In addition to tonight's new candidate(s), consider these stocks as possible trading ideas and watch list candidates. Some of these stocks may need to see a break past key support or resistance:
(bullish ideas) AAP, PANW, TAP
NEW DIRECTIONAL CALL PLAYS
Ambarella, Inc. - AMBA - close: 43.78 change: +1.99
Stop Loss: $40.45
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 2.4 million
Entry on October -- at $---.--
Listed on October 08, 2014
Time Frame: 8 to 12 weeks
New Positions: Yes, see below
Why We Like It:
AMBA is in the technology sector. They're considered part of the semiconductor and semiconductor equipment makers. The company was founded in 2004 and went public in October 2012 at $6.00 a share. That price was significantly below where AMBA was expected to price in the $9-11 range.
The company has grown from making broadcast-class encoders to making consumer and sports cameras, security cameras, and now automotive cameras. Their high-definition chips are being integrated into security IP cameras and wearable cameras.
AMBA is also capturing part of a new market - cameras on consumer-level remote control drones.
The last two plus years have seen a strong performance in AMBA with the stock up +633% from its IPO price. AMBA has GoPro, Inc. (GPRO) to thank for part of that rally. GPRO came to market in June this year and the stock has been in rally mode since mid August with a rally in GPRO from less than $40 to $90 a share. AMBA happens to make the HD camera sensors in many of GPRO's products. As GPRO rallies it could be giving AMBA a boost and GPRO expects record sales this holiday season.
It's also worth noting that AMBA's rally has been helped by consistent earnings growth. The company has beat Wall Street's estimates on both the top and bottom line for the last four quarters in a row. Their most recent earnings report in September saw AMBA's management raise their revenue guidance.
Shorts are getting killed. As the rally continues AMBA could see more short covering. The most recent data listed short interest at 21.7% of the small 28.0 million share float.
We think the bullish momentum continues. Tonight we're suggesting a trigger to buy calls at $44.65.
Trigger @ $44.65
- Suggested Positions -
Buy the NOV $46 call (AMBA141122C46) current ask $2.60
Option Format: symbol-year-month-day-call-strike