NEW BULLISH Plays
Super Micro Computer - SMCI - close: 33.48 change: +0.39
Stop Loss: 31.65
Target(s): To Be Determined
Current Gain/Loss: Unopened
Entry on May -- at $---.--
Listed on May 18, 2015
Time Frame: 8 to 12 weeks
Average Daily Volume = 622 thousand
New Positions: Yes, see below
Why We Like It:
Sometimes the market's expectations get too high. When a company fails to meet these rising expectations the stock can get punished.
SMCI is in the technology sector. According to the company,
"SupermicroÂ® (SMCI), the leading innovator in high-performance, high-efficiency server technology is a premier provider of advanced server Building Block SolutionsÂ® for Data Center, Cloud Computing, Enterprise IT, Hadoop/Big Data, HPC and Embedded Systems worldwide. Supermicro is committed to protecting the environment through its 'We Keep IT Green' initiative and provides customers with the most energy-efficient, environmentally-friendly solutions available on the market."
It's easy to see why investors might have big expectations for SMCI. Looking at three of their last four earnings reports SMCI has beaten Wall Street estimates on both the top and bottom line and raised guidance three quarters in a row. It was their most recent report where results seemed to stumble.
SMCI report its fiscal Q3 results on April 21st, after the closing bell. Earnings were up 25% from a year ago to $0.47 a share. Yet analysts were expecting SMCI to report earnings in the $0.49-0.50 range. Revenues were up +26% from a year ago to $471.2 million, but this also missed expectations.
Guidance was also a little soft. Traders were used to SMCI raising their guidance. This time guidance for the current quarter (their Q4) was generally below consensus estimates.
The market overreacted to the disappointment. Shares crashed from $35 to almost $28 following its earnings news. Then traders started buying SMCI in the $29-30 region a couple of weeks ago. The rebound has lifted SMCI back above technical resistance at its 200-dma and back above price resistance near $32.00.
We are betting this rebound continues. Tonight we're suggesting a trigger to open bullish positions at $33.65.
Trigger @ $33.65
- Suggested Positions -
Buy SMCI stock @ $33.65
- (or for more adventurous traders, try this option) -
Buy the JUL $35 CALL (SMCI150717C35) current ask $1.50
option price is a current quote and not a suggested entry price.
Entry disclaimer: To avoid an unfavorable entry point, we will not launch a new play if the stock gaps open more than $1.00 past our suggested entry point.
Option Format: symbol-year-month-day-call-strike