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Posts Tagged ‘VISIONS’

VISIONS Scan – Potential Trades

Posted by mounddweller on March 26, 2011

Fellow Traders,

Earlier this afternoon I ran SCOUT in VISIONS to see if I could unearth any interesting NP trades for the 3 weeks remaining before APR expiration.  17 stocks met Ron’s Level 4 selection criteria.  The “Top 10” were BBBB, AKAM, STP, STRA, LPL, ARO, CELG, ICLR, UMPQ, and CEPH.  Out of the “Top 10” I felt AKAM, STP, LPL, ARO, and CEPH were worth digging into deeper.

My objective in running the scan was to find stocks trading in Ron’s VISION V with APR puts that met the following criteria:

(1) Strike price at or less than recent lows, and

(2)  Premium that provided an annualized ROIC > 15%.

In the first chart below you can see that LPL was the only stock that met both of my criteria.  However, you’ll also notice it has < 4% DSP.  I didn’t like that so I decided to explore a little further and see how much I had to increase the strike price to attain my desired minimum ROIC.  The results of that analysis can be found in the second chart.  By relaxing my first criteria I was able to identify three trades that I felt might be a reasonable trade.  These are highlighted in green. 

Of these three ‘finalists’ I think CEPH is the best bet.  Looking at its price chart over a 1, 2, and 5 year period reveals that it has strong support around the $55 level.  STP and AKAM do not have strong support at my chosen strike prices.  STP has some support at $7 but as we saw earlier there is no premium at that strike.  Looking at the 1, 2, and 5 charts for AKAM reveals a very scary situation in that it hit lows of around $10 back in 2009. 

Here is the VISIONS 1-year price chart for CEPH.  I would also encourage you to go to Yahoo or another site where you can see the 5-year chart to see the strong support at the $55 price point.

Check these stocks out and let me know what you think about my selection criteria and my process of elimination.

Regards,

Troy

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MYGN – Final Results

Posted by mounddweller on November 27, 2010

All,

It’s been quite a while since I’ve posted anything on my blog.  My apologies.  However, no posts doesn’t mean I haven’t been trading.  It just means my trading has drifted away from exclusively following and selecting only VISIONS trades.  More about that later. 

Right now I want to update you on the final results of my MYGN trade.  You’ll recall I entered this trade with a buy/write back on March 29th.  Shortly after that a court case went against MYGN that invalidated some of their patents.  This caused the stock to drop substantially.   After MYGN went nowhere for 6 months I decided to sell calls below my break-even price.  Of course Murphy’s Law came into play a few short weeks later and the stock jumped back up above my $17.50 strike price.   It then stayed there and closed ITM at the November expiration.  Rather than trying to buy the option back and roll it out, I decided to let it be called away at a loss.  This was my first loss ever using Ron’s VISION’s methodology.

Below is a snapshot of my MYGN trade:

Let’s spend a minute evaluating what I could have done differently to prevent this loss.  First, better due-diligence upfront before placing the trade may have revealed the potential patent issues.  Second, I could have been more aggressive in my trading after the stock fell.  I only sold one round of puts.  Had I continued to sell puts instead of the calls, I more than likely would still have MYGN in my account and would continue to lower my net cost basis.

Regards,

Troy

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VISIONS Screen – 8/21

Posted by mounddweller on August 22, 2010

All,

I ran a VISIONS Scout screen this weekend after AUG expiration Friday.  Below are some highlights from what I found for specific stocks that looked particularly interesting to me.  However, before we jump into those I’ll tell you a little bit about the overall results of the scan.

The scan returned 32 stocks that met all of Ron’s “Level 4” criteria.  Of these 11 are what I’d call ‘investment grade’, i.e., they have a Gold$ greater than or equal to 80.  4 of the 11 have a perfect Gold$ score of 100.  The 11 ‘investment grade’ stocks are (Gold$):  PWRD (100), GHL (100), HAR (100), GAME (100), NVDA (82), SNDA (80), AMTD (80), SF(80), ADBE (80), WAG (80), and GPN (80).

Here are some details of the four stocks that have perfect Gold$ scores as well as one or two others that intrique me.

PWRD – Perfect World is a Chinese online gaming company.  They sell and manage several of the largest and most popular online role-playing games in China.  They have a market cap. of $1.25B.  They have no debt and over $250M in cash on their balance sheet (over $5/share).  Their P/E ratio is 8.5!  As one would expect with a software company they earn incredibly high returns on assets and on equity. 

The stock is currently trading near the lower leg of the VISION V.  Like all VISION selections it has fallen, hit bottom, and is now in recovery mode.  It hit a 52-wk high of $49.08 back in November of 2009.  It then fell hitting its 52-wk low of $20.79 in June.  Since then it has recovered, closing Friday at $24.99.  The SEP CCs at the $24, $25, and $26 strike price all look good.  The best choice of course is dependent on your guess as to the future direction of the market and your risk profile.

GHL – Greenhill & Company is an independent investment bank.  It has a market cap. of $2.13B.  They seem a little pricey having a P/E ratio of 33.  However, they have excellent operating margins.  They have around $33M in cash but over $55M in debt.  The stock hit a 52-wk high of $93.90 back in October before falling to around $61 in June.  It closed Friday at $72.20. 

I would pass on this one for a number of reasons.  First, I like to trade stocks that are less than $50.  Second, it has a very high P/E which in this shaky market means it could fall alot further before folks began to see it as a bargain and starting buying.  Third, while the amounts are modest, it does have more debt than cash on its books.  In this market and economy I’d rather stick with stocks that have zero net debt.

HAR – Harmen International Industries is a manufacturer of stereo equipment under various brand names including the famous Mark Levinson brand stereos found in Lexus automobiles.  It has a market cap. of $2.14B and a reasonable P/E of 13.65.  As one might expect in a highly competitive industry Harmen has thin margins and low rates of return on assets and equity.  However, they do have more cash than debt on their balance sheet and generate good free cashflow.

The stock peaked at $52.51 in April.  Its 52-wk low is $27.10 which it hit almost a year ago in August 2009.  It closed Friday at $30.71.   The SEP $30 call looks interesting at $1.75 bid.

GAME – Shanda Games Limited, like Perfect World is another Chinese online gaming company.  It has a market cap. of $2.02B and a P/E of 9.16.  Also like Perfect World, GAME has excellent operating margins and earns high rates of return on both assets and equity.  It has over $420M in cash vs. only around $2M in debt.

I like everything about Shanda except the stock price.  It is less than $10, having closed on Friday at $7.02.  Thus, when trading options you have little room to maneuver.  Worse yet, the Shanda options trade in increments of $2.50.  For these reasons I would pass on trading GAME.

That wraps up my discussion on the four top-rated VISION picks.  However, a couple of others further down the list of 11 caught my eye.  They are ADBE and WAG.

ADBE – Adobe Systems is one of the most recognized names on the planet in computer software.  It makes the ubiquitous Adobe Acrobat and pioneered the PDF document.  It has a market cap. of $14.66B and a relatively high P/E of  39.21.  However, it has a forward P/E of only 13.  It has good but not exceptional margins and about $1.15B in net cash.   It is trading at the lower leg of the VISION V having hit a 52-wk high of $37.86 last December and bottoming out in July at $26.34.  Friday it closed at $27.92.  The SEP $28 call at $0.88 looks interesting to me.  Ron prefers the OCT $28 or $29 strikes.  In this kind of market I prefer to stick with the near month.

WAG – Walgreens is a drugstore retailer.  It has a market cap. of  $27.69B and a reasonable P/E of 13.70.  Like most all retailers it has thin operating margins.  However, it does earn respectable returns on its assets and equity.  Its cash and debt are almost exactly equal and it generates strong cash flow.  The reason I’m interested in Walgreens is because I think it is a blue chip company with a solid dividend.  This is a company I wouldn’t mind owning for a good long time and now is a good time to establish a position.  It pays a small but growing dividend of $0.70/share.

Since hitting a 52-wk high of $39.66 in October it had fallen to a 52-wk low of $26.20 in July.  On Friday it closed at $28.45.  You could enter a position in WAG in several different ways.  You could do a buy/write and sell the JAN $30 or $31 strike.  This would allow you to make some capital gains and collect at least one dividend before facing the possibility of being called away in January.  Or, you could sell near-month put at either $27 or $28 and hope to be assigned on a pull back.

Hope you find all of this information interesting and useful.

Regards,

Troy

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6/27 – New VISIONS Scan

Posted by mounddweller on June 28, 2010

I ran a new VISIONS scan last night and the volume of stocks popping up on the Scout report continues to increase.  This scan returned 134 stocks that met the Level 3 criteria and 19 that met the Level 4 criteria.  It was only a few weeks ago that I was getting ZERO stocks returned by Scout at Level 4.

There are 4 stocks in the Level 4 list that are rated ‘TA’ (take action) and have a Gold$ score = 80.  They are…

(1) Turkcell Iletisim Hizmetleri AS (NYSE: TKC)

(2) First Solar (Nasdaq: FSLR)

(3) Chemical & Mining of Chile (NYSE: SQM)

(4) Banco Santander, S.A. (NYSE: STD).

I find it interesting that 3 of the 4 are international stocks listed as ADRs on the NYSE.  Perhaps that’s an indicator that we should be diversifying internationally?  Other ‘TA’  rated stocks further down the list (Gold$ < 80) include: GILD, EJ, MAN, MASI, CEPH, PMCS, KCG, NSR, LOGI, DELL, and YHOO.

Up and comers rated ‘GR’ (get ready) and high on the list include: GAME, NTRS, and PBCT.  Of these, GAME (Shanda Interactive) is the most interesting.  It already has a Gold$ score of 82.  It just needs to get back up in the VISION V and it might make an attractive trade.

Let me know if you find any of these appealing and why.  At first glance none of them jumped out at me as a “must trade” opportunity.

Regards,

Troy

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Rich – This one’s for you…

Posted by mounddweller on December 23, 2009

Rich,

I saw your comment about not getting anything back on your Scout search.  Wanted to show you my Scout search criteria and the results.  However, I can’t post images in comments so I had to post a new message.  Below is an image of my Scout search criteria.  You’ll notice it is not very restrictive.  I modified the criteria earlier this year because, like you, I wasn’t finding any reasonable candidates for investment.  I intend to re-tighten the criteria when the market starts going wacky on us again. 

Below is an image of the results file I got back after running Scout on 12/19.

Hope this helps.

Regards,

Troy

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Scout Report – Interesting Results

Posted by mounddweller on July 8, 2009

I ran a VISIONS scan last night and was rather surprised by the results.  What surprised me was that a majority of the most highly rated stocks came from the Biotech or Healthcare sectors.  Biotechs are well known for having occasional periods of strong upward moves.  Perhaps this is the beginning of one?

Below is an image of my Scout report.  The image contains the top 20 results of my scan.  The complete report contained 70 stocks.  HNT looks particularly attractive as it is trading below book value.   Do your own DD and let me know if any others look particularly appealing to you and why you think so.

VISIONS - Scout Report 070709

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