4 stocks to watch next week

Sysco, Applied Materials and Agilent will report earnings. Jeff Bezos buys The Washington Post. JetBlue will add premium seating on flights.

By MSN Money Partner Aug 9, 2013 1:45PM

copyright CorbisMichael Fowlkes, InvestorsObserver


Sysco Corp. reports fiscal fourth quarter results

What's happening with SYY: Food wholesaler Sysco (SYY) will report its fiscal fourth quarter results before the market opens on August 12. Going into its quarterly report, analysts expect the company post earnings of $0.55 per share, in-line with the same period last year. The stock has traded higher during the year, but trailing the overall market with a gain of 12.4% year to date.


Technical analysis: SYY was recently trading at $34.71, down $1.34 from its 12-month high and $6.27 above its 12-month low. Technical indicators for SYY are bullish and the stock is showing signs of a possible trend reversal. The stock has support above $33.50 and resistance under $35. Of the nine analysts who cover the stock one rates it a "strong buy," six rate it a "hold," and two rate it a "strong sell." The stock receives Standard and Poor's 3 STARS "Hold" ranking.


Analysts' thoughts: Sysco has traded higher this year, but I believe traders should be wary of the stock going into this quarterly report. The company has reported lower than expected for the last three quarters, and the stock has been stagnant since the start of April. During its third quarter, the company posted lower revenues from the same period last year, but analysts expect to see a 5% jump in Q4 revenues versus last year. Its net income has slipped during the last four quarters by an average of 15% year over year. So far, the company's income problems have not led to problems for the stock, but unless it is able to post strong numbers this quarter we could see selling finally hit SYY.


Stock-only trade: If you're looking to establish a long stock position in SYY, consider buying the stock under $34.50, and sell if it falls below $33 or take profits if it gets to $39.50.


Option trade: If you are looking for a hedged options trade on SYY, consider a September 37/38 bear-call credit spread for a 30-cent credit. That's a potential 11.1% return (92.2% annualized*) and the stock would have to rise 7.2% to cause a problem.


Speculative put-only trade: For those with an appetite for higher risk and bigger returns, consider buying the November $36 put. If SYY falls just 4.0% you can pull in a 20% or better profit on the option. However, if the stock moves higher, this kind of trade could lose a significant amount.


Applied Materials reports fiscal third quarter results

What's happening with AMAT: Applied Materials (AMAT) will report its fiscal third-quarter results following the market close on August 15. Going into the company's quarterly report, analysts are expecting earnings of $0.19 per share, down from $0.24 during the same period last year. The stock has been a strong performer this year, trading up 38.0% year to date.

Technical analysis: AMAT was recently trading at $15.58, down $1.29 from its 12-

month high and $5.63 above its 12-month low. Technical indicators for AMAT are bullish and the stock is showing signs of a possible trend reversal. The stock has support above $15. Of the 13 analysts who cover the stock four rate it a "strong buy," one rates it a "buy," six rate it a "hold," one rates it a "sell," and one rates it a "strong sell." The stock receives Standard and Poor's 4 STARS "Buy" ranking.


Analysts' thoughts: Applied Materials has strung together an impressive earnings record, posting better than expected earnings for each of the last 13 quarters. I expect to see the company add to that streak by posting better than expected numbers for its fiscal third quarter as well. The industry has been in a downturn, but the recovering economy has helped improve things, and Applied Materials should be in good shape moving forward. The stock's strong performance so far this year indicates how bullish the market views the company and I expect to see that continue through the remainder of the year.


Stock-only trade: If you're looking to establish a long stock position in AMAT, consider buying the stock under $15.50, and sell if it falls below $13.75 or take profits if it gets to $18.

Option trade: If you are looking for a hedged options trade on AMAT, consider a September 13/15 bull-put credit spread for a 30-cent credit. That's a potential 17.6% return (146.4% annualized*) and the stock would have to fall 2.6% to cause a problem.


Speculative call-only trade: For those with an appetite for higher risk and bigger returns, consider buying the October $15 call. If AMAT rises just 3.8% you can pull in a 20% or better profit on the option. However, if the stock moves lower, this kind of trade could lose a significant amount.


Agilent Technologies reports fiscal third-quarter results

What's happening with A: Agilent Technologies (A) will report its fiscal third quarter results after the market closes on August 14. Going into the company's quarterly report, analysts expect earnings of $0.62 per share, down from $0.79 during the same period last year. The stock has gained 12.4% year to date.


Technical analysis: A was recently trading at $45.75, down $1.72 from its 12-month high and $10.37 above its 12-month low. Technical indicators for A are bullish and the stock is showing signs of a possible trend reversal. The stock has resistance below $46.75. Of the 13 analysts who cover the stock 12 rates it a "strong buy," and one rates it a "buy." The stock receives Standard and Poor's 2 STARS "Sell" ranking.


Analysts' thoughts: Agilent was able to post better than expected earnings for its second quarter, but failed to hit its estimate during the previous quarter. Due to the lack of consistency in its earnings over the last year, investors should be weary going into the company's report. However, even with its earnings miss in February, the stock did not run into too much selling, so unless we see a huge earnings miss there is not too much downside risk. Wall Street is very bullish on the stock, and I expect to see the stock trading higher through the remainder of the year.


Stock-only trade: If you're looking to establish a long stock position in A, consider buying the stock under $46, and sell if it falls below $43.50 or take profits if it gets to $53.


Option trade: If you are looking for a hedged options trade on A, consider a September 39/42 bull-put credit spread for a 30-cent credit. That's a potential 11.1% return (92.2% annualized*) and the stock would have to fall 7.8% to cause a problem.


Speculative call-only trade: For those with an appetite for higher risk and bigger returns, consider buying the November $44 call. If A rises just 5.9% you can pull in a 20% or better profit on the option. However, if the stock moves lower, this kind of trade could lose a significant amount.


Amazon founder Jeff Bezos acquires The Washington Post 

What's happening with WPO: In a surprise announcement, Amazon's (AMZN) founder and CEO, Jeff Bezos announced that he had purchased the flagship newspaper from The Washington Post Company (WPO) in a deal worth $250 million. He will not be buying the entire company, just the Washington Post and affiliated publications. The news sent shares of WPO 4.3% higher, and with the recent jump the stock is now up 61.2% year to date.


Technical analysis: WPO was recently trading at $588.60, down $16.58 from its 12-month high and $10.37 above its 12-month low. Technical indicators for WPO are bullish and the stock is in a strong upward trend. The stock has support above $540. The stock receives Standard and Poor's 3 STARS "Hold" ranking.


Analysts' thoughts: There are pros and cons to Washington Post selling off its flagship paper. The paper has been bleeding money for a while and there was little chance that the company could turn the business around. It still has its cable television and broadcasting businesses, which are solid cash earners. The downside is that Bezos did not wind up paying very much for the paper and the company loses a lot of leverage and influence over public policy. I believe the sale will be beneficial for WPO in the long run and the deal shifts the problem of turning around the paper to Bezos.


Stock-only trade: If you're looking to establish a long stock position in WPO, consider buying the stock under $590, and sell if it falls below $550 or take profits if it gets to $675.

Option trade: There are no options trading on WPO.


JetBlue to offer premium seating 

What's happening with JBLU: Discount airliner JetBlue (JBLU) has announced plans to begin offering premium seating on some of its planes. The airline will add first class seats, which recline to a bed, as well as offering "suites" which are walled off from the main aisle. The new seats will start to appear on flights traveling from New York to Los Angeles and San Francisco. JetBlue stock is currently up 11.7% year to date.


Technical analysis: JBLU was recently trading at $6.39, down $0.89 from its 12-month high and $1.63 above its 12-month low. Technical indicators for JBLU are neutral and the stock is in a weak downward trend. The stock has support above $6.15 and resistance below $6.75. Of the 10 analysts who cover the stock two rate it a "strong buy," six rate it a "hold," one rates it a "sell," and one rates it a "strong sell." The stock receives Standard and Poor's 2 STARS "Sell" ranking.


Analysts' thoughts: I believe that JetBlue is smart to begin offering premium seating on its flights. The company once revolutionized cabin travel by offering a better coach experience at a discount price, but now it is finding it hard to start apart from its competition. Prices have come down at all major airlines, and there are other discount airlines with prices even cheaper than JetBlue. If the company can offer first class seating at a price lower than the competition it could find a perfect niche in the market.


Stock-only trade: If you're looking to establish a long stock position in JBLU, consider buying the stock under $6.25, and sell if it falls below $5.75 or take profits if it gets to $7.10.


Option trade: There are no hedged option trades that we like at the current time for JBLU.

Speculative call-only trade: For those with an appetite for higher risk and bigger returns, consider buying the December $5 call. If JBLU rises just 4.5% you can pull in a 20% or better profit on the option. However, if the stock moves lower, this kind of trade could lose a significant amount.


*Annualized returns provided for comparison purposes only


Get InvestorsObserver's free report 18 Warning Signs to Know When to Dump a Stock.

At the time of writing, Mr. Fowlkes owns shares of Amazon, and does not have direct ownership in any of the other stocks mentioned.

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