Here are four stocks we are currently watching for buys and sells:
Tyson Foods (NYSE:TSN) - Expectations are low for the coming TSN report next week, which may give all the reason for a breakout. The stock has been on a tear as of late. Improving from 16.50 to just under 20 in the past two months, the stock is now ready for its next earnings report. Expectations are for a drop in EPS from 0.63 to 0.31. Profitability has hit chicken producers as feed prices have increased. Yet, in the July-September month, the price of chickens has increased from 86 to 89. Additionally, this is about the same prices as one year ago. We believe estimates for profit cuts from increase in input prices is overdone. The stock is setting up to explode on a beat. We expect the stock to move cautiously into earnings, but it may be ready for a major move out of earnings.
Healthcare Select SPDR (NYSEARCA:XLV) - Healthcare was one of the best performers during earnings season. The ETF that holds a number of the top healthcare companies has a great technical set-up. It is above the 20-day, 50-day, and 200-day MAs. The ETF has been outperforming the market, and it has seen some consolidation as of late. We think once this period of consolidation ends for the market, XLV is a great place to stash some cash. We like buying it now at the 200-day MA, and we think that it should hold 33 for the near term. Healthcare maintains its position of strength and safety.
Boston Scientific (NYSE:BSX) - Right now, BSX is looking like a great short sell. Despite our liking of XLV, BSX has broken down. It is now below every major MA as well as in a strong downward price channel. The stock looks headed for 5.40 again where it was after a weak earnings report. The stock bounced after the report, but the weakness in the market is making the stock show its true colors. The stock broke its 20-day MA today, and a close below that will signal more short selling. We would say a break of 5.40 would be very bad for this stock and could signal even lower move. Right now, the stock looks great to sell some bear call spreads against.
Hewlett Packard (NYSE:HPQ) - The company has earnings coming up next week that are supposed to show a 0.20 decline in EPS YoY. The company's report last quarter was less than ideal, and we expect the stock to sell into earnings. The stock has been tightening and consolidating for a breakout. We are not sure it will break down significantly into earnings, but the expectations will be low ... and we should expect some downside into the report.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in TSN, XLV over the next 72 hours.
Additional disclosure: We may short HPQ or BSX.