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TradingBlock provides investors regular market commentary and outlooks from market analysts and educators like Stutland Volatility Group, Dan Sheridan of Sheridan Mentoring, and TradingBlock's own market strategist Tim Biggam. Market analyst outlooks for individual stocks are entered into our... More
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  • Apple Due For Institutional Support At Current Level, Dividend Yield

    Tim Biggam, TradingBlock (May 17, 2012, 3:19 pm CDT)

    SymbolAnalyst Target PriceTarget Date
    AAPL560.00July 20, 2012

    Apple Inc. (ticker: AAPL), together with subsidiaries, designs, manufactures, and markets mobile communication and media devices, personal computers, and portable digital music players; and sells related software, services, peripherals, networking solutions, and third-party digital content and applications worldwide.

    The drubbing in AAPL shares continues seemingly unabated, with the shares trading under 540 for the first time since March 6. Since earnings on April 24th, the stock has been down 11 out of 15 days, falling 12% from 610 to 537. AAPL now has a dividend yield of nearly 2%, eclipsing the yield on the 10-year government bond by 25 bps (basis points). Much of the recent sell-off is due to cash-raising by hedge funds, with AAPL being seemingly every fund's largest holding.

    Given that AAPL shares now fetch only a 13 P/E on a trailing basis, and under 10 on a forward basis, combined with a nearly 2% yield, I think AAPL is reaching a valuation level that will get some institutional support. I look for AAPL to head to 560 by July expiration.

    Play of the Day

    Based on Apple's (ticker: AAPL) current market price of $530.12 and using a target price of $560.00, a target date of July 20, 2012 and $10,000 of investment capital, below are three options strategies (ranked by potential profit) and a comparative stock trade to consider should the price target be achieved at the target date.

    Click on the strategy name below to access trade details using TradeBuilder on TradingBlock.com. Powered by TradingBlock's TradeBuilder.

    Strategy (click for details)% Return at TargetProbability of breaking
    even or better
    Buy Sep Call Spread+96%51%
    Sell Sep Put Spread+85%48%
    Buy Sep Call+23%52%
    Buy Stock+6%55%

    * Click link to access TradeBuilder details on TradingBlock.com. Must have Instant or Actual account. Subject to change due to changing market conditions. Click here to view risks regarding selling stock short.

    DISCLAIMER: This content is provided for educational and informational purposes only. Evaluate any strategy prior to use to understand risk and suitability. TradingBlock does not endorse or warrant any Market Analyst content, service or product. Use this content at your own risk without guarantee or warranty of any kind from TradingBlock. Tim Biggam is a TradingBlock registered representative. He is not compensated by TradingBlock for any market research or analysis services. Tim currently holds neutral spread positions in AAPL.

    May 17 5:00 PM | Link | Comment!
  • With Brazil Now Trading At A Discount To US, $VALE May Offer Value

    Tim Biggam, TradingBlock (May 15, 2012, 3:04 pm CDT)

    SymbolAnalyst Target PriceTarget Date
    VALE22.00Sept. 21, 2012

    Vale S.A. (ticker: VALE) engages in the exploration, production and sale of basic metals in Brazil and internationally. The company is also involved in fertilizers, logistics, and steel businesses. In addition, Vale generates energy through hydroelectric power plants.

    While the US equity market has seen a little rough patch lately, foreign markets have been beaten up to a much greater degree. One of the worst performers has been Brazil, which is down nearly 10% YTD. Brazil is now trading at a big discount to US stocks on a valuation basis, while still showing much better growth prospects.

    Of the Brazilian stocks, VALE has been probably the most unduly punished. The stock is now trading at less than a 6 P/E and sports a very healthy 5.6% dividend yield. Compared to the yield on 30-year US Treasuries of under 3%, VALE certainly looks comparatively attractive.

    With the stock currently priced under 20 for the first time since 2009, VALE is now trading at a trough valuation. Combined with the high yield, I look for VALE to head back to 22 by September expiration.

    Play of the Day

    Based on Vale's (ticker: VALE) current market price of $19.02 and using a target price of 22.00, a target date of September 21, 2012 and $1,000 of investment capital, below are three options strategies (ranked by potential profit) and a comparative stock trade to consider should the price target be achieved at the target date. .

    Click on the strategy name below to access trade details using TradeBuilder on TradingBlock.com. Powered by TradingBlock's TradeBuilder.

    Strategy (click for details)% Return at TargetProbability of breaking
    even or better
    Buy Sep Call Spread+143%48%
    Sell Sep Put Spread+72%59%
    Buy Sep Call+68%46%
    Buy Stock+15%58%

    * Click link to access TradeBuilder details on TradingBlock.com. Must have Instant or Actual account. Subject to change due to changing market conditions. Click here to view risks regarding selling stock short.

    DISCLAIMER: This content is provided for educational and informational purposes only. Evaluate any strategy prior to use to understand risk and suitability. TradingBlock does not endorse or warrant any Market Analyst content, service or product. Use this content at your own risk without guarantee or warranty of any kind from TradingBlock. Tim Biggam is a TradingBlock registered representative. He is not compensated by TradingBlock for any market research or analysis services. He currently does not hold any positions in VALE.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    May 15 4:18 PM | Link | Comment!
  • Cisco Systems Looks To Grind Upward Following Earnings Disappointment

    Tim Biggam, TradingBlock (May 11, 2012, 3:09 pm CDT)

    SymbolAnalyst Target PriceTarget Date
    CSCO18.00July 20, 2012

    Cisco Systems, Inc. (ticker: CSCO) designs, manufactures, and sells Internet protocol (NYSE:IP)-based networking and other products related to the communications and information technology industry worldwide. It offers routers that interconnect IP networks for mobile, data, voice, and video applications; switching products, workstations, IP phones, access points, and servers; application networking services; and home networking products. The company also offers products for security, storage area networking, and collaboration, plus video connected home products and wireless systems.

    While CSCO disappointed with their latest earnings announcement, especially on guidance, the subsequent reaction has been overdone. The stock has dropped over 12% from 19 to under 17, and now sports a very reasonable trailing P/E of nearly 12, with a forward P/E under 10. CSCO also has nearly 9 dollars per share in cash, which puts their ex-cash multiples at bargain basement levels.

    While growth has most certainly tempered, CSCO still is growing at a 6% pace. The stock also has a nearly 2% yield, which is equivalent to 10-year US Treasuries. While the upside may be somewhat limited over the near-term, at these levels think the downside is also limited, especially given the cash hoard.

    I look for CSCO to wander aimlessly for the next few months, with a slight retracement back to the 18 level by July expiration.

    Play of the Day

    Based on Cisco's (ticker: CSCO) current market price of $16.50 and using a target price of $18.00, a target date of July 20, 2012 and $1,000 of investment capital, below are three options strategies (ranked by potential profit) and a comparative stock trade to consider should the price target be achieved at the target date.

    Click on the strategy name below to access trade details using TradeBuilder on TradingBlock.com. Powered by TradingBlock's TradeBuilder.

    Strategy (click for details)% Return at TargetProbability of breaking
    even or better
    Buy Jul Call+92%44%
    Buy Aug Call Spread+43%61%
    Sell Aug Put Spread+40%61%
    Buy Stock+9%55%

    * Click link to access TradeBuilder details on TradingBlock.com. Must have Instant or Actual account. Subject to change due to changing market conditions. Click here to view risks regarding selling stock short.

    DISCLAIMER: This content is provided for educational and informational purposes only. Evaluate any strategy prior to use to understand risk and suitability. TradingBlock does not endorse or warrant any Market Analyst content, service or product. Use this content at your own risk without guarantee or warranty of any kind from TradingBlock. Tim Biggam is a TradingBlock registered representative. He is not compensated by TradingBlock for any market research or analysis services. He currently does not hold any positions in CSCO.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    May 11 4:26 PM | Link | Comment!
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