Filed under: Earnings reports, Analyst upgrades and downgrades, Texas Instruments (TXN), Technical Analysis, Stocks to Buy

Kulicke & Soffa Industries (NASDAQ: KLIC) is a leading supplier of semiconductor assembly equipment, materials and technology. The firm provides the bonding wire, packaging materials and expendable tools necessary to semiconductor assembly and also makes the bonders used to connect wires between the pads of a semiconductor die and the leads on the chip package. Clients include Texas Instruments (NYSE: TXN) and STMicroelectronics (NYSE: STM).

The company pleased investors last week, when it reported Q4 EPS of 47 cents and revenues of $236.8 million. Analysts had been looking for 33 cents and $226 million. Return on Q4 invested capital totaled 48.6 percent. Management also guided Q1 revenues to $220 million, versus consensus of $215.0 million. AmTech Research subsequently reiterated its “buy” rating on the issue. The KLIC price popped on the news and then moved into a bullish “flag” consolidation pattern. Stocks frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.

Continue reading Kulicke & Soffa Industries (KLIC): A bullish buy in tech

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Filed under: Forecasts, Good news, ConAgra Foods (CAG), Options, Technical Analysis

ConAgra Foods, Inc. (NYSE: CAG) shares are trading higher today after the company raised its outlook for Q2 earnings (expected 12/20) due to strong performance in trading and merchandising. If you think that the company won’t fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on CAG.

After hitting a one-year high of $28.35 last December, the stock hit a one-year low of $22.81 in November. CAG opened this morning at $24.90. So far today the stock has hit a low of $24.86 and a high of $25.61. As of 11:20, CAG is trading at $25.56, up $1.17 (4.8%). The chart for CAG looks bearish but improving, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.

For a bullish hedged play on this stock, I would consider a March bull-put credit spread below the $22.50 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn’t do what you think but still leverage nice returns. This particular trade will make a 6.4% return in just 4 months as long as CAG is above $22.50 at March expiration. ConAgra would have to fall by more than 15% before we would start to lose money.
CAG hasn’t been below $22.50 at all in the past year and has shown support around $23 recently. This trade could be protected by strong support around $23 where the stock bottomed in early November.

Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in CAG.

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Filed under: Newsletters, Agriculture, Stocks to Buy

“One sector that outshined most others in 2007 is the agriculture markets, and 2008 looks to be even more active,” says Kevin Kerr in his exceptional MarketWatch Global Resources Trader.

He explains, “Investors can no longer afford to not have some exposure to this segment of investing.” Here, the advisor reviews the Ag market and his long-term bullishness on Monsanto (NYSE: MON).

“The profit potential of the grains is no shock to us as we’ve been investing in the agriculture markets this year via cotton, corn, wheat, and soybeans — all a testament to an exploding ag market.

“Bloomberg recently cited a report by ING Wholesale Banking suggesting that agricultural commodities could climb as much as 40% by 2020 as food, feed and biofuel demand outpace growth in crop yields. That kind of growth and demand is always what is behind a true bull market. High demand and low supply.

Continue reading Monsanto (MON): Profit from grains

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Filed under: Bad news, Industry, Target Corp. (TGT), Kohl’s Corp (KSS), Options, Technical Analysis

Kohl’s Corp. (NYSE: KSS) this morning posted a 10.2% increase in same-store sales for November, beating analyst estimates of 6.7%. Even though the numbers sound good this month, KSS warned that some of this increase was due to a calendar shift and that December’s comps could suffer on the flip side of this shift. Most retail companies are having a tough time this morning, including Target (NYSE: TGT), which announced it may not be able to meet its fourth-quarter earnings projections if business doesn’t significantly improve, as sales have fallen off after a strong Thanksgiving weekend. If you think this stock won’t be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on KSS.

After hitting a one-year high of $79.55 in April, the stock hit a one-year low of $46.99 in November. This morning, KSS opened at $51.50. So far today the stock has hit a low of $49.00 and a high of $51.50. As of 11:05, KSS is trading at $49.65, down $1.06 (-2.1%). The chart for KSS looks bearish but improving, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.

Continue reading Kohl’s (KSS) predicts trouble for December

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Filed under: International markets, Other issues, Housing, Federal Reserve

In a surprise decision, the European Central Bank Thursday left its key interest rate unchanged, keeping its refinance rate a 4% due to inflation risks.

Confounds chatter

The ECB’s decision went against growing chatter in Wall Street circles Wednesday that the ECB, the Bank of England and the U.S. Federal Reserve would all cut short-term interest rates, as well as implement other coordinated measures, to counteract the contraction effects of subprime mortgage and related asset defaults on the world’s largest industrialized economies, the European Union and the United States.

“The decision to stay flat was a bit of a surprise, but that doesn’t mean there won’t be a future cut,” Andrew Resnick, independent currency trader, told BloggingStocks Thursday. “I think we’ll still see coordinated action by the ECB and the Federal Reserve to maintain liquidity and keep overnight rates at typical levels. Also keep in mind that the Bank of England cut its rate, so maybe they’re doing it sequentially to prepare the market for the new monetary policy.”

Continue reading ECB keeps rates the same, surprising some economists

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Filed under: Analyst reports, Good news, Options, Technical Analysis, Crocs Inc (CROX)

CROCS Inc. (NASDAQ: CROX) shares are trading higher today after last night, the analysts on CNBC’s Fast Money mentioned Crocs as oversold and with low valuation. One analyst, Karen Finerman, said she thinks the growth for CROX is not over. If you think that the company won’t fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on CROX.

After hitting a one-year low of $20.68 last December, the stock hit a one-year high of $75.21 in October. CROX opened this morning at $43.06. So far today the stock has hit a low of $43.05 and a high of $43.95. As of 10:50, CROX is trading at $43.29, up $0.49 (1.1%). The chart for CROX looks bearish and steady.

For a bullish hedged play on this stock, I would consider a January bull-put credit spread below the $32.50 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn’t do what you think but still leverage nice returns. This particular trade will make a 6.4% return in just 6 weeks as long as CROX is above $32.50 at January expiration. Crocs would have to fall by more than 25% before we would start to lose money.

CROX hasn’t been below $33 since May and has shown support around $38 recently. This trade could be risky if the stock starts to freefall again, but most of the investors who would bail probably already did so when this stock lost its momentum in October.

Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in CROX.

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Filed under: Tribune Co. (TRB), Options

Tribune (NYSE: TRB) is recently up $32.08.

CNBC’s David Faber says the TRB deal could close very soon. TRB has expected its $34 per share sale to Sam Zell, private equity, debt holders and employees to be closed by year-end. The FCC granted temporary waivers to complete the deal. TRB announced this morning it intends to use cash on hand to reduce total amount of bridge loan to $1.6 billion from $2.1 billion. TRB January option implied volatility of 33 is below a level of 79 from Dec 6th and below its 26-week average of 38 according to Track Data, suggesting the close of the $34 deal is near.

Daily Options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

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Filed under: Berkshire Hathaway (BRK.A), Sears Holdings (SHLD)

I know it’s the end of the year. We’re all bombarded with the “Top X of 2007” or the “Worst Y this Year.” I’m actually thinking of making the top lists of the top lists. It’s like Kramer’s coffee table book about coffee table books on Seinfeld.

Anyway, Herb Greenberg of Marketwatch threw his hat into the ring this morning with his vote cast on the worst CEO of 2007. The winner (or is it loser?): Eddie Lampert, CEO of Sears Holdings (NASDAQ: SHLD). Herb says of Lampert, “So far, for all of Sears, including Kmart, the strategy [of focusing on profitability over revenue growth] has failed miserably. Not only have same-store sales (which Lampert says are “overrated” as a metric) gone deeper into the red, but gross margins, Ebitda and operating income for Kmart are also going in the wrong direction.”

I’d like just to posit the idea that while Lampert might have failed as a CEO of Sears, the retail store, turning around the old-school retailer hasn’t really been his main priority. He’s trying to follow in Warren Buffett’s Berkshire Hathaway (NYSE: BRK.A) shoes by using a cash flow business as the crux of an investment empire. So investors should begin to judge Lampert’s firm as a holding company, not just on Sears’ results.

Continue reading Is Eddie Lampert of Sears really the worst CEO of the year?

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Filed under: Bad news, Economic data

Initial jobless claims fell by 15,000 to 338,000 for the week ended Dec. 1, but the more-telling four-week moving average reached its highest level — up 4,750 to 340,000 — since October 2005, the U.S. Labor Department announced Thursday.

The 338,000 weekly statistic was slightly higher than the 335,000 consensus estimate.

Economists view the four-week average as a better indicator of unemployment conditions, as it smooths-out anomalies for strikes, holidays, or other idiosyncratic events.

The number of continuing claims decreased by 59,000 to 2.6 million for the week ended Nov. 24, the latest period for which figures were available.

Economic Analysis: The four-week moving average — the average economists and analysts concentrate on — continues to move higher and remains a ‘data point of concern’ for the U.S. economy. Joblessness is not high, but job growth is not high either. Further, although not above the more-problematic 350,000-level, the rising four-week moving average suggests that the job market continues to soften, something the U.S. Federal Reserve will keep an eye on, given the historically strong correlation between employment growth and sustainable economic growth.

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Filed under: Options

Rambus Inc. (NASDAQ: RMBS) said it was notified by the SEC that it had ended its formal investigation into the company’s past stock options practices. RMBS closed at $19.84. RMBS has upcoming patent infringement and anti-trust claim issues in 2008. RMBS January option implied volatility is 54 and May is at 74. RMBS average option implied volatility over the last 26-weeks is 64 according to Track Data, suggesting larger price movement.

Micron Technology Inc. (NYSE: MU) is recently up 18 cents to $9.13. MU has been frequently mentioned as takeover candidate over the last 18-months. MU December and January option implied volatility of 57 is above its 26-week average of 42 according to Track Data, indicating larger price risk.

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