Referencing the weekly homework and stock radar, I am highlighting a few of the charts below for potential trades in undervalued stocks.
We had a gap-down to start the week off and as usual in this new environment, the bulls came to the rescue. With the Greek deal far from agreed upon, many thought today was the day we’d finally receive some weakness which would hopefully reset the many overbought charts. Instead, the trend for the past few months continued yet again. A gap-down finds enough dip buyers that it can not break to new lows, so we drift north for the rest of the day towards even. This action is not helpful for traders as we must be extra selective with our capital keeping trades either smaller or fast and aggressive as we trim into the close rather than hold overnight.
Today was not a day we could do much of this though as while the dip buyers did show up, the action was very so slow and weak after the initial hour of enthusiasm. Speculative small-caps have been receiving the most bullish attention, so I’m annotating charts of those types this week. I like that these stocks are receiving attention, but would feel better if we could receive a pullback to rest some of the less speculative stocks. This would allow traders to focus their capital on less risky trades for safer gains.
These days seem to be the new representation of a pullback, which entails mostly weak volume consolidation. That being said, don’t be shocked if we have another day of this only to surge in the coming days. While I’m not predicting this as we are overbought to begin with, it’s hard to fight the trend regardless how illogical it seems. For now, I’ll continue to keep positions reduced and tight. Any aggressive trades are likely to be peeled off before the close to keep risk minimal.
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1-800 Flowers.com (FLWS)
Yahoo Finance Profile:
1-800-Flowers.com, Inc. together with its subsidiaries, operates as a florist and gift retailer in the United States. The company offers a range of products, including fresh-cut flowers, floral arrangements and plants, gifts, popcorn, gourmet foods and gift baskets, cookies, chocolates, candy, and wine through its telephonic and online sales channels, company-owned and operated retail floral stores, and franchised stores. It provides gourmet gifts, such as popcorn and specialty treats through thepopcornfactory.com; cookies and baked gifts through cheryls.com; chocolates and confections through fanniemay.com and harrylondon.com; gift baskets and towers through 1800baskets.com; Celebrations brand party ideas and planning tips through celebrations.com; and customizable invitations, announcements, and greeting cards through finestationery.com. As of July 3, 2011, the company operated 2 floral retail stores, 1 fulfillment center, and approximately 100 franchised stores located within the United States. It has strategic online relationships with Facebook, Google, AOL, Yahoo!, and Microsoft. The company was founded in 1976 and is headquartered in Carle Place, New York.
Notes On Yahoo Finance Fundamentals:
FLWS has a fair forward P/E of just under 14. As of January 13, FLWS has a short ratio of 5, a negligible amount. Cash is slightly under debt at $30 million to $37 million and the Book-Value-Per-Share is just under the current stock price at $2.45. The price target from one analyst is nearly double the current stock price at $5 and the growth estimates for this year are a strong 55%. These are not overly impressive fundamentals, but the Valentines day buzz for the next few weeks should draw more attention to FLWS.
Annotated Chart and Trade Details:
Yahoo Finance Profile:
Warren Resources, Inc., an independent energy company, engages in the exploration, development, and production of onshore crude oil and gas reserves in the United States. It primarily explores for oil reserves in the Wilmington field in California; and natural gas in the Washakie Basin in Wyoming. The company was founded in 1990 and is headquartered in New York, New York.
Notes On Yahoo Finance Fundamentals:
WRES is a small-cap with a low forward P/E of only 9. As of January 13, WRES has only a 6 day short ratio, a negligible amount of shorts. One growing concern is the large amount of debt compared to cash. WRES has about $5 million in cash to $71 million in debt. This could create future financing/capital issues. The median price target for five analysts is $4.45 with a recent upgrade to buy in December 2011. This is not usually a stock I would rush to buy, but speculative small-caps continue to perform very well in this market, so WRES is likely to perform well in the short-term.
Annotated Chart and Trade Details:
Yahoo Finance Profile:
Entegris, Inc. develops, manufactures, and supplies products and materials used in processing and manufacturing in the semiconductor and other high-technology industries worldwide. It operates in three segments: Contamination Control Solutions, Microenvironments, and Specialty Materials. The Contamination Control Solutions segment offers liquid filtration products, components and systems, and gas filtration products that purify, monitor, and deliver critical liquids and gases to the semiconductor manufacturing process. The Microenvironments segment provides wafer and reticle handling products, wafer shipping products, and data storage products, which preserve the integrity of wafers, reticles, and electronic components at various stages of transport, processing, and storage. The Specialty Materials segment offers poco graphite products and specialty coating products that provide low-temperature and plasma-enhanced chemical vapor deposition coatings of critical components of semiconductor manufacturing equipment used in various stages of the manufacturing process. The company sells its products primarily through direct sales force, and strategic and independent distributors to integrated circuit device manufacturers, original equipment manufacturers (OEM), gas and chemical manufacturing companies, and high-precision electronics manufacturers; and electrical discharge machining customers, glass container manufacturers, aerospace manufacturers, and biomedical implantation device manufacturers, as well as flat panel display OEMs, materials suppliers, and end users. Entegris, Inc. was founded in 1966 and is based in Billerica, Massachusetts.
Notes On Yahoo Finance Fundamentals:
ENTG recently reported positive earnings and has a low P/E of under 11. As of January 13, ENTG has only a short ratio of 5, a negligible amount of shorts. A very large benefit ENTG has is the very strong amount of cash, especially in comparison to debt. ENTG has about $273 million in cash with no debt. This large surplus of cash gives many bullish ways they can put it to use further propelling the stock price higher. The median price target for the eight analysts is $11 with a high of $12.
Annotated Chart and Trade Details:
You can follow my real-time trades and market commentary alongside the 36,000 plus market players who follow me on SeekingAlpha (Shameless promotion). As always, do your own homework to see if you agree. Good luck out there.
Mike
At the time of publication, Kudrna had no positions in mentioned stocks, but may initiate positions within 72 hours.
