal on the point & figure chart that suggests an $18.00 target.

Tonight we are suggesting an immediate entry on Monday morning to open bearish positions. We'll try and limit risk with a stop loss at $26.25. More conservative investors may want to consider a stop closer to $25.00 instead. (NOTE: RAVN does have options but the bid/ask spreads are too wide to trade them.)

*Launch Bearish Plays on Monday Morning*

- Suggested Positions -

Short RAVN stock @ (the opening bell)

Annotated Chart: