Market Talk with Piranha is currently moving to its new home at chrisperruna.com. The new site is up and running but many of the posts need editing as the images and stock charts did not transfer successfully (thanks blogger). I will post all new entries to both blogs – Thank you for your patience while I make this change!

Friday, May 05, 2006

The Right Bet was with Las Vegas

Two MSW Index stocks have reported since the close of the market yesterday and we are batting .500 (one right and one wrong but I can say that we could have anticipated the one that went wrong).

Las Vegas Sands (LVS), $71.34, was up over 7% in early afternoon trading as first-quarter earnings jumped to $121.8 million, or 34 cents per share, from $7.1 million, or 2 cents per share, in the prior-year period. The year-ago results were significantly impacted by an $86.3 million loss on the early retirement of debt. Adjusted net income rose to $134.8 million, or 38 cents per share, compared to $103.1 million, or 29 cents per share, during the same period last year. LVS has now gained 26% on the MSW Index since April 1, 2006 – another successful trade.

Here is what I had to say on last Saturday’s MSW Index:
4/29/06
LVS – 64.81
, Earnings come out this Thursday so be ready for that up or down swing. If numbers keep in-line with past reports, I expect the stock to beat expectations and move higher (a hard stop is advisable to protect from bad news).

This is what I wrote when the stock was added to the Index last month:
4/1/06
LVS – 56.66
, The stock has been screened many times (daily) over the past several weeks so I have decided to add it after further research. The stock comes to the Index as a possible $60-$100 candidate over the next twelve months. The strong 8% move this past week gives us the feeling that the young stock is ready to move. I am also looking at the September call options (in the money calls).

By the way, these in-the-money calls were trading at $7 last month (they are trading above $17 today). A $700 contract would be trading at $1,700 in one month, a 143% gain.

LoJack (LOJN) shares are down over 11% in mid afternoon trading as the maker of vehicle-tracking devices posted an 11 percent jump in first-quarter profit, but the company's shares are down due to concerns the company is lowering prices too aggressively. The drop should not come as a surprise to MSW members as we highlighted trouble in the chart on last Saturday’s weekly screen:

4/29/06
LOJN – 22.11
, The stock is in trouble. This is one of the first 200-d m.a. plays that have violated the long term support line without making that anticipated “pop”. Volume is low so we will keep it here until May 5 – earnings day. Place a hard stop to protect against bad news. If good news hits the wire, the stock will fly! Rating: Hold

We added the stock back on March 18, 2006 but it has not materialized above the 200-d moving average as other MSW stocks have.

3/18/06
LOJN – 22.53
, LoJack is another candidate added this week based on long term support at the 200-d m.a. with a trend buy opportunity right now at the current price. Buy and set a sell stop about 7-10% below the purchase price (slightly below the 200-d m.a.)

Some stocks work, some don’t and this is why we use strict money management rules to push the odds in our favor. If you bought both of these stocks, you would be stopped out of LOJN for a small loss and would be sitting tight with a solid gain in LVS. Since LVS is now above a 20% gain, you should start to think about placing a hard stop to guarantee profits if it were to reverse for some reason. I am still looking for the $60-$100 run for LVS, a move that would give the stock a 60%+ gain over time.

It’s not about winning or losing, it’s about playing the odds! Strong poker players would truly understand this philosophy.

Piranha

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