New Watch List Entries
None, no new watch list candidates
Active Watch List Candidates
JCI - Johnson Controls Inc.
Dropped Watch List Entries
ADBE, ASH, GILD, and SCTY all graduated to our active play list.
AMBA and ANTM both met our entry point requirement with Friday's rally and have been moved to the new play section.
New Watch List Candidates:
No new watch list candidates tonight.
We just had a GREAT week for our watch list. Our of seven watch list candidates, six of them have graduated. ADBE, ASH, GILD and SCTY all graduated to active plays this past week. Plus, AMBA and ANTM met our entry point requirement with Friday's rally. These two will begin as new plays on Monday morning.
The recent action in the stock market has been encouraging and the big cap indices like the S&P 500 and the Dow Industrials could lead the market higher.
I am not adding any new candidates tonight. It would be great to see some follow through on the S&P 500's breakout to a new record high.
I will share one stock, SWKS, looks like it has some potential. SWKS could be on the verge of breaking out from an eight-week consolidation phase. I'm a little bit concerned that the options on it might be expensive.
Additional stocks I have listed on my radar screen are:
ASML, MPC, RE, JPM, GS, DNKN, WMT, JBL, HAIN, RIG,
Active Watch List Candidates:
Johnson Controls Inc. - JCI - close: 50.48
JCI is still consolidating sideways. The good news is that the consolidation is narrowing and shares should breakout one way or the other pretty soon. JCI still has a bullish trend of higher lows. Last week the latest industrial production numbers in the U.S. were a disappointment. Yet the auto production component rose +1.3%, which should be a good sign for JCI. I'd like to give it another week before we toss it as a potential candidate.
Trade Description: April 26, 2015:
Shares of JCI hit all-time highs last week. The company is in the consumer goods sector. They are the largest auto parts supplier in the U.S.
According to the company,
"Johnson Controls is a global diversified technology and industrial leader serving customers in more than 150 countries. Our 170,000 employees create quality products, services and solutions to optimize energy and operational efficiencies of buildings; lead-acid automotive batteries and advanced batteries for hybrid and electric vehicles; and interior systems for automobiles."
JCI just reported earnings on April 23rd. The company delivered $0.73 a share, which was a +20% improvement from a year ago. Depending on who you polled that was either one cent above or below Wall Street estimates. Revenues dropped -2.8% to $9.2 billion, which was significantly below estimates. Currency headwinds were a major issue.
Management offered cautious guidance for the current quarter with an earnings forecasting of 90-92 cents a share. Analysts are expecting 92 cents.
JCI's full-year guidance expects earnings growth in the +10% to +15% range.
Alex Molinaroli, JCI's Chairman and CEO, commented on his company's quarter,
"I am very pleased with our second quarter results. Our businesses showed increased underlying growth and delivered higher margins that we believe are sustainable. We saw broad-based order growth in Building Efficiency, continuing a trend that we began to see at the end of the first quarter. Despite foreign currency headwinds, profitability increased across the business segments. This is, in part, a result of the early benefits from the Johnson Controls Operating System which is improving our manufacturing and procurement efficiencies. We expect those benefits to increase in value and broaden in scope over the next several years as we continue to invest in these areas."
Technically shares have been consolidating under major resistance in the $52.00 area for months. The current rally is a major breakout to new highs. The point & figure chart is optimistic with a $69.00 target.
The high on Thursday was $53.40. I am suggesting we wait for JCI to close above $53.50 and then buy calls the next morning with a stop loss at $49.65.
Breakout trigger: Wait for a close above $53.50
Then buy calls the next morning with a stop at $49.65
BUY the 2016 Jan $55 call (JCI160115C55)
Option Format: symbol-year-month-day-call-strike
Originally listed on the Watch List: 04/26/15