Daily Report

This report is posted right here every trading day one hour before "the close". We run all of the searches and select our most bullish and bearish candidate of the day. This report includes live updates for stocks in our watch list that are on the move.

Issue     08/15/2008 Recent Reports     Past Reports    

Bullish TEX
Stock Terex Corporation manufactures capital equipment for construction, infrastructure, quarrying, mining, shipping, transportation, refining, and utility industries worldwide. Its Terex Aerial Work Platforms segment offers aerial work platform equipment, telehandlers, light construction equipment, and construction trailers.
Set-up Stock has at least two consecutive higher closes and it is trading higher than the prior close. Stock is trying to reverse recent pullback and resume longer-term up trend.
Today

This stock has been in a downtrend for the last year. It fell from $90 in October down to $50 in January. After a nice bounce, the stock stalled at $74 in May. It resumed the downtrend and broke below $50 in July. It has formed a firm support level and it has rallied above $50 resistance on heavy volume. I believe this stock will make a nice rebound and it could rally back up to $70.
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 Outlook

Last month, the company announced net income for the second quarter of 2008 of $236.3 million, or $2.32 per share, compared to net income of $174.6 million, or $1.66 per share, for the second quarter of 2007, an increase in earnings per share of 39.8%. Net sales of $2,935.9 million in the second quarter of 2008 were 25.3% above the comparable period in 2007. The increase in net sales versus the prior year period was favorably impacted by acquisitions and by the translation effect of foreign currency exchange rate changes (3.4% and 7.9%, respectively). Excluding these effects, net sales increased 14.1% in the second quarter of 2008 versus the prior year period.

This stock trades at a forward P/E of 7.
Tactic

“Results this quarter demonstrate the continued strength of our global franchise,” commented Ron DeFeo, Terex Chairman and Chief Executive Officer. “The infrastructure and commodity boom is driving strong demand for our cranes and mining equipment. Based on our increasing backlog for these products, we expect these positive trends to continue. Also, as expected, this was partially offset by slower growth trends in the Aerial Work Platforms (AWP) segment and further softening in the Construction segment. Though both AWP and Construction experienced growth this past quarter, slower growth in Western Europe impacted their performance.”

Last week, the company said it is buying the port equipment businesses of Italy's Fantuzzi Industries for about 215 million euros ($322.7 million.)

This company has a fantastic balance sheet and Current Assets exceed Total Liabilities. They are using their cash to buy a company that is in a position to take advantage of global commerce. The revenue growth and earnings are excellent and the stock trades at a low P/E. I like the rally above $50.

This is a great put credit spread candidate.
Update



Bearish NOK
Stock Nokia Corporation designs, manufactures, and sells a range of mobile devices and networks with services and software worldwide. The company offers mobile phones and devices based on the GSM/EDGE, 3G/WCDMA, and CDMA global cellular standards under the Nokia brand, including the Nokia Nseries, the Nokia Eseries, and Vertu sub-brands.
Set-up The stock gapped down 3 days ago and it is trading below the close that day. The 50-day MA is also trending lower.
Today

This stock has been in a steady decline since November. It has fallen from $40 down to $24 in July. The selling has been persistent and the stock has not staged many short covering rallies. Recently, it staged a small bounce and after hitting $27, it has rolled over. The volume is picking up as the stock resumes its down trend. This stock looks like it will continue to drift lower.
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 Outlook

In July, the company said profit was $1.75 billion, or 46 cents per share, down from $4.49 billion, or $1.14 per share, a year earlier.

Sales rose 4 percent to $20.87 billion.

The 2007 second-quarter result included a $2.98 billion gain from the formation of Nokia Siemens Networks, a joint venture with Germany's Siemens AG.

Excluding special items, Nokia said its profit rose 8 percent to $2.18 billion.

Analysts expected earnings of 56 cents per share on $20.05 billion in revenue, on average, according to Thomson Financial.
Tactic

Nokia phones continued to fall because of higher volumes of cheaper phones sold in emerging markets.

The average price for a Nokia handset was $117, down from $125 in the first quarter of the year and $143 in the second quarter of 2007.

In the last month, the company has reduced the price of its phones.

This stock is in a steady decline. After a brief bounce, it has rolled over and it looks like it will challenge the $23.80 level.

The options are liquid and the bid/ask is tight. The premiums are also pretty cheap so this could make a nice option trade if the market falters. It won't move more than a few dollars, but it doesn't have to if you buy a bunch of cheap ITM options.
Update