Monday, May 9, 2011
Follow up on a couple of ideas
In addition to BKI and ROC from last week, readers might want to take a look at Darling International symbol DAR. DAR is in what most people would say is a pretty ugly business. It operates in some segments that most of us don't want to think about. Rendering, recycling, and recovery for the food services industry. Rendering accounts for about 75% of the sales and recovery the rest. The fundamentals of the stock look pretty good while the technical's look higher. DAR has a market cap of about 1.7 billion, is trading at about $15.20 a share, does not pay a dividend, has grown revenue at about 14.3% per year over the last ten years and has averaged a net profit margin of almost 5.0% over this same time frame. With a beta of around 1.76 it is not for the faint of heart but, it could produce a decent return. Buy the stock in this price range wait for an up-tick in the price and look to sell a June or July call contract against it. Now here is a stock that has a great deal of upward price momentum Ariad Pharmaceutical ticker ARIA. This is a bio tech company that must have some good news in the pipeline. First, some facts on ARIA. They do not make money. They do have what appears to be some good news on drug therapy for soft tissue cancers. The stock has gone from the $6.00 per share range to the low 9's. There are some announcement's on these various therapies coming out in late June. If current market action in this stock is any indication it looks like the news will be good. Even with about 11% short interest of the daily float ARIA has managed to go up. Here is a decent way to play the June FDA/Ariad announcement buy a June 10 for about .40c and sell the June 11.00 for about .15c. As long as ARIA gets and stays above 10.25 you are in the money.
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