The Daily Kill Sheet Picking Off Profits One Stock At A Time!

September 18, 2013

Daily Kill Sheet For September 18,2013

Filed under: Advice,Copper/Gold Mining,Long,Take Profits — Administrator @ 10:46 am

I am closing out my 4/18 long call on Freeport McMoran Copper & Gold (FCX, $33.76) with a 22.9% gain.The May $24 puts that I recommended you sell expired worthless, thus we experienced a 5.4% return on that position as well.

The Daily Kill Sheet has not been updated for a while due to a death in the family. My wife had gotten sick earlier in the year which culminated  in her spending two weeks in intensive care in July, and her death in early August. Given the lack of activity on the blog, please consider all trades prior to March 2013 as closed. New trading ideas will be added regularly from here on out.

April 18, 2013

Daily Kill Sheet For April 18, 2013

Filed under: Advice,Copper/Gold Mining,Long,Uncategorized — Administrator @ 9:37 am

Take a look at Freeport McMoran Copper & Gold (FCX, $27.48) for a trade. The company reported first-quarter earnings of $0.68 a share, well below last year’s $0.80 and the consensus estimate of $0.72. Even so, while the numbers weren’t great, the Street was expecting a miss so the news won’t likely come as a shock.

Meanwhile, there are two potential catalysts for the stock here. First, the stock is sitting just above an area of long-term support where the stock has typically stopped falling and has begun to rally. FCX stock is very volatile, and a change in momentum can lead to good gains. Indeed, take note of the recent small gap in the chart below. To fill the gap the stock would have to rise by over 17%. Meanwhile, the stock would have to rise by 35% just to retest its 200-month moving average at $37.81. Big upside from a stock sitting on solid long-term support always makes for a good speculation in my opinion.

Ok, so we have the technical set up, the question becomes “So what is going to send the shares higher from here?” In my mind the catalyst is a fix for the supply/demand imbalance caused by the slowing world economy. A recent mine collapse in the Western United States could be the trigger for that to happen. The Bingham Canyon Mine, recently had a land slide that effectively shut its production. http://www.perthnow.com.au/huge-landslide-shuts-kennecott-utah-coppers-bingham-canyon-mine/story-fnhocq8b-1226619124124 The US is the world’s second largest copper producer and the Bingham Canyon Mine is responsible for about 14% of U.S. production. While the company does not expect any further slides, The department of Mine Safety and Health Administration has not approved the reopening of the mine yet. As of Saturday, there has only been limited activity at the mine…mainly workers removing overburden  from the southeastern portion of the mine (the slide happened in the northeastern wall. All said, while I do expect the mine to reopen in the next couple of weeks, it’s likely that production will be slow to return to normal, thus helping to reduce copper inventories in the near-term and slow to halt the slide in pricing.

Note that the mine collapse happened at a competitor’s mine, thus Freeport‘s production will not be hampered by the slide. The mine where the slide occurred also produced gold, thus the supply of new gold will also be hampered to some extent, also a positive for FCX. With that said, I think FCX shares are poised for a recovery here, driven by stabilizing commodity pricing and strong technical support near the current level. Any increase in the price of copper or gold should also help to boost the shares. My near-term price target for the stock is $32.50, implying an 18.2% gain to my target. My secondary target is $35 (slightly above the 200-day moving average) implying a 27.4% return to my secondary target. For those of you who believe FCX is a good value near the current quote, but doesn’t want the risk of owning the stock here, You can sell May $24 puts at $0.30. If the puts expire worthless in 29 days, you would garner a 5.4% return.

FCX1

Click On The Graph for a larger Clearer Version.

March 13, 2013

Daily Kill Sheet For March 13, 2013 – Position Update

Filed under: Long,Sure Shot Update!,Uncategorized — Administrator @ 12:13 pm

Willbros Group (WG, $8.60) has been mentioned positively in a new research report by UBS. The report cites eight stocks that stand to benefit from infrastructure rebuild in the United States and Willbros is one of the stocks mentioned. At this point, we are up 55% since I first wrote up the stock in the January Sure Shot Letter. At this point, I recommend that we continue to Hold the stock here.

March 6, 2013

Daily Kill Sheet For March 6, 2013

Filed under: Industrial,Long,Sure Shot Update!,Uncategorized — Administrator @ 1:29 pm

Just a quick update on our Deep Value position in Willbros Group (WG, $7.10). Willbros announced fourth-quarter earnings of $0.11 a share, $0.05 better than the consensus estimate. Revenues jumped 54% year over year. 

Management noted that their strategy to reduce the impact of seasonality in the businesses during the first and fourth quarters is proving successful as evidenced by improving top line and operating results. 
 
Backlog:
 
Willbros reported total backlog from continuing operations of $2.2 billion up approximately 7% from last year.  Twelve month backlog at the end of 2012 was $1.1 billion up over $240 million from December 31, 2011. 
 
Strategy: 
 
Key objectives in 2013 are to improve operating results and financial flexibility. They intend to improve performance through strengthening project management capabilities, bolstering training programs and adding work with more favorable terms and conditions to backlog. In addition, they expect to further reduce debt to strengthen the balance sheet.
 
Guidance:
 
Management now expects annual revenue to range from $1.9 to $2.1 billion, excluding the Hawkeye and Oman businesses, and debt reduction of $50-$100 million by the end of the year. The business model has experienced improved results in the first and fourth quarters year over year and they expect that trend to continue, with the strongest operating results in the second and third quarters.
At this juncture, we are up nearly 30% in the shares since our January recommendation. I recommend to continue to hold the shares here. The company remains well positioned to help build out the infrastructure necessary for the U.S. to continue to increase its oil and natural gas output. Energy security is a focus of this administration and it’s likely that oil and gas production will continue to increase regardless of the U.S. economic environment. With that said, the stock is volatile and with patience you should be able to increase your positions at prices below $6.50.

December 11, 2012

Daily Kill Sheet For December 11, 2012

Filed under: Long,Retail,Specialty Retail,Uncategorized — Administrator @ 9:50 am

I am closing out my 10/4 trading call on Limited Brands (LTD, $51.64) with a 2.5% gain. Last night after the close, Limited announced a $3.00 a share special dividend payable on December 26th to shareholders of record on December 20th.

I batted a 1000 on this call. In early October I speculated that there was a good chance that both The Buckle and Limited would announce special dividends given their past history of announcing special dividends, and the fact that tax laws are set to change next year, raising the rate at which dividends were taxed. In late November BKE announced a $4.00 a share special dividend, and last night LTD announced their $3.00 a share special dividend. At this point, I’ll take the money and run and leave someone else to collect the dividend. We closed BKE with an 11% gain and now LTD with a 2.5% gain, thus we did pretty well with our special dividend calls.

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