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The Chairman’s Circle Weekly Briefing
The tattered paperback American Heritage Dictionary (1983 edition) on my desk defines the word “anniversary” as: “The annual recurrence of the date of an event that took place in a preceding year.”
Some anniversaries – like children’s birthdays and weddings – are ones to remember with joy. Others, like the events earlier this week to honor the victims of the 9/11 attacks, are somber occasions. Then there’s the anniversary that happened exactly four years ago this weekend: the Lehman Brothers collapse…
No doubt we’d all like to forget that one. Yet it’s an anniversary we, as investors, ought to remember, too.
It reminds us that “Mr. Market” has a ne’er-do-well uncle – “Mr. Uncertainty.” When the stock indexes do well, he stays in his lair, out of sight, down in the basement – and only seems to come up the steps and ruin the party at the most inopportune and unwelcome of times.
Profits, on the other hand, are always welcome…
That’s why Oxford Systems Trader’s Marc Lichtenfeld “rang the register” on a few positions this morning:
- C.F. Industries (NYSE: CF), November $190 calls: +124%
- V.F. Corporation (NYSE: VFC), November $145 calls: +111%
Until next week,
Jeff Yastine
Editorial Director
The Oxford Club
The Oxford Bond Advantage
Editor: Steve McDonald
- There were no new recommendations this week, but Steve reminded members to avoid chasing recommendations and always stick to the recommended price. If you miss a pick, just wait for the next one.
- Last week’s Quicksilver bond shot up four to five points in one day this week. The price is now about 94 to 95. Hold for now.
The Momentum Alert
Editor: Alexander Green
- New Recommendation: Rackspace Hosting (NYSE: RAX) is in the business of website hosting, serving more than 90,000 businesses in over 100 countries. Much of its business is cloud computing: companies paying Rackspace a monthly fee to host their websites and email servers, store mission-critical data, or even deliver software applications to their employees’ desktops on demand. In the most recent quarter, earnings soared 43% on a 29% increase in revenue. Operating margins are 13%. And management is earning a healthy 15% return on equity. Future growth should be even stronger, as the company is pushing into the Pacific Rim with new offices in Hong Kong and Australia. Buy Rackspace Hosting (NYSE: RAX) at market and place a sell stop at $53 for protection. Speculators can consider the December $70 calls, but don’t pay more than $2.80.
The Insider Alert
Editor: Alexander Green
- New Recommendation: Regis Corp. (NYSE: RGS) owns, operates and franchises more than 12,700 hairstyling salons in the U.S., Canada, Britain and roughly 30 other countries under the names Supercuts, Mastercuts, SmartStyle, Cost Cutters, Hair Masters, Magicuts, Hair Club for Men and Women, and Regis Salons. Regis isn’t just the biggest hair cutter in the world. It’s 10 times larger than its nearest competitor. And insiders are loading up on the stock. Officer and Director Daniel Beltzman purchased approximately 13,000 shares this month. So have beneficial owners Howard Smith and Birch Run Capital. Insiders own more than 11% of the outstanding shares here. Buy Regis Corp. (NYSE: RGS) at $18.50 or better and place a sell stop at $15 for protection. Speculators can consider the December $20 calls, but don’t pay more than $0.50.
- Akamai Technologies (Nasdaq: AKAM) hit a new 52-week high last Friday. We have a 30% gain in three months. Raise your sell stop to $36.50.
- Saul Centers (NYSE: BFS) hit a new high last Friday, too. Raise your sell stop to $38.
- Cracker Barrel (Nasdaq: CBRL) hit a new 52-week high this week. We have a 16% short-term gain. Raise your sell stop to $62.
- Dole Food (NYSE: DOLE). We also have a short-term, double-digit gain here. Raise your sell stop to $12.25
The Pacific Advantage Alert
Editor: Alexander Green
- New Recommendation: Mindray Medical (NYSE: MR) manufactures and sells patient monitoring devices, diagnostic laboratory instruments, and ultrasound imaging systems. Rising wealth in China is rapidly increasing healthcare spending. And Mindray’s products sell for 30% to 40% less than competitors like General Electric, Philips, and Siemens – and come with a four-year warranty versus competitors’ one-year plans. Mindray doesn’t just service China. It also has offices in London, Toronto, Seattle, Moscow, Amsterdam, Sao Paulo, Istanbul and Mexico City. In the latest quarter, earnings jumped 16% on a 23% increase in sales. The company enjoys 18% profit margins and carries very little debt. Management is earning a healthy 15% return on equity. Alex expects Mindray to earn $1.70 a share this year and $2.25 in 2013. Buy Mindray Medical (NYSE: MR) at market and place a sell stop at $28 for protection. Speculators can consider the January $40 calls, but don’t pay more than $1.20.
The FirstLine Investor Alert
Editor: Marc Lichtenfeld
- Genomic Health (Nasdaq: GHDX) has been volatile over the past few weeks. It remains one of Marc’s favorite names in healthcare, and a recent announcement further emboldens his confidence in the company. Genomic released additional data that shows the Oncotype DX test is a strong predictor of disease free survival. In 2012 and 2013, revenue is expected to jump 15% in each year. Earnings next year are projected to nearly double from $0.18 to $0.32 per share. And over the next five years, annual earnings per share are predicted to grow 37% annually. The stock is currently a “Hold” because it’s above our buy limit price.
- Astex Pharmaceuticals (Nasdaq: ASTX) hit a 52-week high on Monday. Raise your stop to $2.61.
The Oxford Systems Trader
Editor: Marc Lichtenfeld
- New Recommendation: Seagate Technology (Nasdaq: STX). In the recently reported fiscal fourth quarter 2012, Seagate generated $1.2 billion in cash flow, more than it did for the entire fiscal year in 2011. The hard drive market is a tough one. Yet Seagate, the leader in its field, is still able to grow and create value for shareholders, including a share buyback that will reduce the number of shares by 40% over the next two years and a 28% boost to the dividend. Marc doesn’t recommend stocks in the Oxford Systems Trader for their dividends, but says there’s nothing wrong with getting a 4.2% yield while we’re waiting for the trade to work out. Buy Seagate Technology (Nasdaq: STX) at $31.50 or lower and place a stop 25% below your entry price. Speculators can consider the Seagate Technology March 2013 $31 calls for $3.80 or less.
- C.F. Industries (NYSE: CF) is up 22%, and our options have gained 94%. Take half of your position in the options off the table. This gives you your risk capital back, so you’re playing with the house’s money. The spread is fairly wide, so if it’s more than $0.30, try to sell your calls in between the spread. If the market makers won’t cooperate, sell at the market. Stockholders, raise your stop to $188.49.
- V.F. Corporation (NYSE: VFC) is up 15% on the stock and 99% on the calls. Sell half of the call position in order to take your original investment back and play with someone else’s money. The spread is also wide, so try to sell your calls in between the spread. If you can’t get filled, sell at the market. Shareholders, raise your stop to our entry point of $139.86.
- LeapFrog (NYSE: LF) hit our stop of $8.51 earlier this week. Sell your shares, and the calls, if you own them, at the market.
- Cooper Tire & Rubber (NYSE: CTB). Raise your stop to $19.36.
- Hologic (Nasdaq: HOLX). Raise your stop to $15.24.
- Delek U.S. Holdings (NYSE: DK). Raise your stop to $23.29.
The Peak Energy Strategist
Editor: David Fessler
- Williams Companies, Inc. (NYSE: WMB). We’re currently sitting on a 75% gain on our shares. Dave recommends selling one-quarter of your position to bank some profits to put towards another pick that he’s currently researching. He should have a new recommendation in a few weeks. Stay tuned.
