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Sunday, July 25, 2010

Top Stocks On Deck !

AK Steel

Fundamental: The Ohio-based steel company is slated to report its second-quarter earnings before the opening bell on Tuesday, July 27. Historically speaking, the firm has matched or bested the Street's per-share earnings predictions in each of the past four quarters.

Technical: It's been a rough couple of months for the shares of AKS, with the security underperforming the broader S&P 500 Index (SPX) by 7% during the past 60 sessions. However, the stock could be on the road to recovery, with the equity poised to finish the week north of its 10-week moving average for the first time since early April.

Sentiment: Despite the stock's challenges on the charts of late, near-term options traders remain relatively optimistic toward AKS. The security's Schaeffer's put/call open interest ratio (SOIR) of 0.37 implies that calls more than double their put counterparts among options slated to expire within three months. What's more, this ratio ranks in the sixth annual percentile, suggesting that near-term traders have been more bullishly biased toward AKS only 6% of the time during the past year.

Elsewhere, analysts are slightly more neutral in their assessment of AKS. According to Zacks, the security has earned two 'buy" ratings and nine lukewarm "holds," with not a "sell" in sight. Meanwhile, Thomson Reuters pegs the average 12-month price target on the stock at $19, My tartdet price is 21 a sharerepresenting a premium of 27% to AKS' current price near $15 per share.

Verdict: Should AK Steel snap its winning streak in the earnings spotlight next week, an unwinding of optimism among options traders or negative attention from the brokerage bunch could spark added selling pressure on the shares

Fundamental: The Chinese Internet concern is slated to take the earnings reins first thing Monday morning. From an historical standpoint, the firm has done little to impress the Street, falling short of analysts' per-share predictions in two of its last four turns in the spotlight.

Technical: The shares of SOHU have also been less than impressive on the charts in 2010, surrendering roughly 23% since the start of the year. And, while the stock is positioned to settle the week atop its 10-week moving average, any upside momentum could be stifled by the security's 20-week moving average, which has rejected all but two of SOHU's rally attempts since October 2009.

Sentiment: Regardless of the stock's year-to-date deficit, the Street remains enamored of SOHU. For starters, the security's SOIR of 0.49 stands only six percentage points from an annual optimistic acme, meaning near-term options players have rarely been more bullishly biased toward the stock. On that same note, SOHU still harbors seven "buy" or better endorsements from the analyst crowd, compared to eight tepid "holds" and not a single "sell."

Verdict: Should once again disappoint in the earnings confessional, the lingering bulls could hit the exits. A reversal in sentiment in the options pits or a round of downgrades could exacerbate SOHU's slide.

Under Armour

Fundamental: The Maryland-based sporting-goods concern will release its second-quarter figures before the opening bell on Tuesday, July 27. Historically, Under Armour is batting a thousand over the past year, exceeding analysts' per-share forecasts in each of the last four quarters.

Technical: The shares of UA have also flexed some serious muscle on the charts, with the equity advancing more than 56% during the past year. Guiding the stock on its quest for new highs has been its ascending 10-month moving average, which hasn't been violated on a monthly closing basis since April 2009.

Sentiment: In light of UA's status as a broad-market standout, it's no surprise to find short-term options speculators on the equity's bullish bandwagon, as indicated by the stock's SOIR of 0.69, in the sixth annual percentile.

However, not everyone on the Street has capitulated to the bullpen. According to Zacks, UA has earned only seven "buy" or better ratings, compared to 18 "hold" or worse recommendations. Meanwhile, despite ebbing by 6% during the most recent reporting period, short interest still accounts for 16.7% of the stock's total available float. In fact, at the security's average pace of trading, it would take more than seven sessions for all of these pessimistic positions to be repurchased.

Verdict: If Under Armour can once again dominate the earnings arena next week, the lingering skepticism surrounding the stock could be a boon for the shares, from a contrarian standpoint. A stronger-than-anticipated quarterly report could trigger a flood of upbeat analyst attention, or spark a short-covering rally – both potential catalysts to help UA will go higher
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