Editor's Note

When old problems suddenly vanish, it is as if the clouds have parted and a new day has dawned. That is the case with Navistar. They finally resolved a 4 year old problem with the SEC and the future looks bright.


NEW BULLISH Plays


NAV - Navistar - Company Profile

Navistar manufactures and sells commercial and military trucks, diesel engines, school and commercial busses and provides service on these products worldwide.

For the last several years, Navistar has been under a cloud. In 2010 the company said it had developed an advanced truck engine that would meet EPA certification requirements. In 2011 the engine failed to pass the tests for EPA certification. In 2012 after making some changes to the engine they reapplied for certification. The EPA staff objected saying there were "several serious concerns" that needed to be resolved before certification. Despite the objections the company released several statements characterizing the application as a "milestone" in development and was proceeding in a timely manner. The company planned to start production on the engine in 2012. It never happened and the SEC fined the company $7.5 million last week for improper statements in 2012. The CEO making those statements was forced to step down in 2012.

Fast forward to today and all those problems are behind the company now that the SEC finally reached a determination. Navistar is producing new state of the art trucks and engines and the stock is in rebound mode.

In their recent earnings they reported a loss of 40 cents that was significantly better than the estimate for a 77 cent loss. Revenue of $1.77 billion was short of estimates for $2.05 billion. However, the company guided for $9.0 to $9.25 billion for the full year.

Earnings June 2nd.

On Thursday, shares spiked to resistance at $16.50 and then retreated in the weak market on Friday. I believe they will break through that resistance level and test the next level at $20.

With a NAV trade at $15.40

Buy NAV shares, initial stop loss $12.95.




NEW BEARISH Plays


No New Bearish Plays