- New Trades -
Hanesbrands Inc. - HBI - close: 111.16
HBI is one of last week's new watch list candidates. Normally we have been using an entry point requirement for our candidates to close above a certain price. HBI was different. We listed an intraday trigger to buy calls at $110.50. Shares hit that entry on Friday morning thanks to a new "outperform" rating and a $125 price target by Credit Suisse. HBI soared +2.8% and broke out from its $105-110 trading range.
We are adding HBI to the new play list in case you missed the entry point. We would still consider new positions now at current levels.
Keep in mind this is a shorter-term trade. We're using the 2015 January calls, which only have about three and a half months left.
Earlier Comments: September 27, 2014:
HBI is in the consumer goods sector. With almost 56,000 employees in more than 35 countries the company is growing into a global apparel giant.
According to a company press release "HanesBrands is a socially responsible leading marketer of everyday basic apparel under some of the world's strongest apparel brands in the Americas, Asia and Europe, including Hanes, Champion, Playtex, DIM, Bali, Maidenform, Flexees, JMS/Just My Size, Wonderbra, NÃ¼r Die, Lovable and Gear for Sports. The company sells T-shirts, bras, panties, shapewear, men's underwear, children's underwear, socks, hosiery, and activewear produced in the company's low-cost global supply chain."
HBI has also been making acquisitions. They recently announced the completion of its DBApparel acquisition. HBI commented on the deal saying, "the purchase of DBA is Hanes' second major acquisition in its core innerwear categories in the past year, making it one of the largest innerwear companies in the world. Maidenform, a leading seller of bras, shapewear and panties primarily in the United States under brands such as Maidenform and Flexees, was acquired Oct, 7, 2013. By contrast, DBApparel is a leading seller of bras, hosiery and underwear primarily in Europe under such strong European consumer brands as DIM, Playtex, and Wonderbra."
Shares of HBI have also been on the war path. The stock popped to new all-time highs back in April when HBI beat EPS estimates and raised their guidance. The stock soared again in June on the announcement of the DBA merger. HBI reported earnings again in July that beat estimates and management raised their guidance again.
Technically shares have been consolidating sideways the last three weeks under resistance near $110. We want to be ready to hop on board if shares breakout again. I am suggesting a trigger to buy calls if HBI trades at $110.50. This is an intraday trigger.
- Suggested Positions -
OCT 03, 2014 - entry price on HBI @ 110.50, option @ 3.80*
symbol: HBI150117c115 2015 JAN $115 call - current bid/ask $3.80/4.30
10/03/14 Triggered. Credit Suisse tags a $125 price target on HBI, shares soar and breakout past resistance near $110.00. Stock hits our intraday trigger at $110.50.
*option entry price is an estimate since the option did not trade at the time our play was opened.
Option Format: symbol-year-month-day-call-strike
Chart of HBI:
Current Target: HBI in the $125.00 area
Current Stop loss: 104.95
Play Entered on: 10/03/14
Originally listed on the Watch List: 09/28/14