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Enron Mail |
---------------------- Forwarded by Mark - ECT Legal Taylor/HOU/ECT on
01/27/99 04:01 PM --------------------------- Enron Capital & Trade Resources Corp. From: xtrials@optioninvestor.com (Option Investor Newsletter Trials) 01/24/99 06:14 AM Please respond to xtrials@optioninvestor.com To: Option Investor Newsletter Trials <xtrials@optioninvestor.com< cc: (bcc: Mark - ECT Legal Taylor/HOU/ECT) Subject: Sunday - Option Investor Newsletter 2 of 6 (calls) The Option Investor Newsletter 1-24-98 Sunday 2 of 6 Last weeks change for this weeks picks: *************************************** Index Last Week Dow 9120.67 -219.88 Nasdq 2338.88 -9.27 $OEX 610.38 -6.08 $SPX 1225.19 -18.07 $RUT 422.44 -4.61 $TRAN 3063.8 -84.73 $VIX 32.85 Stock Price Week VOD 187.38 11.38 No buyer's remorse here. MSFT 156.25 6.51 Split Rumors have resurfaced NOK/A 144.56 5.94 Earnings Friday/ Split Candidate AMGN 114.63 5.75 Earnings Wednesday/ Split Candidate XLNX 78.19 5.31 Announced a 2:1 split UTX 114.56 4.88 Beat estimates by 5 cents T 88.25 4.07 T+TCOMA+ATHM+XCIT = Net content for T DELL 83.00 4.00 If GTW can do it, so can DELL QWST 60.13 3.82 Strong in Down market VIA.B 82.56 3.25 New play - Strong Momentum DH 59.94 3.00 Our new MYG play? ORCL 49.88 2.75 Partnering with IBM SNC 37.75 2.44 No weakness here last week! XIRC 42.00 2.13 Net Income Up 354% PRIA 35.88 1.37 Earnings on Thursday, Jan. 28th LXK 99.25 1.18 Earnings on Monday/ Split Candidate CSCO 102.81 1.13 Time for Earnings RUN FTL 17.81 1.13 Dropped..in a holding pattern. WCOM 74.88 -0.19 UUNET division wins GTW contract MYG 63.63 -0.62 Eight week stretch is over..dropped.. MU 70.50 -0.81 Raised Earnings Forecast ETH 48.00 -0.94 Dropped F 60.88 -1.13 Dropped..lack of performance CCU 59.06 -1.37 Dropped COF 128.69 -1.75 Dropped SUNW 98.00 -2.06 Announced 2:1 split (as predicted) EMC 98.50 -2.07 Earnings Monday, Jan. 25th JBL 70.00 -3.88 Dropped AOL 140.44 -6.06 Earnings Wednesday/ Split Candidate TLAB 79.63 -6.31 Ciena rumor killed it..dropped.. Puts PHYSB 68.13 -10.75 AMR 55.25 -9.06 MRK 139.00 -8.11 BDX 33.75 -6.01 AXP 98.5 -5.88 MCHP 30.19 -4.94 PKN 91.31 -4.07 DD 54.31 -2.75 HSY 59.00 -2.26 BKB 37.63 -1.88 WLA 67.94 -1.69 AVT 44.94 -1.31 PG 85.31 -1.31 CPB 44.31 -0.82 AVP 37.56 -0.69 BAC 65.06 0.50 *************************************************** SPECIAL SHORT TERM SPLIT PLAYS (in order by split date) We always recommend selling the day of the actual split. Profit taking will drive down the price on an average of 7 of 10 splitters immediately after the split. They may come back in a week or two but why risk it ! None currently Current splitters are too erratic GDT - Guidant Corp 2:1 01-27-99 ex-date 01-28 INKT - Inktomi 2:1 01-27-98 ex-date 01-28 SPLS - Staples 3:2 01-28-99 ex-date 01-29 EGRP - E*Trade 2:1 01-29-99 ex-date 02-01 ***************************************************** THE PLAY OF THE DAY -CALLS- ONLY PLAY IN RISING MARKET With all the great plays each week we can never decide on just one so take your pick. ****** AOL - America Online $140.44 (-6.06)(+0.00)(-8.63)(P6W +83.56) Split candidate with Wednesday earnings See details in sector list Chart = http://quote.yahoo.com/q?s=aol&;d=3m ****** NOKA - Nokia $144.56 (+5.94)(+3.63) Split candidate with Friday earnings (before the open) See details in sector list Chart = http://quote.yahoo.com/q?s=noka&;d=3m ****** CSCO - Cisco Sys. $102.81 (+1.13)(-5.00)(+13.88)(P7W +28.11) Split candidate with Friday earnings See details in sector list Chart = http://quote.yahoo.com/q?s=csco&;d=3m PICK SUMMARY ************ SL = Suggested stop loss. Sell if bid breaks this price. OI = Open Interest - the number of open contracts outstanding. TP/P= True premium or Time premium RRR = Risk/Reward/Ratio ITM = In the money ATM = At the money OTM = Out of the money MTD = Move to double - amount stock must move to double option price in one week. ONE WEEK MOVE ONLY ! Numbers within ( ) are the amount of change for the week. Numbers within ( ) may be designated with PxW, like P3W, prior 3 weeks The options with a "*" by the strike price are our choices from the group. If the stock moves as expected we feel they have the best chance to substantially increase or double in price with the best risk/reward ratio compared to the other options for the same stock. You must determine if they fit your risk profile for time and price. Analysts ratings: 1-2-3-4-5 Analysts who follow each stock rate it and these rating are accumulated and displayed as follows; Position 1 = number of analysts recommending "strong buy" Position 2 = number of analysts recommending "moderate buy" Position 3 = number of analysts recommending "hold" or "neutral" Position 4 = number of analysts recommending "moderate sell" Position 5 = number of analysts recommending "strong sell" Example rating 5-3-1-0-0 would be 5 "strong buys", 3 "moderate buys", 1 "hold" recommendation. STOCKS ADDED TO THE PICK LIST ***************************** Calls VIAB - Viacom QWST - Qwest Communications DH - Dayton Hudson ORCL - Oracle AMGN - Amgen SNC - Snyder Communications XLNX - Xilinx VOD - Vodaphone Puts AMR - AMR Corp AVP - Avon Products AXP - American Express BKB - Bank of Boston PHYSB- Pacificare Health PG - Procter & Gamble PICKS WE DROPPED THIS WEEK ************************** Remember that historically, when we drop a pick it will go up 10 to 15% the very next week. It is part of Murphy's Law. Just because we drop a stock as a pick does not mean we are advocating a "sell" on any position you have. We are simply dropping our recommendation as a new play. Existing plays can and do continue on and are usually profitable. CALLS: JBL $70.00 (-3.88) JBL closed under its 30 day moving average on Friday. Its chart has flattened out and it looks like it has lost all momentum. JBL has had a nice run since October, but we are going to have to drop them as a pick. MYG $63.63 (-0.62) It is time to say good-bye to our good 'ole friend Maytag. For the past two weeks, MYG has struggled in the weakened market. It sure would have been nice if Maytag had managed to keep its incredible streak alive. But, the -143.41 drop in the market on Friday snuffed out any chance of MYG rallying. For the first time in eight weeks it finished with a net negative. Even though Maytag announces earnings on Feb 4th and the possibility of a split remains, we feel that Maytag has lost some of its steam. We are dropping it as a pick for the time being. TLAB $79.63 (-6.31) Ciena, the flea, puts Tellabs in the doghouse. Seems like every time we get a good play on Tellabs, rumors circulate that Ciena is again in acquisition talks with them. Ciena goes up $4 on the rumor while TLAB pays the $4 penalty. TLAB is still a great company, but until the Ciena rumor goes away or the market decides it likes the idea of a merger, we can't recommend a play. Thus we are dropping TLAB for now. COF $128.69 (-1.75) We are dropping COF this week. COF had a sub-par week and just hasn't been performing like we would expect it to. Providian Financial has performed much better and is COF's key competitor. It is likely most of the damage is sector related. The banks are always weak whenever there is economic worries overseas. COF suffers with them despite the fact that they have virtually no overseas exposure. COF did announced earnings that were right on estimates. ETH $48.00 (-.94) We are dropping ETH in favor of some quicker moving plays. ETH has had a strong run, but has turned down now for three straight days. ETH had a nice earnings push and was able to get as high as $50.75 on the 19th, but since then has tapered off. ETH CEO did mention that there is a lot of pent up demand for their products and when this comes to fruition, we might see a move to the upside. Of course this could just be a consolidation after the strong move. FTL $17.81 (+1.13) While the possibility of a takeover is still there, FTL has hit a ceiling in it's enthusiasm. For the last couple of weeks it's been trading sideways. We feel it may be stuck in a holding pattern while waiting on news of an offer. If you are still interested in playing you might consider the May options thus giving yourself more time. However, if volume is any indication, current month Febuarys have been popular. Monday mornings have become the popular time to announce news of mergers and buyouts. Something could be brewing for the Jan. 25th. F $60.88 (-1.13) After a 10% rise in operating profits, a 100% increase in their cost cutting success, and their 11th consecutive quarter of beating the street's estimates and their stock drops almost 4 points. It is quite likely that the Dow's 215 drop Thursday/Friday was a catalyst for the decline but we expected better from this automaker. CCU $59.06 (-1.37) Dropping 2 days in a row after setting a new 52 week high, CCU has succumbed to profit takers. We understand the need for consolidation and pullbacks after a strong run, but breaking through it's 10 dma is not a good sign. Depending on how the market performs next week, we will either see a large bounce back up through its 10 dma or a continued slide. Increased interest in competitor AMFM's merger or acquisition activity may drive interest back into this sector but we are cautious and willing to trade this play for a stronger one. Nimble traders should watch for opportunities. This stock is prone to strong 3-5-7 day cycle trading. PUTS: Eastman Kodak (EK) - $65.50 .25 (-3.50) Big winner for OI subscribers after stock gave up more than $15 over the past two weeks. Stock reached our target of $65 and now trading at prior support level. Electronic Arts Inc. (ERTS) - $47.75 +1.75 (.75) Stock trading and holding above key support level of $45. Will revisit play if ERTS violates support. Eli Lilly (LLY) - $80.25 2.31 (-1.00) Stock rallied more than $2.00 during Friday's (1/22) broad market sell-off. Stock sold more than $15 before firming above it 200day moving average. Appears to have found support at $75-80. Rambus (RMBS) - $88.69 -1.94 (-.82) Stock traded up nearly $2 during Friday (1/22) sell-off. Stock now trading near 100-day moving average. STOCK SPLIT CANDIDATES ********************** AOL - America Online EMC - EMC Corp IBM - Intl Business Machines. WMT - Wal-Mart CSCO - Cisco Systems NOKA - Nokia MSFT - Microsoft LXK - Lexmark Intl Group Inc VOD - Vodaphone STOCKS WITH UPCOMING SPLITS *************************** We don't list all splits available, only those we feel may have play possibilities. GDT - Guidant Corp 2:1 01-27-99 ex-date 01-28 INKT - Inktomi 2:1 01-27-98 ex-date 01-28 SPLS - Staples 3:2 01-28-99 ex-date 01-29 EGRP - E*Trade 2:1 01-29-99 ex-date 02-01 WIND - Wind River Sys 3:2 02-04-99 ex-date 02-05 FDS - FactSet Research3:2 02-05-99 ex-date 02-08 MRK - Merck 2:1 02-16-99 ex-date 02-17 BMY - Bristol Meyers 2:1 02-26-99 ex-date 03-01 NSOL - Network Solution2:1 02-26-99 ex-date 03-01 SUNW - SunMicro 2:1 03-11-99 ex-date 03-12 For a complete list of all the coming splits check out the "split calendar" on the side of the online edition newsletter page. NETWORKING ********** CSCO - Cisco Sys. $102.81 (+1.13)(-5.00)(+13.88)(P7W +28.11) Cisco is the leading networker and is expected to help build the next generation Internet. Their goal is to allow people to access or transfer information without regard to differences in time, place or type of computer systems, voice or data. About 85% of the routers used to decipher and direct data traffic on the Internet are made by Cisco. CSCO will gain tremendously from the AT&T/TCI merger since they will build the equipment needed to harness the mass appeal of broadband services. Similarly, in an agreement signed this week, Cisco will provide technology to Daxian Electronics so that Daxian can build cable modems under the Cisco brand to develop cable broadband services in China. China already serves 100 million cable customers, just 10% of the market. Wow! What potential to connect Chinese citizens with local and long distance phone service, Internet, data services, video conferencing, etc. CSCO will earn royalties from the transaction too. Also, a reminder from a Reuters news release, Cisco continues to grow 35% per year while the market grows 15%. CSCO is truly leading the development of the Internet by helping cable and phone companies complete "the last mile", or the distance between the cable in the street an your home. With as volatile a week as we had on NASDAQ, CSCO held up well. It is time we watch for CSCO's earnings run. Plus, the network giant is once again a split candidate. They are due to announce earnings after the close on February 2nd where we expect them to announce a split. It's unusual that they would split so soon after their 3:2 in September. Historically though, CSCO splits in the $80-100 range and they have enough shares authorized to give us another 3:2. Greet price dips as a buying opportunity, confirm market direction and use stops. Day trading CSCO can usually earn you 5-10% on any given trading day (if you pick the right option), but you have to watch it and use limit orders (target shooting works too). If you do, at least be disciplined. BUY CALL FEB-100 CYQ-BT OI= 9773 at $8.63 SL=6.50 BUY CALL FEB-105*CYQ-BA OI=14047 at $6.00 SL=4.25 BUY CALL FEB-110 CYQ-BB OI=12486 at $3.88 SL=2.50 BUY CALL APR-110 CYQ-DB OI= 4189 at $8.13 SL=6.25 LEAPS: BUY LEAP JAN-2000-110 LCY-AB at $21.38 SL=16.75 BUY LEAP JAN-2001-110 ZCY-AB at $30.75 SL=24.00 Picked on Oct 8th $46.69 PE= 108 Change since picked +$56.12 52 week low =$37.25 Analysts Ratings 17-13-1-0-0 52 week high=$109.93 Last earnings on 11-04 est=.33 actual=.34 Next earnings on 02-02 est=.36 versus=.29 Chart = http://quote.yahoo.com/q?s=csco&;d=3m Internet ******** AOL - America Online $140.44 (-6.06)(+0.00)(-8.63)(P6W +83.56) America Online is the largest online Internet access service in the world. Membership now exceeds 15 million users. Its Chairman, Steve Case, said more new users signed up with AOL on Christmas Day than any other day in the company's history. With estimates of 16 million users by the year 2000 and growing advertising revenues AOL has been called the blue chip of the Internets. (If only they could get their mail problem resolved!) A case of throwing the baby out with the bath water. Almost every analyst we hear from regarding the "long overdue" sell-off of Internet stocks qualifies it with, "But AOL is the exception". This was not a good week overall for the internets; tough on AOL too, though they showed good strength in adding back $5 from their $135 opening on Friday morning. Frankly, we struggle at times playing AOL during it's consolidation phase. We still think that with earnings just 3 trading days away, with the expectation of a split announcement, buyers will step in to raise the price and give us a healthy run-up. AOL reports 23,000 new customers logging on daily, and over $1 billion sales through its site for the Christmas season. Weekly, they add new advertisers paying dearly for the exclusive privilege of appearing on AOL. Ever notice those companies don't report how much it costs them? It's a lot and we expect it to be nicely reflected in an earnings surprise. AOL is well over historic split territory, usually $120- $130. They have enough authorized share to give a 3:1, but 2:1 is more likely. Earning are expected after 5:00 p.m. ET, Wednesday, January 27. Given the recent pounding stocks take after announcing great earnings, we strongly caution all traders to re-analyze their risk to hold over an earnings announcement. Just because we expect great numbers and a split doesn't mean that their earnings won't turn sour or that a split may fail to materialize. Confirm market direction and use stops. Intestinal fortitude required. In the news this week, Prodigy, once a strong AOL competitor, threw in the towel on 208,00 subscribers of its Prodigy Classic service because it will not be Y2K compliant. Wednesday, AOL reported that they drew 54.5% of all Internet users at some point in the month of December. MSFT trailed by 6 percentage points. AOL Japan reported 200,000 total subscribers. The real news, not in print, is about earnings and possible split. BUY CALL FEB-135 AOE-BG OI=1749 at $15.38 SL=12.00 ITM BUY CALL FEB-140*AOE-BH OI=6806 at $12.75 SL=10.25 ATM BUY CALL FEB-145 AOE-BI OI=2549 at $10.25 SL= 7.75 OTM BUY CALL APR-140 AOE-DH OI=3769 at $22.13 SL=17.25 ATM BUY CALL APR-145 AOE-DI OI=1420 at $19.63 SL=15.25 OTM Momentum play Chart = http://quote.yahoo.com/q?s=aol&;d=3m Telecom ******** WCOM - MCIWorldCom $74.88 (-0.18)(+0.06)(+3.25)(P5W +9.31) Telecommunications behemoth, MCIWorldCom, is the recent offspring between a marriage of formerly #2 long distance provider MCI and #4 provider WorldCom. Now the newly formed giant of giants is duking it out with AT&T as they stake their claim in the local phone service, international service, cellular, paging, and Internet access arenas. WorldCom's $37 billion purchase of MCI last September qualifies it the 7th largest merger or acquisition in 1998. WCOM is one of the largest Internet backbone providers in the world. If you're reading this letter, somewhere in the transmission, WCOM fiber brought it to you. WCOM, the 5th largest component of the NASDAQ 100, was down slightly on the week, which we think is good news given the Brazil/China/Greenspan jitters. Buyers stepped in with heavy volume of 11-18 million shares daily to offer support in the $73 range. Average daily volume is 10.7 million shares. Technical indicators are not looking so great right now, except for the strong bounce off Thursday's low. Resistance is $80. Market permitting, we expect the bounce to continue and look for nice profits as WCOM tests $80 again. If it breaks $80 with good volume, the sky is the limit. Noteworthy this week, UUNET, the ISP (Internet service provider) division of WCOM announced they would be the service provider for Gateway Computer customer's Internet service. Gateway said it chose UUNET because it was the first company to offer commercial access to the Internet, and it continues to maintain the industry's most reliable, rigorously managed and most widely deployed network (Reuters). Reuters also noted in a different release that WCOM was one of Fidelity Magellan's top 10 holdings. Analyst have also said, "earnings will benefit from the company's strong position in the fastest-growing segments of the industry, such as data, Internet and international. Still getting mileage from award of the GSA contract and baby bells unfortunate court rulings preventing the baby bells from entering the long distance market in their home areas. This spells good news and continued earnings growth for the big 3 long distance providers. BUY CALL FEB-70 LDQ-BN OI= 2717 at $7.13 SL=5.25 ITM $4.88 BUY CALL FEB-75 LDQ-BO*OI=11769 at $4.38 SL=2.75 BUY CALL FEB-80 LDQ-BP OI=14332 at $2.00 SL=1.00 BUY CALL MAR-75 LDQ-CO OI= 6774 at $5.75 SL=4.00 Picked on November 29th at $62.44 PE = 91 Change since picked +$12.44 52 week high=80.12 Analysts Ratings 23-9-2-0-0 52 week low =31.12 Last Earnings 10/29 est .22 actual .21 surprise -4.5% Next Earnings 02/04 est .22 versus .15 Chart = http://quote.yahoo.com/q?s=wcom&;d=3m ****** QWST - Qwest Communications $60.13 (+3.82) The Colorado based Qwest Communications International is the fifth largest local and long distance telephone company in the United States. It is also secures broadband Internet-based data and provides voice and image communication capabilities to businesses and consumers. It is currently expanding its reach into Mexico and most of Europe. In the US, QWST is building its Internet Protocol-based fiber-optic network which will connect over 130 cities by mid 1999. It was nice to see that QWST continued the upward trend it established early in the week. We initiated coverage of this company in Thursday's newsletter. On Friday, it affirmed our beliefs by finishing the day up +$0.75 even though the markets were extremely shaky. The most recent date we have for earnings is listed in Zack's as being on February 11th. Confirm upward movement before initiating any new plays. News: Qwest has recently formed relationships with several companies including Verio Inc., Ford, Hometown Connections and Covad Communications Group Inc. All of the contracts formed revolve around improving communication capabilities. BUY CALL FEB-55 QWA-BK OI=926 at $7.13 SL=5.25 BUY CALL FEB-60*QWA-BL OI=840 at $4.50 SL=2.75 BUY CALL MAR-55 QWA-CK OI= 85 at $8.88 SL=6.75 BUY CALL MAR-60 QWA-CL OI=260 at $6.25 SL=4.75 Picked on January 21st at $59.38 PE= N/A Change since picked +$ 0.75 52 week low =$22.00 Analysts Ratings 7-6-3-0-0 52 week high=$63.37 Last earnings 09/98 est -0.06 actual -0.02 Next earnings 02-11 est 0.02 versus 0.07 Chart = http://quote.yahoo.com/q?s=qwst&;d=3m ****** T - AT&T $88.25 (+4.00)(+9.31)(+1.19) AT&T, the mother of all phone companies isn't just a long distance company any more. Through growth and acquisition, they now provide data transmission, video tele- conferencing, PCS/wireless/cellular, Internet, paging and local phone services via microwave, fiber and copper infrastructure throughout the U.S. and international markets. Their annual revenues in excess of $55 billion dwarf their nearest competitor, MCIWorldCom, by 5 times. Their 1998 acquisition of TCG (formerly Teleport Communications Group, the nations largest competitive local exchange carrier) and IBM's data services division will add substantially to their revenues. Pending a merger with cable giant, TCI, revenues could grow even more. Michael Armstrong, AT&T's CEO, has investors believing that AT&T is no longer a copper wire dinosaur heading-up the telecom extinction list. This is an earnings and momentum play. Up $4.00 on a down week, T is behaving more like a tech stock with $6 daily swings. Technicals look great and will look even better when the market shakes off its jitters. T traded as high as $96 inter-day Wednesday to give us tremendous profits. We hope you protected them from the backslide using stop loss orders. Given AT&T's turnaround with Michael Armstrong at the helm, we think AT&T will show excellent earnings and revenue growth. There is some confusion with earnings announcement date shown as January 26 by Zack's. This is most likely inaccurate. First Call lists no report date. AT&T shareholder relations says, "between February 23-25". We'll report it to you when AT&T clarifies the pictures. In the meantime, with AT&T's current strength, dips should be met as a buying opportunity. Some great news: AT&T may sell it's WorldNet ISP division to @Home for $1 billion in @Home stock. At Home would then fold WorldNet's 1.3 million subscribers into its customer base of 330,000, with the goal of converting the AT&T users to its much faster, cable-based service. AT&T, however, essentially would retain control of it's online service because it's about to acquire voting control over At Home with its pending $41 billion purchase of the second largest U.S. cable TV operator, Tele-Communications Inc. TCI owns a 58 percent voting stake in At Home and 28 percent of its common shares (CBSMarketwatch). With @Home buying Excite, AT&T would then have the content to compete with the likes of AOL. For those new to our publication (veterans, please forgive us), three weeks ago, AT&T got the green light to merge with TCI thus creating a huge bandwidth pipe (lots of transmission capacity) over "the last Mile" or that short distance between the street and your phone jack. It's estimated that it costs $1200 per home for a typical utility to trench and install any transmission equipment. That's why even though the fiber optic cable runs down your street, you can't yet access it. It's too expensive to get it to you. Soon, you'll be able to bypass that fiber in favor of AT&T/TCI cable. It's already there. Translation: increased revenues. BUY CALL FEB-85 T-BQ OI= 8592 at $6.50 SL=4.75 ITM BUY CALL FEB-90 T-BR OI= 4525 at $3.88 SL=2.25 BUY CALL APR-90 T-DR OI= 2759 at $6.63 SL=4.75 BUY CALL JUL-90 T-GR OI= 792 at $9.38 SL=7.00 lots of time Picked on Dec 20th at $73.00 PE = 24 Change since picked +$15.25 52 week low = $48.38 Analysts Ratings 10-9-8-0-0 52 week high= $96.12 Last earnings 9-98 est= 1.00 actual= 1.16 Next earnings 1-26 est= 1.00 versus= .81 Chart = http://quote.yahoo.com/q?s=t&;d=3m ***** NOKA - Nokia $144.56 (+5.94)(+3.63) Nokia is a supplier of telecommunications systems and equipment and is the world's leading maker of cellular phones. It's telecommunications and mobile phone sales are growing rapidly, and margins are higher as well. We dropped Nokia on Jan. 10th as it began a correction and picked it up again in last Sunday's letter. It rewarded us with a 16.81 jump in price by mid-day Wednesday, before losing two thirds of that to market weakness the rest of the week. Nokia was still up $5.94 on the week. The entire telecommunications industry is very strong now, as investors realize that it is one of the sectors with the most exciting growth prospects. As one of the premier companies in that sector, Nokia is especially strong. It continues to announce new contracts to supply its cutting edge products to companies throughout the world, and plans to double production at one of it's German plants to meet demand. We are recommending Nokia as a momentum play and also as a split candidate. It's last split announcement was followed be a long, powerful rise in the stock price. Earnings will be announced before the bell on Friday, January 29th. Although we believe that a split announcement is likely, remember what happened to several other stocks that either did not beat estimates by a wide enough margin, or did not announce the expected split. There is opportunity to play Nokia before the earnings are released. You could pick them up again Friday morning if the company announces a split, and the earnings are as strong as we expect. Holding over can be rewarding but is always risky. BUY CALL FEB-140 NAY-BH OI=416 at $12.38 SL= 9.75 BUY CALL FEB-145*NAY-BI OI=432 at $10.00 SL= 7.50 BUY CALL MAR-150 NAY-CJ OI=112 at $10.50 SL= 8.00 BUY CALL APR-145 NAY-DI OI=296 at $15.75 SL=12.25 BUY CALL APR-150 NAY-DJ OI=275 at $13.63 SL=11.00 Picked on Jan 17th at $138.63 P/E=n/a Change since picked $ 5.94 52 week low = 36.09 Analysts' ratings 10-6-0-0-0 52 week high=155.38 Last earnings 9/98 est=$ .67 act=$.88 surprise=31% This earnings 01-29 est=$1.01 Chart = http://quote.yahoo.com/q?s=NOKA&;d=3m ***** VOD - Vodafone Group PLC $187.38 (+11.38) The vote is in, and Vodafone Group is the UK's #1 mobile telecommunications company, serving about four million customers. It operates analog and digital cellular networks offering voice communications, messaging, paging, and mobile data services. Vodafone sells its cellular phone services through three distribution businesses: Vodafone Retail, Vodafone Connect, and Vodafone Corporate. The company provides cellular services in 12 countries outside the UK; international operations account for 28% of total revenues. Vodafone will nearly double its size with the purchase of US-based AirTouch Communications. VOD took a down turn with the rest of the market on Friday. We don't view this as anything other than profit taking. If and when the market resumes it's uptrend, we feel VOD will be a big winner. Analysts have seemed to like the recent merger announcement of VOD and ATI. On the 19th, one analyst raised VOD from neutral to outperform. The combining of these two companies has very little overlap. This is good news for the current stock price, because very little overlap means the quicker earnings can be increased. When you look at a chart of VOD, you'll notice the choppy nature of the chart. VOD has a lot of gaps at the open. This is due to the nature of an ADR(American Depository Receipt). *OI is low because the stock moves so quickly. BUY CALL FEB-185 VOD-BQ OI=348 at $11.25 SL= 8.75 $2.63 ITM BUY CALL FEB-190 VOD-BR OI= 33 at $ 8.00 SL= 6.25 BUY CALL MAR-190 VOD-CR OI= 14 at $11.63 SL= 9.00 BUY CALL APR-190 VOD-DR OI= 4 at $14.25 SL=11.25 Picked on Jan 21st at $190.31 PE=66 Change since picked -2.93 52 week low =$ 75.19 Analysts Ratings 3-2-2-0-0 52 week high=$197.00 Last earnings 01/99 est= ? actual= .61 Next earnings 05-27 est= 1.56 versus=1.21 Chart = http://quote.yahoo.com/q?s=VOD&;d=3m ***** SEE DISCLAIMER IN SECTION ONE
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