FDO Technicals Could Spell Profits
by Jon Lewis 07/01/09
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Sentiment toward FDO is all over the map. The Street is less than thrilled with the company, as just four of 14 covering analysts rate the stock a "buy."
But options players feel differently. FDO's put/call ratio is sitting at an annual low. The problem is that neither the analyst ratings nor put/call ratio have changed much in the past three months. That makes sentiment mostly a wash, putting the technicals in the spotlight.
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Earnings expectations for Q2 are robust, but are not out of line with what the company has produced during the past year. FDO usually beats the consensus estimate by a penny or two (it hasn't missed in two years), but the post-earnings performance is typically mediocre.
The key is how the stock behaves around the 200-day. If support holds and the market appears to be firming after the three-day weekend, this could be a nice call play to start the earnings season. If not, we'll probably stay on the sidelines and look for other opportunities.
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Jon Lewis is the co-editor of The Winning Edge trading service designed to help you make options profits around corporate earnings and other market events. For more information about Jon, read his bio here.
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