Additional Trading Ideas:
In addition to tonight's new candidate(s), consider these stocks as possible trading ideas and watch list candidates. Some of these may need to see a break past key support or resistance:
SNI, ETN, SPR, JUNO, CLH, GRMN, MOS, CYH, RYN, TWX, LM, GM
NEW BEARISH Plays
Eagle Materials Inc. - EXP - close:
Stop Loss: 61.65
Target(s): To Be Determined
Current Gain/Loss: Unopened
Entry on December -- at $---.--
Listed on December 19, 2015
Time Frame: Exit PRIOR to earnings in February
Average Daily Volume = 800 thousand
New Positions: Yes, see below
The outlook for homebuilders has soured and the XHB homebuilders ETF has sunk toward multi-month lows. Meanwhile the energy sector is getting crushed as crude oil falls to six-year lows. Together they make a tough environment for EXP who serves both homebuilders and the energy industry.
EXP is in the industrial goods sector. According to the company,
"Eagle Materials Inc. manufactures and distributes Cement, Gypsum Wallboard, Recycled Paperboard, Concrete and Aggregates, and Oil and Gas Proppants from 40 facilities across the US. Eagle is headquartered in Dallas, Texas."
The company has struggled to meet Wall Street earnings estimates all year long. The last three quarters in a row have seen EXP miss both the earnings estimate and the revenue estimates. Their most recent report was October 26th. Analysts were looking for a profit of $1.18 per shares on revenues of $336.6 million. EXP only delivered $1.11 a share, which was a -40% drop from a year ago. Revenues were up +15.5% from a year ago to $329.0 million, below expectations.
Technically the stock is in a bear market. The market's bounce on Tuesday and Wednesday produced an oversold bounce in shares of EXP but this has failed with the market's reversal lower in the last two sessions. The point & figure chart is bearish and forecasting at $47.00 target. EXP has broken down below what should have been round-number support at $60.00. The next support level could be the $50.00 region. Tonight we are suggesting a trigger to launch bearish positions at $58.65.
Trigger @ $58.65
- Suggested Positions -
Short EXP stock @ $58.65
- (or for more adventurous traders, try this option) -
Buy the FEB $55 PUT (EXP160219P55) current ask $2.35
option price is a current quote and not a suggested entry price.
Entry disclaimer: To avoid an unfavorable entry point, we will not launch a new play if the stock gaps open more than $1.00 past our suggested entry point.
Option Format: symbol-year-month-day-call-strike