NEW DIRECTIONAL PUT PLAYS
WESCO Intl. - WCC - close: 69.33 change: -1.43
Stop Loss: 72.05
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 619 thousand
Entry on January -- at $---.--
Listed on January 13, 2014
Time Frame: Exit PRIOR to earnings on January 29th
New Positions: Yes, see below
Why We Like It:
Last year the S&P 500 gained +11% as the U.S. economy slowly started to gain some momentum. That was not the case for WCC. This stock underperformed the market in 2014 with a -16% decline.
According to the company's marketing materials, "WESCO International, Inc. (WCC), a Fortune 500 company headquartered in Pittsburgh, Pennsylvania, is a leading provider of electrical, industrial, and communications maintenance, repair and operating (MRO) and original equipment manufacturers (OEM) products, construction materials, and advanced supply chain management and logistic services. 2013 annual sales were approximately $7.5 billion. The company employs approximately 9,200 people, maintains relationships with over 25,000 suppliers, and serves over 75,000 active customers worldwide.
Customers include commercial and industrial businesses, contractors, government agencies, institutions, telecommunications providers, and utilities. WESCO operates nine fully automated distribution centers and approximately 475 full-service branches in North America and around the world, providing a local presence for customers and a global network to serve multi-location businesses and multi-national corporations."
Last year was challenging for WCC's earnings results. They missed Wall Street's earnings estimates three quarters in a row. The only reason they beat estimates back in October was because management had lowered their guidance back in July. So WCC managed to beat Wall Street's lowered estimates. On December 17th WCC lowered their guidance again, this time for fiscal year 2015. Management tried to soften the blow by announcing a $300 million stock buyback program over the next two years.
Technically WCC looks terrible. It formed a bearish double top with the peak in January and June in 2014. Shares have developed a bearish trend of lower highs. The point & figure chart is bearish and forecasting at $55.00 target.
Now it appears to be breaking down under key support near $70.00. The intraday low today was $68.82. We are suggesting a trigger to buy puts at $68.75.
This is going to be a short-term trade. We will plan on exiting prior to WCC's earnings report on January 29th.
Trigger @ $68.75
- Suggested Positions -
Buy the FEB $65 PUT (WCC150220P65) current ask $1.30
Option Format: symbol-year-month-day-call-strike