Sears Holdings (NASDAQ: SHLD - option chain) shares have jumped higher today even after the company announced a Q3 loss that included slowing sales and falling margins. Earnings and revenues fell, but an extension of the company' s buyback plan is boosting the shares today, along with a positive outlook for the company's holiday layaway promotion. It might just be that investors expected even worse results from the beleaguered retailer. 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 SHLD.
SHLD opened this morning at $33.98. So far today the stock has hit a low of $31.55 and a high of $38.47. As of 12:20, SHLD is trading at $36.67, up $4.83 (15.2%). The chart for SHLD looks bearish and S&P gives SHLD a negative 2 STARS (out of 5) sell ranking.
For a bullish hedged play on this stock, I would consider a December bull-put credit spread below the $22.50 range.
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FeedSears Holdings (SHLD) soars despite weak earnings
Continue reading Sears Holdings (SHLD) soars despite weak earnings
Microsoft announces big buyback, raises dividend
With its share price having spent the first part of the millennium in the doldrums, Microsoft (NASDAQ: MSFT) is putting its $23 billion cash pile to work -- and it's not being used for anything as exciting as an acquisition of Yahoo (NASDAQ: YHOO).
In a press release, the company announced that it had increased its quarterly dividend by 18% to 13 cents a share, and perhaps more interestingly, the board of directors authorized the company to repurchase $40 billion worth of stock.
Shares of Microsoft were up about 5% on the news in pre-market trade, but investors shouldn't read too much into it. A dividend hike of 8 cents per year is not exactly a reason to buy a stock, and as with any buyback announcement, this is an authorization, not a commitment. Microsoft might buy back $40 billion worth of stock and it might not buy back anywhere near that much.
Speaking on CNBC last week, Carl Icahn, who is now on the board of directors at Yahoo, reiterated his commitment to pushing the two companies into a deal of some kind. If it ends with an acquisition, Microsoft's buyback could be off the table.
In a press release, the company announced that it had increased its quarterly dividend by 18% to 13 cents a share, and perhaps more interestingly, the board of directors authorized the company to repurchase $40 billion worth of stock.
Shares of Microsoft were up about 5% on the news in pre-market trade, but investors shouldn't read too much into it. A dividend hike of 8 cents per year is not exactly a reason to buy a stock, and as with any buyback announcement, this is an authorization, not a commitment. Microsoft might buy back $40 billion worth of stock and it might not buy back anywhere near that much.
Speaking on CNBC last week, Carl Icahn, who is now on the board of directors at Yahoo, reiterated his commitment to pushing the two companies into a deal of some kind. If it ends with an acquisition, Microsoft's buyback could be off the table.
Mobile Telesystems (MBT) soars on $452M buyback plan
Mobile Telesystems (NASDAQ: MBT - option chain) shares are soaring higher today after the company announced its board approved buying back 11.1 billion rubles ($452 million) worth of shares. 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 MBT.MBT opened this morning at $68.18. So far today the stock has hit a low of $67.55 and a high of $70.54. As of 12:35, MBT is trading at $69.22, up $3.08 (4.7%). The chart for MBT looks neutral and S&P gives MBT a neutral 3 STARS (out of 5) hold ranking.
For a bullish hedged play on this stock, I would consider a September bull-put credit spread below the $60 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 4.2% return in just three weeks as long as MBT is above $60 at September expiration. MBT would have to fall by more than 13% before we would start to lose money. Learn more about this type of trade here.
MBT hasn't been below $60 at all in the past year and has shown support around $64 recently.
Brent Archer is an options analyst and writer at Investors Observer.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in MBT.
Western Union (WU) soars on guidance, buyback plan
Western Union (NYSE: WU) shares are trading higher today after the company said fiscal-2008 earnings will likely be in higher end of the range of $1.25 to $1.29 per share previously forecast, above analysts' estimates of $1.27 per share. WU also approved a plan to repurchase $1 billion in common stock. 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 WU.After hitting a one-year low of $15.00 in August, the stock hit a one-year high of $24.83 in December. WU opened this morning at $24.35. So far today the stock has hit a low of $24.08 and a high of $25.45. As of 10:35, WU is trading at $25.43, up $2.27 (9.8%). The chart for WU looks bullish and steady, while S&P gives the stock a neutral 3 Stars (out of 5) Hold rating.
For a bullish hedged play on this stock, I would consider a November 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 an 8.7% return in just five months as long as WU is above $20 at November expiration. Western Union would have to fall by more than 21% before we would start to lose money. Learn more about this type of trade here.
WU hasn't been below $20 by more than a few cents since October and has shown support around $22.50 recently. This trade could be risky if the company's earnings (due out 7/22) don't match their guidance. but even if that happens, this position could be protected by the support the stock might find at its 200 day moving average, which is currently around $22 and rising.
Brent Archer is an options analyst and writer at Investors Observer.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in WU.
Intuit (INTU) jumps on Q3 earnings, buyback plan
Intuit (NASDAQ: INTU) shares are trading higher after INTU announced yesterday evening its third-quarter profits jumped 21% to $444.2 million on strong sales of its tax-preparation and accounting programs. The company posted earnings of $1.39 a share on revenue of $1.31 billion, beating analysts' expectations. Also of note was a new $600 million stock buyback plan. 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 INTU.
After hitting a one-year high of $33.10 in October, the stock hit a one-year low of $25.08 in March. INTU opened this morning at $27.81. So far today the stock has hit a low of $27.56 and a high of $29.29. As of 12:20, INTU is trading at $28.50, up $1.29 (4.7%). The chart for INTUlooks bullish and steady while S&P gives INTU a neutral 3 STARS (out of 5) hold rating.
For a bullish hedged play on this stock, I would consider an October bull-put credit spread below the $25 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 19.0% return in just five months as long as INTU is above $25 at October expiration. Intuit would have to fall by more than 12% before we would start to lose money. Learn more about this type of trade here.
Continue reading Intuit (INTU) jumps on Q3 earnings, buyback plan
DirecTV (DTV) reports surprising first-quarter earnings
Shares of digital television provider DirecTV Group Inc. (NASDAQ: DTV) have been rallying in early trading as its earnings numbers for the first quarter were better than analysts had forecast. The company also announced its board approved an increase in its stock buyback program, raising it to $3 billion.The company said its first-quarter profit rose 10% to $371 million, helped by higher subscriber additions. DirecTV was able to slightly come in above analyst estimates, with 32 cents per share compared to the forecast 31 cents per share. Compared to its first period last year, earnings were up, as the digital television provider came with earnings of 27 cents a share last year.
The nation's largest satellite-TV company posted a respectable growth of 17% for its first-quarter revenue, which jumped to $4.59 billion compared with $3.91 billion a year ago. This was above analysts' predictions for quarterly revenue of $4.47 billion, according to Thomson Financial.
Continue reading DirecTV (DTV) reports surprising first-quarter earnings
Amazon.com (AMZN) soars on buyback plan
Amazon.com Inc. (NASDAQ: AMZN) shares are rising today after the online retail giant announced a multi-billion dollar stock and debt buyback plan this morning. The company will retire debt worth $1.25 billion and will buy back up to $1 billion in common stock over the next two years. If you think that the company 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 AMZN.After hitting a one-year low of $37.04 in March, the stock hit a one-year high of $101.09 in October. AMZN opened this morning at $73.40. So far today the stock has hit a low of $72.67 and a high of $74.60. As of 10:20, AMZN is trading at $74.07, up $3.16 (4.5%). The chart for AMZN looks bearish but improving slightly, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.
For a bullish hedged play on this stock, I would consider a March bull-put credit spread below the $55 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 4.4% return in just six weeks as long as AMZN is above $55 at March expiration. Amazon would have to fall by more than 22% before we would start to lose money. Learn more about this type of trade here.
UPS rises on buyback plans, upgrade
United Parcel Service, Inc. (NYSE: UPS) shares are trading higher this morning after a Bear Stearns analyst upgraded the stock to Outperform from Peer Perform with a price target of $85. The analyst said in a note he expects lower guidance for the company in the near term, but believes UPS is "well positioned for the longer term." This upgrade comes on the heels of UPS yesterday announcing that it will buy back $10 billion in stock over the next two years to boost their stock price. If you think that the company 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 UPS.After hitting a one-year high of $78.99 in August, the stock hit a one-year low of $65.74 yesterday. UPS opened this morning at $68.78. So far today the stock has hit a low of $68.31 and a high of $69.81. As of 11:00, UPS is trading at $69.18, up $2.47 (3.7%). The chart for UPS looks bearish and steady, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.
MGM Mirage plans $750 million stock buyback
MGM Mirage (NYSE: MGM) and Dubai World announced this morning they would launch a cash tender offer to buy back up to 10 million MGM common shares for $75 to $80 each. The companies' decision came on worries that an economic slowdown will lower demand for gambling. If you think that the company 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 MGM.The stock hit its 52 week high of 100.50 in October and set its 52 week low of 59.74 in January. MGM opened this morning at $73.71. So far today the stock has hit a low of $71.82 and a high of $74.29. As of 12:40, MGM is trading at $72.43, up $2.45 (3.5%). The chart for MGM looks bearish and steady while S&P gives MGM a neutral 3 STARS (out of 5) hold rating.
Continue reading MGM Mirage plans $750 million stock buyback
AT&T buyback shows value in its shares
Few deny that the current market contains considerable uncertainty: a subprime mortgage and related asset default issue which seeks a solution, declining corporate earnings, high energy prices and a wary consumer have put investors and citizens on guard. Sound business decisions in these choppy waters require research, careful planning and verve, and on Tuesday, AT&T (NYSE: T) may have accomplished just that.
AT&T announced that it would buy back $15.2 billion of its stock, and also said it would increase its quarterly dividend by 12.6% to 40 cents from 35.5 cents. AT&T's shares surged $2.02 to $39.92 Tuesday at mid-day on the news.
The company also set a long-term target of 30 million subscribers by 2010 for its TV service, which is delivered over phone lines.
Texas Instruments (TXN) increases buyback, lifts dividend
Earlier today, Brent Archer offered an options recommendation to capitalize on Texas Instruments (NYSE: TXN) as it rallies on today's fundamental developments. This morning, the microchip concern said its board authorized an additional $5 billion share buyback. Prior to this increase, TXN had about $3.8 billion shares left under an earlier buyback plan. Since September 2004, the company has been cleared to buy back $20 billion of its own shares, according to the Dow Jones newswires. Additionally, the company announced plans to lift its quarterly dividend payout by 25% to 10 cents per share, effectively taking the annual dividend payment on the company to 40 cents per share. The first new-and-improved dividend payment is tentatively scheduled on November 19 to shareholders of record on October 31.
Buybacks and boosted dividends are frequently read as strong fundamental indicators, as they suggest a company is willing to invest in itself, typically a bullish sign. In late-morning trading, TXN has gained 3.3%, gapping slightly higher. The stock appears poised to close the week north of its 10-week and 20-week moving averages for the first time since July 20.
Beth Gaston Moon is an analyst at Schaeffer's Investment Research. She does not own any Texas Instruments shares.
Texas Instruments (TXN) raises dividend and buyback
Texas Instruments Inc. (NYSE: TXN) shares are spiking higher today after the company announced plans to buy back another $5 billion of its shares and increase its regular quarterly dividend 25% to 10 cents. If you think that the company 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 TXN.After hitting a one-year high of $39.63 in July, the stock dropped sharply before rebounding off support at $32 in August. TXN opened this morning at $36.59. So far today the stock has hit a low of $36.52 and a high of $37.08. As of 11:05, TXN is trading at $36.89, up $1.12 (3.1%). The chart for TXN looks bearish but improving, while S&P gives the stock its highest 5 STARS (out of 5) strong buy rating.
For a bullish hedged play on this stock, I would consider a January bull-put credit spread below the $30 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 5.9% return in just four months as long as TXN is above $30 at January expiration. Texas Instruments would have to fall by more than 18% before we would start to lose money.
TXN hasn't been below $30 since January and has shown support around $34.75 recently. This trade could be risky if the company's earnings (due out 10/22) disappoint, but even if that happens, this position could be protected by the strong support formed around $32 in August, plus the stock's 200 day moving average, which is at $33 and rising.
Brent Archer is an options analyst and writer at Investors Observer.
Sears Holdings (SHLD) buyback trumps lackluster earings
Sears Holdings Corporation (NASDAQ: SHLD) opened at $136.00. So far today the stock has hit a low of $135.91 and a high of $139.63. As of 11:00, Sears is trading at $138.20, up $5.10 (3.8%).
After hitting a one year high of $195.18 in April, the stock has been slumping lately, falling to a year low of $128.00 on Friday. Shares are rebounding nicely today after the company announced a $1.5 billion buyback program, even though sales for the company were less than stellar and they lowered their forecast. Technical indicators for Sears are bearish and steady, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.
For a bullish hedged play on this stock, I would consider a September bull-put credit spread below the $120 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk and leverage returns. For this particular trade, it's possible to make a 12.4% return in just six weeks as long as Sears is above $120 at September expiration. The company would have to fall by more than 14% before we would start to lose money. Learn more about this type of trade.
Sears hasn't been below $120 at all in the past year and has shown support around $128 recently. This trade could be risky if the retail sector's back-to-school numbers are weak, but even if that happens, this stock is one that has been knocked down so much recently that it could be attractive to value investors.
Brent Archer is an options analyst and writer at Investors Observer. DISCLOSURE: At publication time, Brent neither owns nor controls positions in SHLD.
Continue reading Sears Holdings (SHLD) buyback trumps lackluster earings
ConocoPhillips lifted by $15B repurchase plan
ConocoPhillips (NYSE: COP) opened at $84.90. So far today the stock has hit a low of $84.67 and a high of $85.90. As of 11:00, COP is trading at 85.19, up 1.10 (1.3%).The market is expecting strong earnings numbers from the oil sector, as crude oil trades above $70 a barrel and the next half of the year looks good for the group. Also, ConocoPhillips announced a $15 B buyback plan to be implemented over the next 18 months. Many oil stocks, including COP, are trading at record highs today. Recent technical indicators for the stock have been bullish and steady, while S&P gives COP a positive 4 STARS (out of 5) buy rating.
For a bullish hedged play on this stock, I would consider a November bull-put credit spread below the $70 range. A bull-put credit spread is an options position that combines the purchase and sale of call options to hedge risk and leverage returns. For this particular trade, we will make a 5.3% return in just 4 months as long as COP is above $70 at November expiration. COP would have to fall by more than 21% before we would start to lose money on this trade.
COP has not been below $70 since May and has shown support around $76 recently. This trade could be risky if crude futures slide with the bigger inventories we are seeing, but even if that happens, this stock could have trouble going below $75, where it has bounced twice in the past two months.
Brent Archer is an options analyst and writer at Investors Observer. Do you have any deadwood in your portfolio? Check out the 18 Warning Signs That Tell You When To Dump A Stock.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in COP.
Amgen boosted by $5B larger buyback
Amgen Inc. (NASDAQ: AMGN) opened at $56.99. So far today the stock has hit a low of $56.75 and a high of $57.75. As of 10:50, AMGN is trading at 57.25, up 1.30 (2.3%).After hitting a one year high of 77.00 in October, the stock fell to a low of 52.36 in May. Shares are gaining this morning after the company announced that it has increased its buyback program by $5 billion. Technical indicators for AMGN are neutral and deteriorating, while S&P gives the stock a positive 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 $52.50 range. A bull-put credit spread is an options position that combines the purchase and sale of call options to hedge risk and leverage returns. For this particular trade, we will make an 8.7% return in less than 6 weeks as long as AMGN is above $52.50 at August expiration. AMGN would have to fall by more than 8% before we would start to lose money on this trade.
AMGN hasn't been below $52.50 except by a few cents in the past year and has shown support around $54 recently. This trade could be risky if the company's earnings (due out July 26) disappoint, but even if that happens, it looks like this position could be protected the strong support the stock found just under $55 where it bounced twice in the past two months.
Brent Archer is an options analyst and writer at Investors Observer. Do you have any deadwood in your portfolio? Check out the 18 Warning Signs That Tell You When To Dump A Stock.
DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in AMGN.
Ray of light: U.S. temp worker hiring increased by 34k in October
Closing Bell: Bulls gutting bears (ATVI, EWBC, GE, JASO, ENZN, MCD)
Goldman Sachs CEO Lloyd Blankfein pulls a Jeff Skilling in an interview
