Monday, January 21, 2019

Watchlist Update: CREE, FISV, RTN, SNAP, TEAM

In this January market rally, for the fourth straight week, the sentiment has changed sharply in Wall Street and today bullish airs are breathing. From what seemed like a shy post-Christmas correction within a larger fall, today the vision is very different. Two key factors caused the change: Powell confirming the dovish tone of the FED, and the advances (although the officials deny, it seems serious and concrete) in the resolution of the Trade War. At least the markets have understood this, even despising the shutdown of the US government. As I permanently indicated in this blog, a positive US-China agreement would guarantee a good 2019 on the world stock exchanges. Let's see some ideas from stocks of my January' watchlist.

Cree Inc. CREE, $48.41

In these last two weeks (supported with its recent deal with STMicroelectronics STM), this Mid-Cap light-product manufacturer, exceeded without problems, its SMA200 average and the Ichimoku cloud, both resistances that give me the technical signal for long entry as I commented in my previous post. It can correct in the short term by being overbought, but it is clear that the stock is in bullish days. The $47.50 resistance level was also exceeded this week, and its next is its 52-week highs at $51.80.
A Put/Call=0.3 and short-interest at 10.74 suggest that the short covering can take the price up for a while longer. However, in two weeks ahead, its report earnings Q4, will define my position in CREE. Although in the last two earnings, beat the market, this company need to confirm its improvement in weak fundamentals, such as profit margin and cash flow, both in fall, and flat revenues for several years.

Fiserv Inc. FISV, $77.82

The news this week in FISV has been its acquisition of First Data FDC, in an all-stock transaction for $22B. While at first hours it was not well received by the traders (its price fell to about $68), the price bounce back sharply to close the week in solid $78, breaking not only the downtrend channel (lines shown in yellow), but also its significant averages SMA50 and 200, entering the Ichimoku cloud with possibilities to enter this week to bull territory. Despite being little volatile (25%), its good fundamentals (cash and revenues increasing for years), good valuation (under PE industry), and three upgrades this week (including a strong buy by CFRA), show me that it was a good decision to consider this IT company in my January watchlist. Long for the mid-term in this 2019.

Raytheon Co. RTN, $165.41

I believe this technology company specialized in government defense, aerospace and cybersecurity services can have a good 2019. The tense relations between the US and Russia will demand more investment in these areas. This week has obtained additional contracts from the Department of Defense for missile support ($72M), US Navy vessels ($72M), Naval Air System Command ($434M), the unmanned aerial vehicle Reaper MQ-9 ($ 59M), among others more. Wall Street analysts will be looking for positivity from RTN as it approaches its next earnings report date, in January 31st.
It has an interesting PE value below the average of its industry that makes it attractive to invest, supported by good fundamentals, in revenues and cash flow. 

Technically, it overcomes this week its SMA200 and is struggling with 23.6% of his Fibonacci in its weekly chart, that can do so based on the above news. In stocks recovering I usually check its "value zone", defined by Elder as the zone between its EMA 13 and 26 (black lines, solid and dashed), as the best moment for an entry trade.  On my radar, with bull emphasis for February.

Snapchat Inc. SNAP, $6.18

The followers of this blog know that, since its IPO two years ago, I never recommend Snapchat as a long-term investment. As I wrote those years, just by "sentiment trading" it seemed to me, and still seems, it's only an stock just for speculate. I can not deny that I have had good short-term or day-trades with this stock, always shorting it or with puts in the money.
On Wednesday the stock fell 13% with the news of the resignation of its CFO, second in less than a year. However, it seems that Wall Street valued this fact and next days the stock bounced upwards, having a MACD bull divergence (in yellow) without resolution, until its EMA13 (the black line) points up. SNAP, as always, is an stock never for a long-term investment, but nice for short-term speculation.

Atlassian Co. TEAM, $90.67

Atlassian, the creators of Jira, have quietly become one of the best stocks in the entire market. At its IPO in 2016, this was a $25 stock. Today, it nearly trades for $100. And with amazing numbers in its recent earnings: revenues $299M (39% up), operating loss -3.2M (from -$13M), net income $45.2 (from -$64.2M), adding new 6,551 to its total 138,235 customers. This week, after earnings, TEAM reach its all-time-highs in $100 with crazy volume and all technical indicators in bull mode. Now is correcting from overbought levels, but seems that gap could be filling soon, following market recovery. My entry point for a long trade depends on a clear breakout above the $100, a psychological level, otherwise I wait.