MOST NOTEWORTHY: OptionXpress, China Precision Steel and WMS Industries were today's noteworthy initiations:
JMP Securities expects OptionXpress (NASDAQ: OXPS) to continue to benefit from continued retail adoption of options and futures trading and expansion of its platform outside the U.S. Shares were assumed with an Outperform rating and $29 target.
Merriman believes China Precision Steel (NASDAQ: CPSL) should be able to gain market share as it mainly competes against foreign imports and currently has a lower cost to manufacture. The firm started shares with a Buy rating.
Soleil expects WMS Industries (NYSE: WMS) to do well as it benefits from market share gains and continues to boost operating efficiencies. The firm initiated shares with a Buy rating and $34 target.
OTHER INITIATIONS:
Motorola (NYSE: MOT) was initiated at Societe Generale with a Sell rating.
Pacific Growth initiated Cisco Systems (NASDAQ: CSCO) with a Neutral rating.
Sonus Networks (NASDAQ: SONS) was started at JP Morgan with a Neutral rating.
OptionsXpress (NASDAQ: OXPS) shares are trading higher today after the company announced it will acquire Open E Cry LLC for $18 million in cash and stock. Open E Cry is a high-volume futures broker. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on OXPS.
After hitting a one-year high of $34.95 in December, the stock hit a one-year low of $18.55 in March. OXPS opened this morning at $22.57. So far today the stock has hit a low of $22.52 and a high of $23.46. As of 12:15, OXPS is trading at $23.19, up $0.62 (2.7%). The chart for OXPS looks bullish and steady, while S&P gives the stock a bullish 4 Stars (out of 5) Buy rating.
For a bullish hedged play on this stock, I would consider an August bull-put credit spread below the $20 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 9.9% return in just two months as long as OXPS is above $20 at August expiration. OXPS would have to fall by more than 14% before we would start to lose money. Learn more about this type of trade here.
MOST NOTEWORTHY: Omnicare, Coca-Cola and OptionXpress were today's noteworthy upgrades:
Oppenheimer upgraded Omnicare (NYSE: OCR) to Outperform from Perform citing their analysis that indicates the Rx market is stronger than expected in the LTC channel, which is largely overlooked by investors due to the legacy focus on beds. The firm expects solid Q2 results will increase confidence in the company's ability to achieve mid-point or better EPS guidance.
Deutsche upgraded Coca-Cola (NYSE: KO) to Buy from Hold based on favorable currency impact, international growth, and valuation.
OptionXpress (NASDAQ: OXPS) was raised at Merriman to Neutral from Sell as they see little downside to risk estimates, following several rounds of cuts, and valuation.
OTHER UPGRADES:
Fresh Del Monte (NYSE: FDP) was upgraded to Outperform from Market Perform at Wachovia.
JP Morgan upgraded Kellogg (NYSE: K) to Overweight from Neutral.
Going into 2008, it's been an extreme experience for online brokers. There has been considerable volatility in equities, with the major averages falling an average of 10%. What's more, home prices remain depressed.
So, for a company like optionsXpress (NASDAQ: OXPS), which relies heavily on the retail investor, it's been a challenge. Yet, the company somehow keeps growing.
In Q1, profits increased 12% to $23.8 million, or $0.38 per share. Revenues were up 11% to $60.8 million.
Basically, optionsXpress continues to be effective with customer acquisition, especially with its broad tools and educational resources. It also helps that its competitors – such as E*TRADE Financial Corporation (NASDAQ: ETFC) – are suffering.
MOST NOTEWORTHY: OptionXpress Holdings, Supertex and Syngenta were today's noteworthy initiations:
Merriman believes OptionXpress Holdings (NASDAQ: OXPS) has lost market share, and remains vulnerable on many fronts. They expect the competitive landscape will continue to intensify, pressuring margins and growth rates. The firm initiated shares with a Sell rating.
Morgan Keegan started Supertex (NASDAQ: SUPX) with a Market Perform rating, citing lack of near-term catalysts.
Syngenta (NYSE: SYT) was initiated with an Outperform rating at Bear, as they are positive on the company's defensive growth profile and valuation.
OTHER INITIATIONS:
HSBC initiated FedEx (NYSE: FDX) with a Neutral rating and $102 target and United Parcel Service (NYSE: UPS) with an Overweight rating and $86 target.
Credit Suisse started Liberty Media (NASDAQ: LCAPA) with an Outperform rating and $140 target.
It's not easy to top a present like TheStreet.com, Inc. (Nasdaq: TSCM), but my next holiday stock pick does just that. I give you investor education cum brokerage firm INVESTools Inc. (Nasdaq: SWIM). It's a pretty cool business model that aims to teach people to invest via seminars, getting some juicy upfront fees and reaping the rewards over time through commissions and fees, if they are successful in their teachings.
Besides having a booming stock – which, after a nasty 50% mid-year drop, this week is breaking out to new all-time highs – an incredible trading platform that I use for my own trading and big time investors known for discovering undervalued smallcap stocks, this company has some serious growth. In fact, you'd be hard pressed to find another company in the finance arena with numbers that are even in the same ballpark.
OptionXpress Holdings Inc. (NASDAQ: OXPS) -- volume & volatility Elevated on renewed buyout speculation. OXPS is recently up $0.87 to $26.47 on renewed buyout speculation. OXPS call option volume of 3,911 contracts compares to put volume of 33 contracts. OXPS August option implied volatility of 47 is above its 26-week average of 39 according to Track Data, suggesting larger price fluctuations.
Select Comfort Corp. (NASDAQ: SCSS) -- calls active on unconfirmed Tempur Pedic International Inc. (NYSE: TPX) buyout speculation. SCSS, a personalized sleep product company, is recently up $0.15 to $17.49. TPX has been frequently mentioned as interested in acquiring SCSS assets over the last three years. SCSS has a market cap of $854 million with zero long term debt. SCSS had March quarterly 2007 revenue of $216 million. TPX has a market cap of $2.4 billion. SCSS call option volume of 3,011 contracts compares to put volume of 174 contracts. SCSS August option implied volatility of 42 is above its 26-week average of 39 according to Track Data, suggesting slightly larger price fluctuations.
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MOST NOTEWORTHY: OptionXpress, China Precision Steel and WMS Industries were today's noteworthy initiations:
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Here are some highlights from this past week's 
Going into 2008, it's been an extreme experience for online brokers. There has been considerable volatility in equities, with the major averages falling an average of 10%. What's more, home prices remain depressed..gif){kind=logo}
OptionXpress Holdings Inc.
The week in preview: Chicken soup (or a doughnut) for the recession-weary soul?
Comfort Zone Investing: Oil's down, which is a start, but not good enough
Stocks have their worst week in six years
