After hitting a one-year low of $59.50 in August, the stock hit a one-year high of $144.34 in May. This morning, PCLN opened at $119.78. So far today the stock has hit a low of $114.38 and a high of $121.95. As of 12:10, PCLN is trading at $117.95, down $7.18 (-5.7%). The chart for PCLN looks neutral and improving, while S&P gives the stock a neutral 3 Stars (out of 5) Hold rating.
For a bearish hedged play on this stock, I would consider an August bear-call credit spread above the $155 range. A bear-call credit spread is an options position that combines the purchase and sale of call 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 5.3% return in seven weeks as long as PCLN is below $155 at August expiration. PCLN would have to rise by more than 32% before we would start to lose money. Learn more about this type of trade here.
PCLN hasn't been above $145 at all in the past year and has shown resistance around $132 recently. This trade could be risky if the company's earnings (due out in early August) are a positive surprise, but even if that happens, this position could be protected by resistance PCLN might find around $140, where it topped out in May.
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 PCLN or EXPE.
Priceline.com (NASDAQ: PCLN) is an online travel agency. It offers a range of services, including airline tickets, hotel rooms, car rentals, vacation packages and cruises, as well as destination and travel insurance services. The company operates a Name Your Own Price system, which allows users to make offers for travel services at prices they set. It also markets fixed-price travel products and offers various online financial services. Expedia (NASDAQ: EXPE) is a major competitor.
The firm pleased investors last week, when it reported Q1 EPS of 76 cents and revenues of $403.20 million. Analysts had been expecting 60 cents and $377.17 million. Gross travel bookings increased 76% yr/yr, a result above company guidance of 60-65%. Pro forma gross profit rose 74.7% yr/yr, versus guidance of 55-60%. Management predicted FY08 EPS of $5.25-$5.65 ($5.12 consensus).
Bank of America downgraded GAP (NYSE:GPS) to "neutral" according toBriefing.com. The news service also reports that Citigroup has downgraded Priceline (NASDAQ:PCLN) to "hold" from "buy"
RBC Capital Markets said that sales at Digital River (NASDAQ:DRIV) were above its estimates and kept its "outperform" rating on the stock, according to the AP.
MOST NOTEWORTHY: GTX Inc, Akeena Solar and NexMed were today's noteworthy initiations:
Rodman & Renshaw is positive on GTX Inc's (NASDAQ: GTXI) opportunity for Acapodene in prostate cancer and Ostarine for muscle wasting. The firm started shares with an Outperform rating and $22 target.
Akeena Solar (NASDAQ: AKNS) was initiated with a Buy rating at Merriman. The firm believes the company is positioned to generate a high margin recurring revenue stream through the licensing of its Andalay proprietary rack mounting system.
Roth Capital expects NexMed's (NASDAQ: NEXM) Phase III data for its antifungal Lamisil, expected in mid-2008, to be positive. The firm, which started NexMed with a Buy rating and $2.50 target, said early clinical data demonstrated a roughly 7-8X improvement in fungal reductions versus the competitive topical formulation sold as Penlac. The analyst said Phase III trial will admittedly have a different end point, but this data makes them bullish.
priceline.com Inc. (NASDAQ: PCLN) shares are trading higher after the company announced on Friday that it has agreed to a one-year partnership with Chinese classified information search engine Kooxoo.com. Under the deal, PCLN will gain data access to over 8,000 hotels in China, which could give it a leg up in international bookings over competitors Expedia (NASDAQ: EXPE) and Orbitz (NYSE: OWW). 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 PCLN.
After hitting a one-year low of $52.00 last March, the stock hit a one-year high of $129.24 in February. PCLN opened this morning at $119.48. So far today the stock has hit a low of $119.04 and a high of $128.75. As of 12:30, PCLN is trading at $127.87, up $9.24 (7.8%). The chart for PCLN looks bullish and steady, while S&P gives the stock its lowest 1 Star (out of 5) strong sell rating.
For a bullish hedged play on this stock, I would consider a July bull-put credit spread below the $70 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. This particular trade will make a 6.4% return in just four months as long as PCLN is above $70 at July expiration. Priceline would have to fall by more than 46% before we would start to lose money.
PCLN hasn't been below $70 since August and has shown support around $110 recently. This trade could be risky if the US economy gets even weaker in the coming months, but even if that happens, this position could be protected by the support the stock might find just above $90 from its 200 day moving average.
Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in PCLN, EXPE, or OWW.
While I believe much of the price action in the most actively traded technology stocks to be rather unpredictable, there are specific price points at which the odds can be in your favor. Because so many traders believe in chart reading, or technical analysis, the price action often becomes a self-fulfilling prophecy (as I've written about here). So, let's take a look at some popular names with traders:
Apple Inc (NASDAQ: AAPL), after a big drop, has already put in solid sideways price action and if it can break $140, there looks to be a rather clear path to $160.
Research In Motion Ltd (NASDAQ: RIMM) has weathered this storm incredibly well, putting in a solid double bottom in the low $80s and more recently, holding the key $100 level. There's still resistance at both $110 and $120, so a big breakout doesn't seem likely anytime soon.
Priceline.com Inc (NASDAQ: PCLN) is still in the midst of a strong yearlong uptrend, a mere $10 off its highs. On any market rebound, I fully expect this stock to break out to new highs.
MOST NOTEWORTHY: Priceline.com, Monster and Internap were today's noteworthy downgrades:
Susquehanna downgraded Priceline.com (NASDAQ: PCLN) to Neutral from Positive as they believe upside may be difficult given the macro environment, competition, and currency headwinds.
JP Morgan lowered Monster (NASDAQ: MNST) to Neutral from Overweight following the company's expectations for higher 1Q08 operating expenses.
Internap (NASDAQ: INAP) was downgraded by Merriman to Neutral from Buy as they believe upside will be limited until the company can complete its integration of the VitalStream CDN acquisition.
Priceline.com (NASDAQ: PCLN) is an online travel agency. It offers a range of services, including airline tickets, hotel rooms, car rentals, vacation packages and cruises, as well as destination and travel insurance services. The company operates a Name Your Own Price system, which allows users to make offers for travel services at prices they set. It also markets fixed-price travel products and offers various online financial services. Expedia (NASDAQ: EXPE) is a major competitor.
The firm pleased investors earlier in the month, when it reported Q4 EPS of 96 cents and revenues of $334.9 million. Analysts had been expecting 84 cents and $329.3 million. In discussing the solid quarter, the CEO emphasized continued momentum in growth of gross bookings. International growth accelerated to 113% year over year and the domestic growth rate increased 24% sequentially. Management also guided Q1 EPS to 50-60 cents (53 cent consensus) and FY08 EPS to $4.80-$5.10 ($4.90 consensus).
I don't care to try to predict if we're heading into recession or how bad that recession will be. I have no idea where the market will bottom or how long it will take to get there; the one thing I do know is that stocks are going to continue to get wrecked, whether or not we have a short-term bounce. Amazingly, it's been just eighteen days since I warned investors the market would drop 10% in 2008 and now we're already there. I've considered buying quality growth stocks like Mosaic (NYSE: MOS), Monsanto (NYSE: MON), Sigma Designs (NYSE: SIGM), Priceline (NASDAQ: PCLN), BE Aerospace (NASDAQ: BEAV), Vistaprint (NASDAQ: VPRT) and Lululemon (NASDAQ: LULU) on weakness, but their continued downtrending has made them falling knives, aka, too unpredictable for me.
My fellow blogger Lita Epstein has talked about picking up bargains on beaten stocks with strong fundamentals. I disagree with her. While maybe her statement applies to a precious few like Apple (NASDAQ: AAPL) and Amazon.com (NASDAQ: AMZN), I don't care how great those companies are, we're looking at a housing collapse and a massive slowdown in consumer spending which will hurt even the best of companies. For now, forget about stock picks; this is not the time for speculation. If foreign stock markets have tanked this hard on U.S. recession fears, imagine how hard U.S. stocks will get hit -- why not protect yourself and respect the downside for once?
While you may be thinking the stock market's fallen off a cliff, it's really only a couple of percentage points off its highs. There could be a lot more downside, and while the Dow has some support at 12,000, what if that doesn't hold? That's when the real pain begins and what you should be prepared for. You're really going to have to avoid most of the hotly debated names because they've proven themselves unworthy of your hard-earned cash.
When I warned you that the trouble in the financial and housing sectors would pressure the stock market, I underestimated how quickly the pain would begin. Then, I threw out 10 names I was considering buying if they showed signs of either bottoming or some good old-fashioned panic -- neither has happened yet, so I'm still watching and waiting.
In particular, Apple (NASDAQ: AAPL) and Intel (NASDAQ: INTC) really disappoint me. I haven't been an Apple fan ever since its stock became too pricey, but the muted reaction to Macworld really proves my point that expectations were too high. And Intel -- well, thanks to its pathetic excuse for a quarter, it's forced the Semiconductor HOLDRs (AMEX: SMH) to take out some hugely important multi-year support, which tells me to avoid all the semiconductor stocks. Just say no to potential buys like NVIDIA (NASDAQ: NVDA), Broadcom (NASDAQ: BRCM), Texas Instruments (NYSE: TXN) and Altera (NASDAQ: ALTR).
MOST NOTEWORTHY: Amazon.com, PG & E and Centerplate were today's noteworthy upgrades:
Citigroup upgraded shares of Amazon.com (NASDAQ: AMZN) to Buy from Hold and raised their target to $119 from $95 as they believe the recent weakness has created an attractive entry point and that Amazon has one of best Fundamental outlooks for 2008 among all U.S. internet stocks.
The firm also upgraded PG & E (NYSE: PCG) to Buy from Hold on valuation, as they believe skepticism around the company's 8% EPS growth target is alredy priced into the stock.
Centerplate Inc. (AMEX: CVP) was raised to Buy from Neutral at Piper on valuation following the recent weakness.
OTHER UPGRADES:
CIBC upgraded Humana Inc. (NYSE: HUM) to Sector Outperformer from Sector Performer.
Regular readers of BloggingStocks will find no shortage of stock picks for 2008 on our pages. Steven Halpern alone has compiled about 120 picks from the investment advisors he follows. But plenty of other bloggers have favorites for 2008 to share.
In an effort to consolidate the wealth of ideas into one handy post, here are a few of our bloggers' favorite selections for the year ahead:
Priceline (NASDAQ: PCLN) is the current favorite of Beth Gaston Moon. It's already had an amazing run in 2007, climbing from about $45 to $120 a share. Looking for a lower-priced stock? Beth recently spotlighted 10 Stocks for Under $10.
Deckers Outdoor (NASDAQ: DECK) is a stock I picked in a recent video, which Beth likes as well. I think it will continue to surprise to the upside on the strength of sales of its trendy Ugg boots. Zac Bissonnette thinks it will no doubt flame out at some point.
Priceline.com (NASDAQ: PCLN) shares are falling today after an analyst at Citi Investment Research reiterated his hold rating on PCLN and dropped his price target to $142, citing weakness in European travel. Citi also removed competitor Expedia (NASDAQ: EXPE) from its Top Picks Live list, cut the price target on EXPE as well. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on PCLN.
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While I believe much of the price action in the most actively traded technology stocks to be rather unpredictable, there are specific price points at which the odds can be in your favor. Because so many traders believe in chart reading, or technical analysis, the price action often becomes a self-fulfilling prophecy (as I've written about 
I don't care to try to predict if we're heading into recession or how bad that recession will be. I have no idea where the market will bottom or how long it will take to get there; the one thing I do know is that stocks are going to continue to get wrecked, whether or not we have a short-term bounce. Amazingly, it's been just eighteen days since I warned investors the market would drop 10% in 2008 and now we're already there. I've considered buying quality growth stocks like 
While you may be thinking the stock market's fallen off a cliff, it's really only a couple of percentage points off its highs. There could be a lot more downside, and while the Dow has some support at 12,000, what if that doesn't hold? That's when the real pain begins and what you should be prepared for. You're really going to have to avoid most of the hotly debated names because they've proven themselves unworthy of your hard-earned cash..gif){kind=logo}
Regular readers of BloggingStocks will find no shortage of stock picks for 2008 on our pages. Steven Halpern alone has compiled about 
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