Contributor since: 2013
This report is only based on manufacturing shipments. I also profiled retail earlier in the month. It is true that financial and energy stocks have surged, but those sectors do not lead the economy. That's why manufacturing activity and retail spending are key. The market has now priced in a lot of growth based on a rebound in manufacturing later in the year. So this report along with the ISM will be important to watch.
I couldn't agree more. The problem is that the market now works backwards -- when the market is going up, everyone wants to be bullish and will pick out the data that supports their case. From what I can see, we are way ahead of ourselves again. The economic trend is still down and there are a lot of headwinds that we have not even accounted for yet, like tax increases, reduced government spending, and Obamacare. The continued impact of QE on the economy has diminished entirely. Now the money from the Fed goes from the primary dealers straight to the market (it amounts to around $3 billion per business day). It seems like every time the Feds manipulate the market, it ends badly. Hope that's not the case this time around.
Fastenal reported January sales this morning. Net sales came in at $274,866 and average daily sales grew at 6.7%. This is the lowest year/year growth rate since February 2010. The growth rate needs to come in above 9% for the next two months to meet analyst revenue estimates.
I definitely agree with that. It's hard to pass up a good value like APOL given how high the multiples are getting on many other stocks. What ultimately sold me was the ability was the company's ability to maintain healthy profits in the face of a drastic decline in enrollment. If enrollment bottoms and starts to creep back up, the shares should move up quickly. Nice risk/reward.
CSX coal volumes decreased by 20.3% in Q4 and Ag volumes were down about 5.5%. Total traffic was down about 3.1%. Unless CSX was able to generate more revenue per unit (which has been declining throughout the year), my model shows a significant miss on revenues. I would avoid this one for the time being. It does not look like there will be much upside.
Thank you for the feedback. I am planning to do this analysis for several other companies in the near future ... so stay tuned!!!
The bearish call spread or put spread using the same two strikes should yield the same results. For the bearish put spread, you will be paying the amount of the long put less what you receive for selling the short put. For the bearish call spread, it is just the opposite. You will be receiving more for the short call than you will be paying for the long call. But in the end, your breakeven and profit potential should be the same.
If you are talking about using different strikes for the put and call spreads, then the risk/reward will vary greatly. When evaluating these, keep an eye on your breakeven price and the risk/reward ratio to find something suitable for your view on price movement.
I hope this answers your question ...
I have played FAST from the long side in the past. I started to change my view as growth began to slow earlier this year. I think the move to $48 is a great opportunity to play the short side of the trade again. For stocks priced like FAST, growth is a big deal. When it begins to slow down, multiples adjust fast. Investors in CMG, NFLX, GMCR, etc. learned that first hand recently.
Yes, most stocks trading at high multiples become the target of short-sellers. This one was no different. But the company's fundamentals never really justified a short position until the May 2012, and the stock responded with a significant drop from $53 down to $38. The price has jumped back up again providing another short opportunity. The risk reward here looks good. If an investor prefers a long-short strategy as a hedge to big swings in the market, this is definitely one of the better short candidates out there in my view.
I think the days of 20% y/y growth are in the past. I wouldn't consider a long position until it drops back to the $38-$39 level. It should drop at least another $2.50 from here (which is the top of the trading range from July to mid-December.