The most profitable play this morning was to take advantage of the "sell on the news" crowd - short the opening, cover quickly, buy the drop ((75-76) then ride the recovery after the profit-takers are washed out. This will recover to 79-80 helped by short covering. Note that the analysis that says "guidance is weak" seems to overlook the fact that NKE ALWAYS issues cautious guidance, but at the same time, always seems to beat the street and show strong financials even when market conditions are weak or challenging. Focusing on growth markets, share value and technological innovation makes this a long term winner. I'm long mostly at 70-72.50 with a small amount at 77. I was glad to see NKE drop below 76 this a.m. which was a good buying opportunity.
Keep buying UA, dudes. Euphoria buying is much more powerful than reacting to a market drop. If everyone keeps buying UA will run back up to 120 instead of crashing to 105. It's like Nemo - just keep buying, just keep buying. Uh...good luck with that.
I started buying LYB stock and options when the stock was 78-79, bought more at 81-82 and just bought July 90 options. This stock has been up and down on lawsuit news however the long term trend is up with a better than 80% increase in earnings last quarter and a recently announced large stock buyback funded with a 4.6% billion dollar note. LYB is a chemical refining company that benefits greatly from abundant natural gas which is a feedstock for LYB derivative chemicals such as plastics.
This is a great play on natural gas fracking since LYB is benefiting from this. Also they are growing fast with lots of sales in the future as indicated by the fact that they had to reopen a methanol plant they had previously mothballed. They pay $2.40 a year per share in dividends. So there is a lot going on at this company, which was flying under the radar and under-appreciated since Lyondell and Basell merged into this powerhouse chemical giant.
LYB has moved above 85 to the 86-86 level and is creeping toward 87-89 en route to 95. More institutions are adding LYB to their portfolios. This is an overlooked/undervalued stock that had a breakout quarter but was not recognized for this achievement. I am long LYB. I bought in at 77-79. LYB uses natural gas as a feedstock in their refineries and is one of the few energy companies that benefits from abundant low priced natgas. A good way to play energy - a company that benefits directly from fracking and huge natgas reserves.
The seasonal breakout is fast approaching - keep in mind that NKE reports earnings in MARCH - the last earnings were reported in DECEMBER which means that the December/Holiday sales will be included in the March earnings and by most accounts this season was extremely strong for athletic wear - as evidenced by Under Armour's breakout results which drove the stock up 25 points. Olympic-related sales will also be included in the March earnings report. NKE has moved up from 70-71 to cross the 75 mark and is now heading toward 79-80.
UA ran too fast...a pullback and profit taking will help the stock long term. This Olympic disaster sort of cancels out all the millions in marketing expenses invested - tough when marketing campaigns backfire. The giant question is - will this trigger profit-taking and a sell-off below 100?
The combination of Nike's earnings coming up in March, the seasonal surge that happens in the spring, and the fact that holiday sales will be included in March earnings due to Nike's off-calendar fiscal year - are making this an attractive play. Under Armour's woes from the Wall St. Journal article - and cable TV discussions by Cramer, CNCBC, etc. are also benefiting Nike. It appears to be time to take profits on UA and have a complementary position in NIKE. I am long Nike and do not own Under Armour shares.
Sentiment: Strong Buy
The worrisome thing about this controversy is that it may spark selling by nervous investors and signal that this is a good time to take profits and get the money off the table.
CNBC today trashed Under Armour over allegations that their suit designs are losing medals for U.S. athletes in racing events. This bad press is temporary but it is also causing on-air analysts to re-examine the valuation of UA's stock which ran up 25 points on blowout earnings. It doesn't take much to cause a flurry of profit-taking by nervous investors, so this is a time to be cautious. I have been a long investor on UA and happily so, but currently do not own shares. I do own shares in Nike which I expect to rise on Nike's seasonal March-April "surge" which seems to happen every spring.
Barclays just raised the price target on LYB to the mid 90s so that's cool. I hold stock and options because the record breaking earnings quarter - which is a seasonally LOW quarter normally - was a blowout. Clearly, LYB is benefiting from the glut of natural gas from the fracking deposits in Pennsylvania and is one of the very few energy stocks that will benefit from low natgas and large quantities because natgas is the feedstock for most of their chemical products, plastics and derivatives. This in my opinion is a company that has been under appreciated and overlooked. LYB pays $2.40 a year in dividends. This is my second highest stock holding.
Did you miss the market runup, being in cash? I held defensive stocks (ENTA mostly which did very well when the market dropped, and again when it recovered) as well as UA and I bought NKE at the bottom around 70. I had some cash available but the market correction had some weak charting and the market was jump started by the first week pension buy-ins - the first week there is often a surge of automatic pension fund buying that keeps the market from plunging or staying underwater. I do expect the market to drop again after earnings season.
NIKE is positioning for its annual spring runup. If you check the charts you'll see that Nike typically falls after Xmas but then tends to surge in Feb. or March. This is the beginning of the surge and is fueled a combination of: 1) stronger than expected holiday sales by the athletic wear leaders, 2) earnings coming out in MARCH, and 3) Olympics buzz where Nike dominates the PR. Analysts are beginning to weigh in with higher price targets in the 80s. The best buy-in point was close to 70 which is where I bought shares and call options. This year I did well with Nike and Under Armour.
Your question is answered - 70 was the bottom. The new question is: what is the TOP? Earnings are coming out in MARCH so there is a timing issue and possible runup in the coming month.
Adidas has also indicated that they are requesting a JURY trial which signals they want to garner maximum publicity over this - which means negative publicity for Under Armour. The question is, did UA check the patents on their techwear before designing, or did they do their patent due diligence before making their recent acquisition? I'm a fan of the company and an Under Armour customer - I am normally long until now - I currently hold put options.
Here is the news item: http://www.nasdaq.com/article/adidas-sues-under-armour-over-patents-20140204-01392
The UA runup may be over - UA always drops back severely after a quick surge so check the charts. In addition to the tendency of the stock to fall back after a surge, Adidas has filed a very serious lawsuit on 12 infringements and includes UA's new acquisition in the suit which dilutes the value of that. I will not be surprised if UA gaps down in the morning. Time to take profits.
This is a reminder that UA often drops 5 to 10 points after a quick runup on a beat the street result. Also, the expected market correction could drop the Dow to 14,800 and this is another risk that could drag the stock. Don't be surprised if UA drops below 100 in the next 15 to 20 days.
LYB quarterly earnings were up 86% year over year. The methanol plant that was reopened should begin to show results in the next earnings report.
LYB just recorded another blowout quarter - which answers the question: how do you invest in the energy sector when oil and gas prices are FALLING? The answer is: Find a chemical company that uses natural gas as a feedstock which means it will have an abundant source of supply (natgas) and likely lower costs. That company from my research is LYB. I hold LYB for long term cap gains and the dividend which is about $2.40 a year. Also a good hedge against the market correction.