Metals On the Rebound Again

Editor's Note:

Titanium Metals - TIE - close: 12.06 change: +0.28

Why We Like It:
The metal stocks are on the rebound again. What I find interesting is that investors are buying these stocks even though European GDP growth has stalled and China is slamming on the brakes to cool down their economy. Shares of TIE did see a significant correction from their highs and investors are buying it near prior resistance, which is typically new support.

I would consider this a slightly aggressive play for two reasons. First, China probably isn't through applying the brakes to its economy. Future announcements from the country could have an impact on the steel and metals industry. Second, TIE is due to report earnings on February 25th after the market's closing bell. Wall Street expects a profit of one-cent per share. Reaction to earnings could send this stock flying either direction. I am suggesting bullish positions now. More conservative traders may want to wait until after we see the market's reaction to the earnings news.

There is some resistance near $15.00 but our long-term target is $19.75. Choose either the 2011 or 2012 LEAPS.

Company Info:

TIMET is the world's largest supplier of high quality titanium metal products. With its unique combination of strength, light weight, corrosion resistance and other metallurgical properties, titanium is used in hundreds of diverse aerospace, industrial and emerging applications where no other metal is as reliable or economical, especially on a lifecycle costing basis. As a fully-integrated titanium manufacturer and distributor, TIMET's activities span every phase of titanium research, manufacturing and sales. (source: company press release or website)

Use the 2011 or 2012 January calls (Entry point - now, at current levels)

BUY CALL JAN 2011 $15.00 strike (VWN1122A15) current ask $1.40
BUY CALL JAN 2012 $15.00 strike (WWN1221A15) current ask $2.60

Chart of TIE: