TGIF! What a great week for us. We unveiled the new 16 Days of Oxen and things are going well. Yesterday, we had a fantastic day exiting TSL and DBRN for 5% and 4.% profits, respectively. We also entered a new Midterm Trade in Focus Media (FMCN) that was available only to my new Oxen Group members. We also unveiled the Afternoon Snack that I will include after this post.
(It may be time for a silver rally to get in par with gold…)
On the negative side, we did not hold Marvell (MRVL) into earnings and took a four cents loss. The stock is trading up 7%+ in the market currently after earnings were better than expected. Further, we had to take 4% loss on Chico’s (CHS) for our Short Sale in them.
The market, though, looks ready to breakout. A great day yesterday and a rebound is in the works to move higher today…positive signs. For that reason, I feel comfortable looking at another Midterm Trade, moving into next week.
Midterm Trade of the Day: Verigy Ltd. (VRGY)
Analysis: We start off by saying that, the Verigy merger with LTX-Credence was probably not a great decision by the company. They do get access to some of LTXC’s high profile clients, but the company has a lot of baggage and has not performed well as of late. Yet, at the same time, Verigy has put itself in a place where it has shed nearly all of the investors who did not like the decision and gotten rid a lot of traders involved with it. From pre-merger news about the merge to today, the stock has dropped just 
under 20%.
So, why do we think this is at all a good decision? Verigy is slated to report outstanding earnings next week as the stock has just hit rock bottom. The company is expected to report an EPS of 0.28 vs. one year ago’s loss of 0.02 per share. The company is improving its EPS by 1500%. That type of gain should attract a lot of investors, especially at these levels. The company is even improving quarter-over-quarter by more than 20%.
Competition has performed well additionally. 8/10 of the most similar market cap semicondutor equipment companies have beat or met earnings. No one has been blowing earnings out, but better than expected earnings are…
