New Watch List Entries

NKE - Nike Inc.

TJX - The TJX Companies, Inc.

Active Watch List Candidates

CVS - CVS Health

FB - Facebook

MA - MasterCard Inc.

Dropped Watch List Entries

AKAM and COH have graduated to our active play list.

EXPD has been removed.

New Watch List Candidates:

Nike, Inc. - NKE - close: 99.88

Company Info

In Greek mythology Nike is the winged goddess of victory. It's an appropriate brand name for the American athletic wear giant. Nike is the 800-pound gorilla in the industry with annual sales of more than $30 billion.

If you're not familiar with the company, "NIKE, Inc., based near Beaverton, Oregon, is the world’s leading designer, marketer and distributor of authentic athletic footwear, apparel, equipment and accessories for a wide variety of sports and fitness activities. Wholly-owned NIKE, Inc. subsidiaries include Converse Inc., which designs, markets and distributes athletic lifestyle footwear, apparel and accessories, and Hurley International LLC, which designs, markets and distributes surf and youth lifestyle footwear, apparel and accessories."

The company's most recent earnings report was March 19th, after the closing bell. NKE reported its Q3 2015 results. Analysts were expecting a profit of $0.84 a share on revenues of $7.62 billion. NKE delivered a profit of +0.89 a share or +16% from a year ago. Revenues were up +7% to $7.46 billion. However, if you back out the currency headwinds, their revenues were up +13%.

The company reported sales growth across every geographical region. Their gross margins improved 140 basis points to 45.9 percent. Management said their online sales are soaring. saw its revenues jump +42% last quarter.

The current quarter is NKE's 2015 Q4 (March-July) and the company said orders for Q4 in North America are up +15%, which is above analysts' estimates of +11.6%. Orders from China are up +11%, also above estimates. In the company's earnings release NKE said, "As of the end of the quarter, worldwide futures orders for NIKE Brand athletic footwear and apparel scheduled for delivery from March 2015 through July 2015 were 2 percent higher than orders reported for the same period last year. Excluding currency changes, reported orders would have increased 11 percent."

One big concern is the U.S. dollar. Sales in Europe were up +21% but when you factor in euro weakness and dollar strength that sales growth drops to +10%. The strength in the U.S. dollar is a major headwind but after NKE's Q3 results Wall Street feels that the company is managing the currency impact very well. The company is forecasting low double digit sales growth in the current quarter.

Wall Street applauded the results and shares of NKE gapped open higher on March 20th to hit all-time highs. There was a parade of bullish analyst comments. Several firms raised their price target on NKE. Here's a brief list of new price target: $106, $110, $115, $116.00. The point & figure chart is more optimistic as it is forecasting at $125.00 target.

Shares of NKE have seen some profit taking, which isn't a surprise considering the market's recent decline. However, now that NKE has filled the gap, traders jumped in to buy the dip. The stock looks poised to breakout past round-number resistance at $100.00 (again). Tonight I am suggesting investors wait for NIKE to close above $101.00 and then buy calls the next morning with a stop loss at $94.45.

Breakout trigger: Wait for a close above $101.00
Then buy calls the next morning with a stop loss at 94.45

BUY the 2016 Jan $110 call (NKE160115C110) current ask $3.70

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

Chart of NKE:

Originally listed on the Watch List: 03/22/15

The TJX Companies, Inc. - TJX - close: 69.59

Company Info

Investors should take notice when a company lowers guidance but the market doesn't care. Normally when a company lowers their earnings forecast their stock gets clobbered. That hasn't been the case for TJX.

The company describes itself as, "The TJX Companies, Inc. is the leading off-price retailer of apparel and home fashions in the U.S. and worldwide. As of January 31, 2015, the end of the Company’s fiscal year, the Company operated a total of 3,395 stores in six countries, the United States, Canada, the United Kingdom, Ireland, Germany, and Poland, and three e-commerce sites. These include 1,119 T.J. Maxx, 975 Marshalls, 487 HomeGoods and 6 Sierra Trading Post stores, as well as and, in the United States; 234 Winners, 96 HomeSense, and 38 Marshalls stores in Canada; and 407 T.K. Maxx and 33 HomeSense stores, as well as, in Europe."

Management is increasingly shareholder friendly. They just recently announced a +20% increase to their dividend (now $0.21 a share). TJX also announced they plan to spend $1.8 to $1.9 billion buying back their stock in fiscal year 2016 (ends January 30, 2016). That's about $100 to $200 million more than last year's stock buyback program.

Of course the real question is earnings. TJX reported their Q3 results on November 18th. Earnings were in-line with estimates at $0.85 a share while revenues were up +5.5% to $7.37 billion. Comparable stores sales came in at the high-end of guidance at +2.0%. Unfortunately management guided lower due to currency headwinds. The market didn't care about this lowered guidance and soon TJX stock was at new highs.

The company reported their 2015 Q4 results on February 25th. Earnings were up +15% from a year ago to $0.93. That beat estimates by three cents. Revenues were up +6.3% to $8.3 billion, above estimates. Comparable store sales surged +4%, well above expectations. Their margins improved from 12.0% to 12.4%.

Carol Meyrowitz, Chief Executive Officer of The TJX Companies, Inc., stated, "We are very pleased to end 2014 with excellent results in the fourth quarter! Our EPS growth of 15% and comp increase of 4% significantly exceeded our expectations. We are particularly pleased our comps were almost entirely driven by customer traffic, as consumers responded to our exciting merchandise assortments, amazing values and effective marketing. Merchandise margins were also very strong. We are also very pleased with our full year 2014 performance. Our adjusted earnings per share growth of 12% over last year's 15% increase marks our sixth consecutive year of double-digit EPS increases."

She went on to say, "Like other major international retailers, our 2015 plans also reflect an expected negative impact from foreign currency exchange rates. Our underlying business remains very strong and we are reiterating our 10% to 13% long-term annual EPS growth model. We see tremendous U.S. and international potential for our Company. We are excited to be entering our seventh country, Austria, this spring, and to announce our plans to expand into our eighth country, The Netherlands, later this year. We are growing TJX as a global, value retailer and are well on our way to becoming a $40 billion company and beyond!"

TJX management lowered their 2016 Q1 and full year guidance with expectations for currency headwinds at 5%. They also announced they were raising their minimum wage for workers in the U.S. to $9.00 an hour. This matches a move by larger rival Wal-mart who announced a wage hike. Investors seem unconcerned with the lowered earnings guidance. Traders bought the initial dip and now TJX is trading near new highs.

Technically the stock has been consolidating just below major resistance at $70.00 for weeks. Today it is poised for a bullish breakout. The point & figure chart displays a quadruple top breakout buy signal with an $89.00 target. I am suggesting we wait for TJX to close above $70.50 and buy calls the next morning with a stop loss at $66.25.

Breakout trigger: Wait for a close above $70.50
Then buy calls the next morning with a stop loss at 66.25

BUY the 2016 Jan $75 call (TJX160115C75) current ask $3.10

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

Chart of TJX:

Originally listed on the Watch List: 03/22/15

Active Watch List Candidates:

CVS Health - CVS - close: 102.50

03/29/15: CVS flirted with a breakout past $105.00 but couldn't quite commit. Shares retreated to technical support at the 50-dma with the market's widespread decline. I don't see any changes from last week's comments.

Earlier Comments: March 22, 2015:
We just removed WBA as a watch list candidate but we are replacing it with CVS. Both companies are in the drug store business. Both stocks have been showing significant strength the past couple of years. Fortunately for us CVS stock hasn't sprinted away from us like WBA.

The company describes itself as "CVS Health (CVS) is a pharmacy innovation company helping people on their path to better health. Through our 7,800 retail pharmacies, more than 900 walk-in medical clinics, a leading pharmacy benefits manager with nearly 65 million plan members, and expanding specialty pharmacy services, we enable people, businesses and communities to manage health in more affordable, effective ways. This unique integrated model increases access to quality care, delivers better health outcomes and lowers overall health care costsj."

The most recent earnings report was 2014 Q4 numbers on February 10th. CVS' earnings were in-line with estimates. Revenues were up +12.9% to $37.0 billion, which beat estimates for $36.0 billion. Their pharmacy services revenues were up +21.7%.

Full year 2014 earnings were up +13.5% to $4.49 a share. Management guided 2015 earnings in the $5.05-5.19 range (+12% to +15.5%), which is in-line with estimates. Following the earnings report a couple of analysts upgraded their price targets into the $114-115 range. The point & figure chart is very bullish with a long-term target of $141.00.

Currently shares of CVS are hovering just below resistance at the $105.00 level. Tonight I am suggesting we wait for shares of CVS to close inside the $105.00-106.00 zone and buy calls the next day with a stop loss at $99.85.

Breakout trigger: Wait for CVS to close in the $105.00-106.00 zone
Buy calls the next morning with a stop at $99.85.

BUY the 2016 Jan $110 call (CVS160115C110)

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

Originally listed on the Watch List: 03/22/15

Expeditors Intl. - EXPD - close: 47.97

03/29/15: We have been expecting shares of EXPD to pull back. I've been suggesting we buy calls on a dip to support near $46.00. However, I'm growing increasingly concerned about relative weakness in the overall transportation industry.

Tonight I am removing EXPD as a watch list candidate. We can keep it on our radar screen and if shares bounce near $46.00 then we might reconsider it as a candidate.

Trade did not open.

03/29/15 removed from the watch list

Originally listed on the Watch List: 03/15/15

Facebook, Inc. - FB - close: 83.30

03/29/15: We wanted to buy calls on a dip at $82.00. FB almost made it but the stock bounced at $82.14 on Thursday. I would be seriously tempted to just buy calls right here but there is still a good chance FB retreats on broader market weakness.

Tonight I am moving the buy-the-dip trigger to $81.00 in hopes of getting a better entry point.

Earlier Comments: March 22, 2015:
Facebook probably needs no introduction. It's the largest social media platform on the planet. As of December 31st, 2014 the company reported 1.19 billion monthly active users and 890 million daily active users. If FB were a country that probably puts them as the third most populous country on the planet (behind India and China).

This past week the company announced a new mobile payment service through FB's messenger app. The new service will compete with similar programs through PayPal, Apple Pay, and Google Wallet.

The announcement combined with a broad market rally helped fuel a +7% gain in FB's stock last week. FB's market cap has risen past $230 billion making it the tenth largest company in the S&P 500.

Growth has been phenomenal. According to IBD, FB's Q4 earnings were up +69% form a year ago. Revenues were up +49%. Wall Street is expecting FB's profit to rise +12% in 2015 and +32% in 2016.

Technically shares of FB have broken out from a very significant consolidation pattern. The point & figure chart is bullish and forecasting at $96.00 target. I think it will go higher. After a five-day run we do not want to chase it here. I'm suggesting a buy-the-dip entry trigger at $82.00 with a stop loss at $74.75.

Buy the dip trigger at $81.00 with a stop at $74.75

BUY the 2016 Jan $90 call (FB160115C90)

03/29/15 move the buy-the-dip trigger from $82.00 down to $81.00
Option Format: symbol-year-month-day-call-strike

Originally listed on the Watch List: 03/22/15

MasterCard Inc. - MA - close: 87.25

03/29/15: Financial stocks had a rough week and MA followed the group lower. It's currently trading near short-term support around $87.00 and its 50-dma. I don't see any changes from my recent comments.

Earlier Comments: March 22, 2015:
Do you have a credit card? How about a debit card? Odds are you do. About 70% of Americans have a credit card and many have more than one. Inside the United States there are over 500 million credit cards between American Express, MA, and Visa. There's more than 1.12 billion globally (not counting the U.S.). There's also another 572 million MA or Visa debit cards in the U.S. (MasterCard has more than 144 million). Not counting America there are more than 1.2 billion debit cards around the world.

Now what if you could charge a small percentage for consumers using their plastic every time they make a purchase? That's MA's business model. As of 2013 their market share of global transactions (credit or debit) was about 27%. They are the second biggest credit and debit card company behind Visa (V). According to the company, "MasterCard (MA),, is a technology company in the global payments industry. We operate the world's fastest payments processing network, connecting consumers, financial institutions, merchants, governments and businesses in more than 210 countries and territories. MasterCard's products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone."

MA has been delivering steady growth. They reported their Q3 results on October 30th with earnings up +19% from a year ago to $0.87 a share. That beat estimates. Revenues were up +12.8% to $2.5 billion, also above expectations. The bullish trend continued when MA reported its 2014 Q4 results on January 30th. Earnings per share soared +32% from a year ago to $0.69 and revenues grew +13.6% to $2.42 billion. Both metrics were above Wall Street expectations.

The company did warn that the surge in the U.S. dollar was impacting results but they still see strong single-digit revenue growth for 2015. They reaffirmed +20% earnings growth.

Meanwhile one of MA's biggest rivals, American Express (AXP), is not having a good year. AXP lost its exclusive deal with Costco (COST) last month. This deal generated 20% of AXP's loans and about 10% of their annual card growth. AXP is also losing its partnership with JetBlue (JBLU). AXP's losses will likely be MA's and Visa's gain.

Recently MA announced it had signed a 10-year deal with Citigroup. Not only is Citigroup one of the biggest banks on the planet they are the largest credit card issuer in the world. The press release states "Citi will begin aligning the company's consumer proprietary credit and debit portfolios to the MasterCard network in 2015." One analyst has already opined that the deal should provide a "decent tailwind for EPS growth" (for MA). Speaking of opinions, a couple of analysts at Nomura believe that MA is cheap at current valuations and could be seen as safe haven investment given their steady earnings growth.

“Despite a mixed global economy, we delivered solid results for the quarter and for the full year in 2014,” said Ajay Banga, president and CEO, MasterCard. “This year is off to a good start with several new wins, as well as renewals of some important customer agreements, with more in the pipeline. Looking ahead, we will continue to be at the forefront of our industry by driving payment innovation with solutions such as MasterPass, and by increasing electronic payments usage globally as demonstrated by our significant expanded acceptance footprint across Africa.”

Technically shares of MA have started to bounce after a 50% correction of its February rally. The rising 50-dma also provides technical support. The point & figure chart is bullish and currently forecasting at $118.00 target. Aggressive investors might want to consider launching bullish positions on a close above Friday's high of $90.36. I am suggesting we wait for MA to close at a new high above $93.15. Then buy calls the next morning with a stop loss at $86.40.

Breakout trigger: Wait for a close above $93.15
Then buy calls the next morning with a stop at $86.40

BUY the 2016 Jan $100 call (MA160115C100)

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

Originally listed on the Watch List: 03/22/15