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Bank on Trimble Navigation

by Jon Lewis 04/23/09

When it comes to trading earnings, I like the more-obscure names, especially for bullish trades. They're less crowded. I avoid crowded trades, or I play them on the put side.

One such obscure stock is Trimble Navigation (TRMB), which is set to release earnings on Tuesday, April 28.

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The company provides advanced positioning products (as in GPS, GIS and related items) for commercial and government users.

Trimble has an enviable earnings track record, having met or beaten every quarterly estimate for nearly six years. Expectations for Q1 have been scaled back considerably. Analysts are looking for a 35% drop in profits compared to an average gain of 21% during the past four quarters.

Sentiment toward TRMB is likewise reserved. The put/call ratio is coming off an annual high, meaning that extreme pessimism is unwinding into some buying power.

Keep in mind that optimistic sentiment represents higher expectations and, thus, can create some vulnerability if those expectations aren't met. Conversely, pessimism reflects lower expectations that often lead to upside earnings surprises.

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