In addition to tonight's new candidate(s), consider these stocks as possible trading ideas and watch list candidates. Some of these stocks may need to see a break past key support or resistance:
Bullish ideas: UAL, TMO, UA, ALK
Bearish ideas: DECK, KORS, YY
NEW DIRECTIONAL CALL PLAYS
Illinois Tool Works - ITW - close: 99.48 change: +0.23
Stop Loss: 97.65
Target(s): To Be Determined
Current Option Gain/Loss: Unopened
Average Daily Volume = 1.8 million
Entry on February -- at $---.--
Listed on February 24, 2015
Time Frame: 8 to 12 weeks
New Positions: Yes, see below
Why We Like It:
ITW is in the industrial goods sector. The company employs almost 50,000 people and operates in 57 countries.
According to the company, "ITW is a Fortune 200 global diversified industrial manufacturer of value added consumables and specialty equipment with related service businesses. The Company focuses on solid growth, improving profitability and strong returns across its worldwide platforms and divisions. These divisions serve customers and markets around the globe, with a significant presence in developed as well as emerging markets. ITW's revenues totaled $14.5 billion in 2014."
ITW has several different business segments. These are: automotive (18% of total revenues, test & measurement and electronics (15%), food equipment (15%), polymers & fluids (13%), welding (13%), construction products (12%), and specialty products (14%). Management has managed to boost ITW's profits by selling off its slower-performing assets.
ITW turned in +29% earnings growth for all of 2014. Their most recent earnings report was January 27th. ITW saw Q4 earnings rise +28% to $1.18 a share, which was five cents above estimates. Revenues slipped -1.4% to $3.5 billion. Their profit margin improved 190 basis points to 19.6%. Organic sales growth was up +2.3%.
The company is guiding 2015 earnings in the $5.15-5.35 range (about +12%). They see revenues in the $14.19-14.35 billion zone. That's a -2% decline from 2014 due to foreign currency headwinds. They're aiming to boost their operating margin to 23% by 2017.
Investors didn't care that ITW's guidance was a little soft. The stock has been in rally mode ever since their Q4 report in late January. The last several days have seen shares of ITW break through resistance at $98.00. Today the stock is trading at all-time highs. The point & figure chart is bullish and forecasting at $116.00 target.
We like ITW's relative strength and want to buy calls if shares can break through round-number resistance at $100.00. Tonight we are suggesting a trigger to buy calls at $100.25.
Trigger @ $100.25
- Suggested Positions -
Buy the Jun $105 CALL (ITW150619C105) current ask $1.20
Option Format: symbol-year-month-day-call-strike