NEW BULLISH Plays
Intrexon Corp. - XON - close: 26.53 change: +0.71
Stop Loss: 24.85
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Entry on December -- at $---.--
Listed on November 29, 2014
Time Frame: 8 to 12 weeks
Average Daily Volume = 506 thousand
New Positions: Yes, see below
Why We Like It:
XON is considered part of the healthcare sector. They have an interesting attitude toward the application of biotechnology. Here's a bit from the company's website:
"Intrexon Corporation, founded in 1998, is a leader in synthetic biology focused on collaborating with companies in Health, Food, Energy, Environment and Consumer sectors to create biologically based products that improve quality of life and the health of the planet. At present rates of global industrialization and population growth, food and energy supplies and environmental and healthcare resources are becoming scarcer. We believe Intrexonâ€™s leading Better DNAÂ® approach to synthetic biology has the potential to provide new, more effective and sustainable solutions to address these challenges.
With a suite of proprietary and complementary technologies, Intrexon applies engineering to biological systems to enable DNA-based control over the function and output of living cells. Working with key collaborators, Intrexon seeks to develop high value applications that can bring better medicines to more people, alleviate shortages of essential nutrients, develop renewable fuels and other resources, and protect the environment."
The health division is working on new therapies for both humans and animals. The food division is trying to develop new science to boost crop yields. Their energy research hopes to find a biological approach toward greener energy. The company also plans to develop technology to help our environment and provide new solutions for consumers.
As is typical with most biotech companies their earnings are very lumpy. One quarter might see strong earnings results and the next they could be down sharply. XON is no different with hits and misses in its bottom line results. The good news is that the company is seeing revenue growth. In May 2014 XON reported revenues of $7.9 million, up +102% from a year ago. Their report in August saw revenues up +76% to $11.8 million. Their latest report in November XON said revenues grew +253% to $21.2 million.
The current rally in XON has powered shares from $16 toward resistance in the $26-27 area. A breakout here could spark a big short squeeze. The most recent data listed short interest at 73% of the float (12.1 million shares short versus a float of 16.5 million).
Tonight I am suggesting a trigger to open small bullish positions at $26.75 with an initial stop loss at $24.85. More conservative investors may want to wait for XON to rally past last week's high of $27.22 before initiating positions. We want to keep our position size small to limit risk since biotechs can be very volatile.
Trigger @ $26.75 *small positions, more aggressive trade*
- Suggested Positions -
Buy XON stock @ $26.75
- (or for more adventurous traders, try this option) -
Buy the 2015 Jan $30 call (XON150117C30) current ask $1.50
Option Format: symbol-year-month-day-call-strike