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Selling Short Big Printer Company

|Includes: AAPL, CAJ, CSCO, DELL, DVMT, HPQ, HTHIY, IBM, Lexmark International, Inc. (LXK), NCR, STX, XRX

After reviewing the DJIA, SP500 and Nasdaq index charts, it looks like a major downtrend is underway. With the sell-off in May and June, one might expect a short-term rebound. There possibly could be one, but the charts are still pointing down to me. I suggest caution on the buy side, and selling short my stock pick this week on Lexmark, or any other favorite short-sells you might have. Energy, commodity stocks have been the place to be lately on the buy side. Maybe they have more room to run, and maybe its time for a reversal with them. I recommend selling short stocks, trading commodities and forex.

According to Zacks Investment Research and their long-term winning stock portfolios, leading printing and imaging solutions provider Lexmark International Inc. won a 3-year contract from a renowned tire and auto repair company TBC Corporation. Financial terms of the deal were not disclosed.

Per the contract terms, Lexmark will provide its Managed Printing Services (MPS) to TBC Corp, which aims to upgrade and reduce operational costs of its printing environment. Apart from this, Lexmark will enhance the manner in which TBC Corp handles and orders printer consumables.

With Lexmark’s technology, the company will be able to keep its inventory up to date and thereby order the exact amount of consumables required. The process should subsequently clear the clutter at TBC Corp and more importantly, save it from blocking a huge amount of money.

TBC Corp. has begun deploying Lexmark’s MPS across its retail tire and automotive maintenance stores, as well as its Wholesale Division throughout the U.S.

As a new branch of the printing business, MPS is attracting major industry players. Gartner sees this as the capability of the service provider to take primary responsibility for meeting customers’ office printing needs, including printing equipment, supplies, service and overall management. Lexmark has entered into this business in a big way.

Lexmark operates in a highly competitive market. So there is a constant price war among major players to snatch market share from one another. The market is narrowing as digital technology and e-commerce become more prevalent.

Lexmark’s first quarter results were disappointing, as both top and bottom lines missed Zacks expectations. The company provided a lackluster revenue outlook for the second quarter. Though new products could stem market share losses, the impact on results could still be some ways off. Though Lexmark faced little impact from Japan’s disaster, the company expects a mild jolt in its second quarter earnings.

However, Lexmark may benefit from its retail presence as it sells through Best Buy Co. stores in the U.S.

Currently, Lexmark has a Zacks #5 Rank, implying a short-term Strong Sell rating.

Sell Short Lexmark – Ticker LXK

Sell Entry: 29.85 to 29.09

Stop-Loss: 32.23

Take Profit Areas: 24.84 to 24.53, 21.39 to 21.11, 16.86 to 16.63

Company Profile

Lexmark International, Inc. develops, manufactures, and supplies printing and imaging solutions for offices. It offers laser printers, inkjet printers, and multifunction devices, as well as cartridges and other supplies, services, and solutions. The company also sells dot matrix printers for printing single and multi-part forms by business users. In addition, it offers maintenance, consulting, and systems integration services, as well as provides managed print services, including asset lifecycle management, implementation and decommissioning services, consumables management, optimization services, and utilization management. Lexmark International serves large enterprises, small and medium businesses, and small offices/home offices. The company offers its products primarily through resellers, retailers, and distributors, as well as through solution providers, discount store chains, consumer electronics stores, office superstores, wholesale clubs, OEM arrangements, and online. It operates in North and South America, Europe, the Middle East, Africa, Asia, the Pacific Rim, and the Caribbean. The company was founded in 1990 and is headquartered in Lexington, Kentucky.

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Click the Lexmark stock chart below for a larger view.