NEW DIRECTIONAL CALL PLAYS
Home Depot - HD - close: 68.06 change: +0.50
Stop Loss: 66.40
Current Option Gain/Loss: Unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below
Why We Like It:
The home improvement giant has bounced back to multi-year highs following its recent earnings report. HD beat estimates by three cents with a profit of 67 cents a share. Revenues were also a beat at $18.25 billion for the quarter. Same-store sales were up +7% in the fourth quarter. Investors ignored management's bearish, downside full year guidance and instead applauded HD's +34% rise in the quarterly dividend to 39 cents a share and a $17.0 billion stock buy back program.
I am suggesting a trigger to buy calls at $68.50. It is possible that the $70.00 level could act as round-number, psychological resistance especially since the stock failed their multiple times in the 1999-2000 time frame. However, we are going to set our sights on a run to $74.00.
FYI: The Point & Figure chart for HD is bullish with a long-term $95 target.
Trigger @ 68.50
- Suggested Positions -
buy the Apr $70 call (HD1320d70) current ask $0.87
Entry on February -- at $---.--
Average Daily Volume = 6.9 million
Listed on February 27, 2012