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PLAY >New Updates Sunday, March 04, 2001
New Split Updates   New Candidate Updates   New Momentum Updates
(We update our stop losses daily at the CURRENT PLAYS page.)

New Split Updates

BAX - Baxter International Incorporated $93.33 (+3.93)

The mapping of the human genome was a giant leap forward for the biotech industry. Using a DNA recipe to successfully cure a disease, however, is proving to be a great deal more challenging. In spite of this, Baxter is finding out that its also a great deal more rewarding. The company's genetic therapies for life-threatening diseases are due to improve earnings by 20% annually and expand gross profits margins to 60%. This is in stark contrast to the company's 5% earnings growth it has achieved as a medical supply business. As for our play, BAX shares kept climbing on Friday and set a new all time high of $93.48. The leg up came on fairly good volume of 1,537,400 shares traded and leads us to believe that there are still plenty of buyers to lift the stock higher. A positive MACD and higher highs in the OBV indicator have also helped to confirm the potential for more gains. So, with that said, we'll expect to see the next key level of resistance to appear at the $95 mark. Look for a potentially harder barrier to come at the century mark, which can often times mark the peak of a rally. Consider using a trailing stop strategy, should the stock bounce sharply from either of these levels. Support is at the 5-dma of $91.89 and then at the 10-dma of $90.70. We'll look for potential entry points to occur when BAX rallies through resistance or bounces from support on good midday volume of at least 900,000 shares. Our stop of $89 will provide us with downside protection.


Picked on March 1st @ $92.61
Change since picked +0.72
Stop Loss @ $89.00

 
Interactive Chart Quote News First Call on BAX
 


LTR - Loews Corporation $109.11 (+10.61)

Loews Corporation, a diversified holding company with majority stakes in CNA Financial Corp., cigarette maker Lorillard, Loews Hotels, Diamond Offshore Drilling Inc., and watchmaker Bulova Corp., has posted gains in four of the last five sessions. On Friday, shares of LTR traded to a 52-week high of $111.76 before pulling back to a close of $109.11 on volume of 559,000 shares. The stock has made 4 consecutive 52-week highs on strong volume so it could be ready to challenge its all-time high of $115.62 as we move closer to the 2:1 split, payable on March 20th. In the meantime, LTR has support at Friday's intra-day low of $107.80 with additional support at the 5-dma, currently at $106.79. Resistance has moved up to Friday's intra-day high of $111.76 and then $113.87, the 11/5/97 intra-day high. A bounce off of $107.80 or a breakout above $111.76 on midday volume of at least 225,000 shares may be possible entry points. Our stops remain at $98.50 to limit potential losses.


Picked on February 27th @ $106.40
Change since picked +2.71
Stop Loss @ $98.50

 
Interactive Chart Quote News First Call on LTR
 


GVA - Granite Construction Incorporated $35.20 (+2.13)

GVA, one of the largest heavy civil construction contractors in the United States, scored a new high of $35.48 this week on better than twice its normal trading volume. In our write up on Thursday, we closed our report on GVA by noting that we were raising the volume requirement to 60,000 traded by midday when considering opening a new play. Our parameters were easily met on Friday, as GVA traded on volume of 168,000 well above the three-month average of 66,000. GVA is one of our split-run plays and is due to split 3:2 on April 13th. We will now look for a series of new highs as the stock approaches its ex-date in April. For next week consider opening a new position in GVA if it bounces off support at $34.00 or advances further through resistance at $35.48 on heavy volume. Heavy volume will now be considered 60,000 traded by midday. Additional support exists back at the 20-dma at $32.45. Look for added assistance from the broader markets when considering starting a new play in GVA. We will continue to keep a stop loss at $30.50 for now until we get enough breathing room to ratchet it higher.


Picked on February 25th at $33.07
Change since picked +2.13
Stop Loss at $30.50

 
Interactive Chart Quote News First Call on GVA
 

New Candidate Updates

AYE - Allegheny Energy Incorporated $47.00 (-0.40)

Allegheny's recent agreement to purchase Merrill Lynch's energy-trading business, Global Energy Markets (GEM), for $490 million could soon position AYE among the top-10 domestic energy traders worldwide. Assuming the Federal Energy Regulatory Commission and the Federal Trade Commission approve the acquisition, the deal should close by the end of this quarter. Once the buyout is complete, the combined company will gain better leverage in its existing physical-power-generation base, and should have combined capacity of 13,000 megawatts within the next five years. For us, we're hoping that news of a confirmed buyout, which is due by month's end, causes shares to regain upward momentum. In order for this to occur, it is important that the stock holds above support at either the $47 mark, bolstered by the 20-dma of $46.72, or at the 30-dma of $46.04, before reaching our stop. With that said, we'll look for entry points to come from a bounce off either of these levels or a run through resistance at $49, when volume reaches at least 350,000 shares traded by mid-day. We will set our stop level at $45.94 to limit our downside risk.


Picked on February 22nd @ $48.22
Change since picked -1.22
Stop Loss @ $45.94

 
Interactive Chart Quote News First Call on AYE
 


IGT - International Game Technology $53.84 (+0.15)

IGT is a dominating presence in the casino world. The company has long been the leader in the design and manufacture of numerous electronic casino games and is best known for its innovative slot machines. IGT has also developed several management systems that help casinos keep track of accounting, play rates and other systems that speed up cash transactions. Everything that IGT does is designed to keep casino patrons happy, stimulated and plunking more cash into machines. IGT is expected to post profits of $2.46 a share for the fiscal year of 2001, which ends in September. If IGT hits these estimates, the company will have increased their profits more than 39% over its 2000 earnings. This type of growth from a major company is exceedingly rare these days. Consequently, investors have been accumulating shares of IGT ever since September. IGT will report the results of their most recent quarter on April 19th. IGT is expected to show profits of $0.62 a share, which would be a huge increase over $0.34 a share the same quarter a year ago. IGT is also close to a price that has historically resulted in a split announcement. IGT's last three 2:1 splits, all in the early 90's, occurred when the stock was trading between $55.25 and $61.38. IGT weathered last week's tumultuous market quite well. Resistance at the 52-week high of $55.50 remains within striking distance. We remain comfortable adding positions in IGT's stock as long as it stays above the trend line support of $53.00. Momentum traders may want to jump on board if IGT can establish a new high with midday volume over 300,000 shares. The MACD is perilously close to triggering a sell signal, however, a positive move for the stock on Monday would relieve this problem. Otherwise, the very strong Money Flow and OBV point towards continued gains over the intermediate term.


Picked on February 20th @ $53.52
Change since picked +0.32
Stop Loss @ $49.50

 
Interactive Chart Quote News First Call on IGT
 


PII - Polaris Industries Incorporated $47.20 (-1.61)

This past week Polaris Industries Inc. chose the path of least resistance and followed the broader markets into negative territory. Percentage wise, PII, which manufactures and markets a variety of all-terrain vehicles, suffered much less than the Dow Jones Industrial Average (INDU) this week but managed to fall below its base formation nonetheless. The week started off on a great note when GVA vaulted to a new high on Monday. Tuesday through Thursday the stock spiraled downward only to end the week with a bounce and a mild recovery. Friday, GVA gapped down and found some solid footing just above the 50-dma at $45.00 then proceeded to climb out of its hole the rest of the session. With this wide swing in prices, PII put in an "outside" day, meaning Friday's price bar fully engulfed Thursday's price bar. This is usually a very bullish sign, so we are encouraged going into next week. Friday's trading volume was recorded at 114,000 shares or about 30% higher than the three-month average of 88,000. PII has been a split candidate for nearly a month now. The company has 23.7 million shares outstanding and 80 million authorized; enough for a 2:1 or a 3:1 split. There are no scheduled meetings for the company, but with the number of authorized shares, a split announcement could be made at any time. For next week possible new play opportunities might exist if the stock bounces off support at $46.00 or moves through resistance at $48.00 on heavy volume, 100,000 traded by midday. If support fails, the 50-dma is just below at $44.50 and should catch the stock from falling further. We will keep our stop loss at $44.88.


Picked on February 13th at $48.70
Change since picked -1.50
Stop loss at $44.88

 
Interactive Chart Quote News First Call on PII
 


PFGC - Performance Food Group Company $53.69 (+3.56)

Food product manufacturer Performance Food Group Company ran into some resistance on Friday. Shares of PFGC fell to an intra-day low of $50.88 before bouncing back to close at $53.69 on extremely light volume of 45,800 shares. The stock has had a firm upward trend, but the daily volume has been trending lower, potentially indicating that PFGC may spend some time consolidating in the $50-$55 range. However, a positive volume surge could send the stock into record territory. For now, support has fallen to the 5-dma at $52.15 with stronger support at $50.21, the 10-dma. Resistance is holding steady at the December 29th intra-day high of $55.13 and then the all-time high of $56.75. Consider starting new plays on a bounce off of $52.15 or a move above $55.13 on volume greater than 100,000 shares by noon. We are leaving our stops at $47 as downside protection.


Picked on February 25th @ $50.13
Change since picked +3.56
Stop Loss @ $47.00

 
Interactive Chart Quote News First Call on PFGC
 

New Momentum Updates

BDX - Becton, Dickinson and Co. $35.85 (+0.65)

BDX survived a somber week on Wall Street. The company's broad array of medical products, equipment and services has enabled the firm to maintain a healthy profit picture while so many other companies are struggling. Analysts expect BDX to increase its profits by over 14% in 2001. Lehman Brothers currently rates the stock a Strong Buy with a year-end target price of $42.00. Friday's early broad-based selling in the overall market caused BDX to dip below the short-term support of $35.00. We are encouraged, however, by the fact that the stock managed to rally into the close and finish the day above the support level. The 10-DMA provided resistance all last week and now resides at $36.28. We suggest that a move above $36.50 on midday volume over 700,000 shares could spark a more substantial rally that may lead to a test the 52-week high of $39.25. The OBV and Money Flow remain strong. This fact leads us to believe that BDX is simply in a consolidation phase and that the longer-term trend still remains positive. The RSI is in neutral territory. This fact affords the stock plenty of upside potential before an overbought signal is triggered. New low-risk positions can be entered as long as BDX can stay above $35.00 on Monday and midday volume exceeds 400,000.


Picked on February 11th @ $37.03
Change since picked -1.18
Stop Loss @ $34.50

 
Interactive Chart Quote News First Call on BDX
 


ELY - Callaway Golf Corporation $25.00 (+1.01)

Manufacturing improvements and reduced labor expenses are helping to drive Callaway's profit margins to 50% this year. What's more, the company should also bring in healthy sales numbers, thanks to the recent launch of two new lines of titanium drivers, the Big Bertha ERC II and the Hawk Eye VFT. We're pleased with this week's action in ELY shares. The stock broke through resistance and managed to tack on 4%. Still, what has really captured our attention this week has been the volume. The stock's 3-month average volume is 497,000 shares per day. However, over the past five days, ELY has logged an average of 854,000 shares, some 70 percent above normal. We feel this is an excellent confirmation of a momentum breakout and should lead to more near-term gains on the upside. To that end, we'll look for resistance to come at the 52-week high of $25.41 and then at the $30 mark. Support comes in at the $24 mark, bolstered by the 10-dma of $23.92. Traders considering a position in ELY should look to time their entries when the stock rises above resistance or bounces swiftly from support on strong volume of 250,000 shares traded by noon. We'll limit our downside risk with a stop at $20.


Picked on February 25th @ $23.99
Change since picked +1.01
Stop Loss @ $20.00

 
Interactive Chart Quote News First Call on ELY
 


LMT - Lockheed Martin Corp. $38.20 (+1.35)

Lockheed Martin Corporation opened Friday's session in negative territory on news that NASA has terminated its X-33 space plane project with LMT. Shares of the aerospace contractor fell below the 20-dma to an intra-day low of 36.23. However, the stock bounced back after the Estonian defense ministry agreed to buy long-distance surveillance radar from Lockheed Martin. LMT ended the day at a 52-week high of $38.30. The stock has been trending higher on above average volume over the past month, so it could continue to rally. Going forward, support has moved up to the 5-dma at $37.69 with additional support at $36.73, the 20-dma. Resistance is now up to the 8/23/99 intra-day high of $39.44 and then the 6/8/99 intra-day high of $41.56. Traders should be looking for entry points on a bounce off of $37.69 or a breakout above $39.44 on volume of at least 800,000 shares by noon. Our stops are holding steady at $35 to limit downside exposure.


Picked on February 4th @ $36.40
Change since picked +1.90
Stop Loss @ $35.00

 
Interactive Chart Quote News First Call on LMT
 


TX - Texaco Incorporated $66.84 (+3.79)

Texaco Incorporated finished the week on a high note as plans for their merger continue to come together. On Friday Texaco, soared to a new 52-week high after Wall Street received more optimism regarding their merger with Chevron (CHV). This past week the proposed merger between Texaco and Chevron received approval from the European Union (EU) and now awaits the same from the U.S. antitrust authorities. On Friday a news story from Reuters announced the following: "Barring unforeseen circumstances Chevron and Texaco's planned merger should make it past U.S. antitrust authorities within three months". If all goes as planned a completion to the deal would come in early July. Traders responded favorably to the announcement and shares of TX rose better than 2% on Friday. The stock closed at a new high of $66.84 that was achieved on volume of 2.5 million shares, 38% greater volume than its three-month average of 1.8 million. TX is in a nice position to move even higher, as merger fever continues to rise. Next week look for another new high or a quick bounce off of support at $65.00 when considering a new play in TX. Volume will be a key component to further gains; we'd look for follow through volume of at least 1.2 million shares traded by mid-day. Past breakout volume from TX has exceeded 3 million shares and we should expect no less here. Additional support from the Dow Jones Industrial Average (INDU) and the Oil Service Index (OSX.X) would be helpful as well. We have placed a stop loss on this play at $61.88.


Picked on February 18th at $64.90
Change since picked +1.94
Stop Loss at $61.88

 
Interactive Chart Quote News First Call on TX
 


Play Updates Index

 


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