Today is actually a positive day for us that is overshadowed by the likes of one Skechers Inc. (SKX). We are about to exit three positions this morning in the green. I start with Key Energy Services (KEG). Despite the company’s report that they made an EPS of 0.05, it appears without some one-time gains the company did not hit estimates. I have no idea how it is possible given the numbers they reported, but it is what it is. The stock is slated to open 0.5% above where we bought in, and I will be out of our last 1/3 of the position at the open. It will probably all average out to a gain of a little under 2% since I locked 2/3 of selling at an average price of 10.225 yesterday. Additionally, we are looking out a nice open out of Yingli Green. After entering at 11.83, the stock is poised to open in the 12.20s. We are looking to exit YGE at 12.28 and above. Finally, on the positive side, there is Krispy Kreme (KKD). We got involved at 5.63 yesterday, and the stock is looking to open at 5.85 or more for a solid 4% gain. I will be looking to exit this one around 5.90 area or more.
Three solid trades that could log some nice gains. They are all overshadowed by one Skechers Inc. (SKX). In all my days of playing earnings, never have I seen a company fall short of even the bottom line. What were all the analysts thinking? Anyways, Skechers is a dog, and we are going to have to sell this one. I actually do not want to sell right out of the gate. We have a green day with a strong market that should help to add some quick gains to SKX from its 16% drop it is logging in pre-market. I will look to sell within the first thirty minutes, but let’s see what we can get out of it. I think we will look to sell our second 1/2 close to a 10-12% loss to average our loss to closer to 5-6%.
That loss will be neutralized by a KKD or YGE gain, and we actually end in the green.
Since I am maxed out on Buy positions, I will do a Midterm Trade this morning instead of typical Buy picks. Short sales look to be a bad choice today as well.
Finally, (long intro) I was not able to finish the Big Lots story because I worked on something even better that I will be unveiling today. Just wait and you will see what is in store…
Midterm Trade of the Day: JinkoSolar Holding Co., Ltd. (JKS)
Analysis: We all know that I am a big fan of solar especially moving into Q4 and Q3 earnings. Most solar companies are poised for their best quarters to date, but it is not be reflecting in a lot of prices of companies other than some of the very top leaders. Many solar companies are close to fair value on RSI and are not making those large gains pre-earnings like I had expected. While this is somewhat bothersome, I am still firmly entrenched in my position that this will be a very good earnings season for these companies, and it starts tonight with First Solar (FSLR).
This company should very well lift the entire sector. They are looking at a nearly 30% earnings per share growth YOY, and forecasting should be very solid from the company. One other company that looks very solid moving into earnings on Monday and should get a solid rise tomorrow from the duality of FSLR earnings and pre-earnings movement is JinkoSolar (JKS). This company has been on fire as of late after coming onto the scene in early 2010. Last quarter,
which was only its second reporting quarter, the company fired off a more than 100% gain. Moving into earnings, this is the type of previous news that can really help push a stock.
Further, I like this stock because it has the analysts behind it. In the last three months, the stock has received 6 Strong Buys, 4 Buys, and 2 Holds. The stock has had quite a run up in share price after its last month earnings, which has pushed the stock into areas that are quite significant, but the stock has been range bound for the past month and a half with a high of 32. The stock, today, had a nice early gain with the rest of the solar stocks but has been moving down close to neutral.
These solar stocks want to get off the ground, but they continue to be pushed back by an uncooperative market. One thing the market will not be able to control are some very solid First Solar earnings that will finally be reflected back into the solar stocks. Even if FSLR does not wow and just comes in as people are expecting, it is not as if the solar stocks have been pricing in some amazing gain from the company. Therefore, JKS has its own earnings to prop it up as well. The company has estimates coming in around 0.96 EPS for this coming quarter. The numbers are below the last quarter, but the last quarter was not even close to estimates.
Moving forward, JKS is only trading at 7x future gains, and it does not actually support a significant P/E ratio compared to the industry. The stock is still relatively cheap, and it has become range bound until it can show it can do more. This evening and moving into next week, JKS will show it has more under its legs.
I think I might have to start saying "In Solar I Trust."
Technically, the stock is pretty much fair valued after its pullback this morning. Its RSI is sitting at just under 55. The company has fast stochastics that are just overbought, and they are pulling back as well. The stock is actually dipping into the red now, which is allowing a great buying opportunity for us.
Get in now!
Entry: We are looking to get involved at 29.80 – 30.20.
Exit: We are looking to gain 3-5%.
Stop Loss: 4% on bottom.
Good Investing,
David Ristau
IN PROGRESS
