Daily Report

This report is posted right here every trading day one hour before "the close". We run all of the searches and select our most bullish and bearish candidate of the day. This report includes live updates for stocks in our watch list that are on the move.

Issue     07/06/2012 Recent Reports     Past Reports    

Bullish PNRA
Stock Panera Bread Company, together with its subsidiaries, owns, operates, and franchises retail bakery-cafes in the United States and Canada. Its bakery-cafes offer fresh baked goods, sandwiches, soups, salads, and custom roasted coffees, and other complementary products, as well as provide catering services under the Panera Catering name.
Set-up Stock has at least two consecutive higher closes and it is trading higher than the prior close. Stock is trying to reverse recent pullback and resume longer-term up trend.
Chart

This stock has been in a long term up trend. It pulled back from its $165 high in March and it found support at $135. The market has been down the last two days and the stock has traded higher. That is a sign of strength and it looks poised to rally back above the 200-Day MA at $143. If it can do that, it will rebound. This is a strong stock and it could resume the long term up trend.
 Outlook

In May, the company reported net income of $41 million, or $1.40 per diluted share, for the fiscal first quarter ended March 27, 2012. The first quarter of fiscal 2012 results compare to net income of $33 million, or $1.09 per diluted share, for the fiscal first quarter ended March 29, 2011, and represent a 28% year-over-year increase in diluted earnings per share.

In the first quarter of fiscal 2012, Company-owned comparable net bakery-cafe sales increased 7.5%, franchise-operated comparable net bakery-cafe sales increased 5.2%, and system-wide comparable net bakery-cafe sales increased 6.3% compared to the comparable period in fiscal 2011.

The Company-owned comparable net bakery-cafe sales increase of 7.5% in the first quarter of fiscal 2012 was comprised of year-over-year transaction growth of 2.1% and average check growth of 5.4%.

The stock trades at a forward P/E of 21.
Tactic

For the second quarter of fiscal 2012, the Company is targeting earnings per diluted share of $1.40 to $1.43 versus $1.18 per diluted share in the second quarter of fiscal 2011. If the Company meets this target, diluted earnings per share would grow 19% to 21% in the second quarter of fiscal 2012 versus the comparable period in fiscal 2011.

Bill Moreton, President and Co-CEO commented, "We are very pleased with both our strong 7.5% comparable store sales growth and 28% earnings growth in the first quarter. This marks the eighth out of the last nine quarters that our earnings have grown at a rate of 20% or greater. The momentum from our strong first quarter results and our continued intense focus on investing in the quality of our food, people, and overall customer experience gives us the confidence to target full year fiscal 2012 earnings slightly above the high-end of our long-term range of 15% - 20% annual earnings growth."

This stock has been a long of ours for many months. We briefly shorted the breakdown and I told you that was nothing more than a technical move. I also told you it would not be on our short list long.

The tide had turned and the stock has formed support. During the last two days, the market has been down and the stock has moved higher. It is trading up against a weak tape and it wants to run.

Earnings were up 28% and same stord sales were up 7.5%. I like that is has no exposure to Europe.

I believe the market will find support next week and I like selling the July $135 puts and buying the July $125 puts for a $.90 credit.
Stop



Earnings



Bearish LRCX
Stock Lam Research Corporation designs, manufactures, markets, refurbishes, and services semiconductor processing equipments used in the fabrication of integrated circuits.
Set-up Looks for stocks that have been in a downtrend but have recently rebounded. Today the stock is attempting to resume the sell-off and it is making a 10-Day low.
Chart

This stock has been in a steady decline since hitting $45 in March. It has made series of lower highs and today it is breaking major horizontal support at $36. If it breaks below $35, it will make a new 52-week low and the selling pressure will build.
 Outlook

In April, the company said that revenue for the period was $659.0 million, gross margin was $267.1 million, or 40.5%, operating expenses were $209.0 million, and net income was $45.6 million, or $0.38 per diluted share, compared to revenue of $584.0 million, gross margin of $234.8 million, or 40.2%, operating expenses of $187.3 million, and net income of $33.2 million, or $0.27 per diluted share, for the December 2011 quarter. Shipments for the March 2012 quarter were $713 million compared to $563 million during the December 2011 quarter.

The stock trades at a forward P/E of 10.
Tactic

"Lam began 2012 on a strong note, delivering against our financial commitments for the March quarter while executing against the significant plans which support our strategic growth objectives," stated Martin Anstice, Lam's president and chief executive officer. "We continue to make substantive progress in advancing the capabilities of our core products in etch and single-wafer clean to help our customers address next-generation process challenges."

In June, it completed the merger with NVLS. NVLS said its revenue fell 21 percent, to $326.7 million from $413.2 million in Q1.

In the last few weeks, HPQ, DELL, CSCO and NTAP have warned. Last night, STX and INFA warned. Tech stocks are selling off.

LRCX has broken support at $36 today and it looks poised to drift lower. I like buying the Aug $36 puts. Stop the trade out if the SPY closes above $136 or the stock closes above $36.

I believe the market will find support in the next 2 days and I would keep bearish trades at a minimum.
Stop



Earnings