NEW DIRECTIONAL CALL PLAYS

Deckers Outdoor Corp. - DECK - close: 91.79 change: +1.11

Stop Loss: 88.75
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 763 thousand
Entry on November -- at $---.--
Listed on November 15, 2014
Time Frame: 8 to 12 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
DECK is part of the consumer goods sector. The company owns a number of brands but for many Deckers means UGG. The iconic footwear line was started in 1978 in Southern California. Strength in the UGG line helped power the company's latest quarterly results.

According to the company website, "Deckers Brands is a global leader in designing, marketing and distributing innovative footwear, apparel and accessories developed for both everyday casual lifestyle use and high performance activities. The Company's portfolio of brands includes UGG, I HEART UGG, Teva, Sanuk, TSUBO, Ahnu, MOZO, and HOKA ONE ONE. Deckers Brands products are sold in more than 50 countries and territories through select department and specialty stores, 130 Company-owned and operated retail stores, and select online stores, including Company-owned websites. Deckers Brands has a 40-year history of building niche footwear brands into lifestyle market leaders attracting millions of loyal consumers globally."

The most recent earnings report was October 23rd. Analysts were expecting a profit of $1.03 per share on revenues of $457.2 million. DECK beat estimates with a profit of $1.17 a share. That's a +23.2% increase from the same period a year ago. Revenues soared +24.2% to a record $480.3 million. U.S. sales rose +21.1% and international sales surged +29.2%. E-commerce sales soared +45%.

It was DECK's Q2 and their gross profit rose +34% while gross margins increased 340 basis points to 46.6%. This was above estimates of 45% and above their gross margin a year ago of 43.2%. Management said all brands delivered a strong performance.

The company lowered their Q3 guidance (current quarter) to below Wall Street estimates. They also raised their Q4 and 2015 guidance on both the top and bottom line. DECK expects 2015 to see revenues up +15%, earnings up +15.8%, and gross margins around 49%. Last quarter the S&P 500 saw earnings growth of about +6.9%. DECK is clearly outgrowing the market with +23% growth. The S&P 500 is expected to see +10-11% growth in 2015.

Technically shares are poised for a breakout on both the daily chart and the point & figure chart. Looking at the point & figure chart (not shown), a breakout past $92.00 would generate a new triple-top breakout buy signal. A breakout could also spark some short covering. The most recent data listed short interest at 17% of the small 33.6 million share float.

Tonight we are suggesting a trigger to buy calls at $92.25. Such a move probably signals a run toward resistance near $100.00.

Trigger @ $92.25

- Suggested Positions -

Buy the 2015 Jan $95 call (DECK150117c95) current ask $3.50

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

Daily Chart:


Open Text Corp. - OTEX - close: 59.09 change: +0.79

Stop Loss: 57.45
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 300 thousand
Entry on November -- at $---.--
Listed on November 15, 2014
Time Frame: 8 to 12 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
OTEX is in the technology sector, specifically the application software industry. They are a Canadian company that was founded in 1991. The company considers itself a leader in the Enterprise Information Management (EIM) market. OTEX has beaten Wall Street's earnings estimates the last four quarters in a row.

The most recent report was OTEX Q1 report, announced on October 22nd. Analysts were expecting a profit of $0.86 on revenues of $461.2 million. OTEX beat the bottom line estimates with a profit of $0.97 a share. Revenues were a miss at $453.8 but that is still a +40% improvement from a year ago.

The quarter was fueled by a +260% surge in cloud services revenue. Their operating margin improved from 30.6% a year ago to 34.3%. OTEX CEO Mark J. Barrenechea said, "We delivered the strongest first quarter results in the history of OpenText, with total revenues of $453.8 million, up 40% year-over-year and non-GAAP-based operating income of $155.7 million, up 57% year-over-year, despite a toughening economy."

The stock experienced a knee-jerk reaction sell-off on this report (big drop on October 23rd) but shares have been up every week since then. Now OTEX is trading at all-time highs. Shares have spent the last few days consolidating sideways in the $58-60 zone and look poised to push higher. The point & figure chart is bullish and suggesting at $76 target.

Tonight we are suggesting a trigger to open bullish positions at $60.25.

Trigger @ $60.25

- Suggested Positions -

Buy the Dec $60 call (OTEX141220c60) current ask $1.20

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

Daily Chart:

Weekly Chart: