5 stocks to watch for next week

Priceline, AOL, and Sysco to report earnings. Gold mining stocks remain weak. Real money Internet poker returns to Nevada.

By MSN Money Partner May 3, 2013 11:32AM

Trading floor © Image Source SuperStockBy Michael Fowlkes, InvestorsObserver


Priceline reports 1Q results Thursday
What's happening: Priceline
(PCLN) will report its first quarter results on May 9. Analysts have forecast earnings of $5.27 per share, up from $4.28 during the same period last year. The company has a remarkable streak of posting better than expected earnings during the last 27 quarters, and there is no reason to expect disappointing numbers for its first quarter. The stock has been strong this year, gaining 13.5% year to date.


Technical analysis: PCLN was recently trading at $694.06, down $70.53 from its 12-month high and $140.64 above its 12-month low. Technical indicators for PCLN are bearish and the stock is in a weak downward trend. The stock has resistance under $720 and support above $683.50. Of the 15 analysts who cover the stock 11 rate it a "strong buy," two rate it a "buy," and two rate it a "hold." The stock receives Standard & Poor's 3 STARS "Hold" ranking.


Analyst's thoughts: Priceline's business has been improving along with the overall economy. Priceline is the world's largest online travel site in terms of sales, and a major player in the U.S. market. The online travel industry in the U.S. is expected to hit $180 billion by the year 2016, making Priceline a great long term investment given its strong market share in the sector. In addition to its strong U.S. presence, the company has also focused on Europe. Its portfolio of websites include booking.com, which handles 6% of all European hotel bookings. We expect to see the company continue to be a strong performer in years to come.


Stock-only trade: If you're looking to establish a long stock position in PCLN, consider buying the stock when it is below $694 and sell if it falls below $615 or take profits if it gets to $798.


Option trade: If you are looking for a hedged options trade on PCLN, consider a June 625/630 bull-put credit spread for a 70-cent credit. That's a potential 16.3% return (114.3% annualized*) and the stock would have to fall 9.1% to cause a problem.


Speculative call-only trade: For those with an appetite for higher risk and bigger returns, consider buying the July $675 call. If PCLN rises just 5.4% 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.



AOL rings up earnings Wednesday
What's happening: AOL
(AOL) will report its first quarter results on May 8. Analysts have forecast earnings of $0.34 per share, up from $0.17 during the same period last year. The company has either matched, or bested analyst estimate for the last six quarters. Its fourth quarter earnings were inline with analyst estimates, but the overall report was strong enough to send the stock soaring. Year to date the stock is up 36%.


Technical analysis: AOL was recently trading at $38.62, down $5.31 from its 12-month high and $15.04 above its 12-month low. Technical indicators for AOL are bullish and the stock is showing signs of a possible trend reversal. The stock has support above $37.75 and resistance under $39.25. Of the 11 analysts who cover the stock five rate it a "strong buy," two rate it a "buy," three rate it a "hold," and one rates it a "sell."


Analyst's thoughts: After years of struggle, AOL appears to be coming back to life. During the fourth quarter, the company posted its first year-over-year revenue growth in eight years. The improved revenue numbers come as a result of a 17% increase in its search business and a 31% increase in its third party ad business. AOL, which started as a dial-up Internet company, has transformed to a content driven site, and the changes are starting to pay off. The company's dial-up business is declining, but it still provides a decent margin. As the Internet continues to develop, sites that offer original content will set themselves apart from the rest of the pack. This is AOL's best strength, and a reason why it is enjoying a solid second life, something most online companies never get to enjoy. We like the long-term potential of AOL, and believe its worst days are behind it.


Stock-only trade: If you're looking to establish a long stock position in AOL, consider buying the stock when it is below $38.50 and sell if it falls below $34 or take profits if it gets to $44.25.


Option trade: If you are looking for a hedged options trade on AOL, consider a June 30/35 bull-put credit spread for a 65-cent credit. That's a potential 14.9% return (106.9% annualized*) and the stock would have to fall 7.7% to cause a problem.


Speculative call-only trade: For those with an appetite for higher risk and bigger returns, consider buying the July $36 call. If AOL rises just 6.0% 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.



Sysco's earnings to be uncovered Monday
What's happening: Sysco
(SYY) is scheduled to report its fiscal third quarter results before the market opens May 6. Analysts forecast earnings of $0.43 per share, which is a penny under the $0.44 it earned during the same period last year. Sysco has failed to hit analyst expectations during its last two quarters, but still has managed to trend higher with the overall market. Year to date the stock is up 12.3%.


Technical analysis: SYY was recently trading at $34.57, down $1.05 from its 12-month high and $7.52 above its 12-month low. Technical indicators for SYY are bearish and the stock is showing signs of a possible trend reversal. The stock has support above $33.75 and resistance under $35. Of the nine analysts who cover the stock seven rate it a "hold," and two rate it a "strong sell." The stock receives Standard & Poor's 3 STARS "Hold" ranking.


Analyst's thoughts: Food wholesaler Sysco got off to a strong start this year, but has been in a sideways pattern over the last month. The stock has been strong due to recent acquisitions and cost cutting measures. Last quarter, it completed the acquisition of four independent companies, and it expects to continue acquiring companies as it sees fit. In the long run, the company believes that these acquisitions can help it achieve annual sales growth between 0.5% and 1%. The company is well-positioned for the future with its 17% market share, and its 3.2% annual dividend yield and price-to-earnings ratio of 19 make it a solid long term buy.


Stock-only trade: If you're looking to establish a long stock position in SYY, consider buying the stock when it is below $34.50 and sell if it falls below $31.50 or take profits if it gets to $39.50.


Option trade: If you are looking for a hedged options trade on SYY, consider an August 29/32 bull-put credit spread for a 30-cent credit. That's a potential 11.1% return (37.9% annualized*) and the stock would have to fall 6.6% to cause a problem.


Speculative call-only trade: For those with an appetite for higher risk and bigger returns, consider buying the November $32 call. If SYY rises just 3.0% 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.



Gold prices continue to apply pressure to gold mining stocks
What's happening:
Gold prices have come under pressure over the last few months, and as a result gold stocks such as AngloGold Ashanti (AU) have taken a beating. AngloGold has been in a steady downwards trend since the beginning of the year, and thus far has lost 39.2% year to date.


Technical analysis: AU was recently trading at $19.12, down $19.19 from its 12-month high and $1.67 above its 12-month low. Technical indicators for AU are bearish and the stock is in a strong downward trend. The stock has resistance under $23. Of the three analysts who cover the stock one rates it a "strong buy," and two rate it a "hold."


Analyst's thoughts: Gold prices continue to remain weak, but I see limited downside at this point. Countries around the world, including the U.S., have implemented strong quantitative easing programs to help keep their economies strong, and eventually this is going to send gold prices higher. With so much fiat money being spilled into the global economy, gold prices have to rebound eventually and make up some of its recent losses, and when it does gold stocks such as AngloGold will rebound as well. The majority of investors have turned bearish on gold, which is another indicator that the bottom is near.


Stock-only trade: If you're looking to establish a long stock position in AU, consider buying the stock when it is below $19 and sell if it falls below $17 or dips more than 10% or take profits if it gets to $21.75.


Option trade: If you are looking for a hedged options trade on AU, consider a June 15/17 bull-put credit spread for a 20-cent credit. That's a potential 11.1% return (79.5% annualized*) and the stock would have to fall 10% to cause a problem.


Speculative call-only trade: For those with an appetite for higher risk and bigger returns, consider buying the October $16 call. If AU rises just 6.9% 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.



Real money poker returns to the U.S.
What's happening:
In April 2011, the Justice Department shut down Internet poker in the U.S., but the long-awaited return of real money online poker is finally here, at least for part of the country. Nevada is the first state to offer real money online poker, with the first online poker room opening on April 30. So far there is just one running site, but it signals that more are on the way, and Boyd Gaming (BYD) has already been granted a license to open its own online poker room. Enthusiasm is high over the prospects of Boyd getting into online poker, helping drive the stock up 85% year to date.


Technical analysis: BYD was recently trading at $11.86, $0.20 below its 12-month high and $7.11 above its 12-month low. Technical indicators for BYD are bullish and the stock is in a strong upward trend. The stock has support above $11.50. Of the 17 analysts who cover the stock one rates it a "strong buy," one rates it a "buy," ten rate it a "hold," three rate it a "sell," and two rate it a "strong sell."


Analyst's thoughts: The return of online poker in the U.S. presents big opportunities for companies that get in early, and Boyd is likely to be one of the pioneers. It was not the first company to launch a real money site in Nevada, but it will not be long before it does, which will give it a chance to perfect its software in preparation for other states such as New Jersey and Delaware. In New Jersey, the law states that only companies with physical casino operations will be allowed to run online sites, and since Boyd has properties in New Jersey it will be involved in that state's operations as well. While only three states have passed legislation, more are expected to follow, and once a heavily populated state such as California or New York gets involved the profit potential is huge. Boyd should be able to take advantage of the changing state of American online poker, which is why I believe it is a good long term holding.


Stock-only trade: If you're looking to establish a long stock position in BYD, consider buying the stock when it is below $11.50 and sell if it falls below $9 or take profits if it gets to $13.25.


Option trade: If you are looking for a hedged options trade on BYD, consider a June 9/11 bull-put credit spread for a 35-cent credit. That's a potential 21.2% return (151.8% annualized*) and the stock would have to fall 4.3% to cause a problem.


Speculative call-only trade: We are bullish on the stock, but we do not want to set up any speculative call-only trade at the current time. The stock has traded up so strongly over the recent month the call options have gotten too expensive for us to feel comfortable with a call-only trade.



*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 does not have direct ownership in any of the other stocks mentioned.

1Comment
May 3, 2013 3:39PM
avatar
Glad i sold ZNGA and bought BYD,made High profits since i purchases it 2 days ago
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