DJIM #15 2007

A premise here has been our belief that the markets will be solid going into another earning season, a market has little chance of crashing through the floor before the companies get a chance to tell their side of the story. The correction has been literally wiped away and the recent retracement to the 100ma averages has seen a healthy bounce as we enter Q2.  Last week was one for the books as a number of plays here enjoyed breakaway gains..WBD, JSDA, GROW, MFW.  Isn't interesting that these are all earning plays at one time or another on DJIM. We also had nice moves from AMAG,OYOG.  Plus the solars TSL,ASTI, FSLR..we talked about last weekend as a possibility for the week made for some nice trades.  Sometimes the strong get stronger and it is more apparent in a bullish trend such as we enjoyed last week.  Simply, this was a case of recycling which is a big part of our trading methodology. Speaking of recycling, a few names popped back into our books here on Thursday and they include DJIM stocks from January in MTRX and USAP, both previous earning gem winners.

We'll concentrate on Thursday additions...

MTRX, announce an excellent Q with an upside to guidance. Last Q this was pick up at 16+ and was as steady as they come. Not a big flyer it survived every pit the market would throw at it, including a sliding Oil price and it still held ground. We expected MTRX to trade as the previous earning day, but it performed much better than expected as the institutions did not churn it as before. The guidance was the key this time around as it put on gains throughout the day finishing strong.

...beats by $0.07, issues upside guidance (21.41 ) : Reports Q3 (Feb) earnings of $0.24 per share, $0.07 better than the Reuters Estimates consensus of $0.17; revenues rose 41.1% year/year to $168.7 mln vs the $136.5 mln consensus. Co issues upside guidance for FY07, sees FY07 revs of $630-640 mln, up from previous guidance of $560-580 mln, vs. $588.92 mln consensus.  CEO says, "Our third quarter performance significantly exceeded our expectations as we were able to add to our strong talent pools in the construction services groups allowing us to capture and execute more projects, particularly in the Downstream Petroleum Industry."

USAP, a darling from last Q with first buy in at 36+. This maker of speciality steel products including Aerospace and power industries is in the right space at the right time.  We think it is just a matter of hours before we see USAP take on the February highs of 51.80 and go forward and so we added it back. FWIW...Cramer was bullish on his lighting bolt seg March 7th as well.

SPEC, this one gapped off earning March 30th, ( Q1 EPS of $0.16 vs $0.02 in yr ago period; revs $32.9 mln vs $25.6 mln in yr ago period ). Sequentially, this was in line with Q4EPS and with 99 94 IBD numbers it is seeking $15 from the IBD crowd.

Speaking of IBD... How about SYNL and EML, #13 and #85 this weekend for these two DJIM finds from 2006 and last Q. Guess they added their volume together to stick them finally on IBD100.  A note about EML, Friday there was a note on Dept of Defense new armoured vehicle program. Big contracts will come in 07 as this program expands and AH(Armor Holding) gets EML do quite a bit of the work. 

TNH, Terra Nitrogen (nitrogen fertilizer products). 93c Q announced in February. It has been a great trade for sometime due to its volatility. It is one to be traded with care. We added on the dip Thursday and it recovered and flirted with new day highs by close. Made a NCH on a very good volume day(top 5 this year). Guess this is a Ag play as it grows what we eat,  but it is tied to the price of natural gas, it is more than 60% of its expenses. So know what's going on in that end.

As great as the recycling program can be, it does not stop us from looking forward and having cash available to go strong after a new batch of earning plays. We have a growing play list after last week, but we think the bigger money can be made in new picks coming up and so enter this Q with plenty of cash on hand.  Also, if we were holding any laggards at this point, we would simply dump here and avoid waiting for a sunny day with anything stalled and just free up more cash to use on new plays.

If you need reminding, here is a list of some of the stocks we traded here last Q off earning... USAP CCF VTRU VARI MTRX SYNL EML HDNG CYNO TRT HURC TRCR TGX NWK AVZA CSV.   Get it?  Opportunities will be there!

It starts with RIMM and VIP this week as far as past DJIM earning plays.  If you missed it, we've talked about VIP being a play before earning on the heels of MBT report  here on the Journal. So watch it closely this week for a pre-earning reaction. A few notable Russian funds were up over 3% last week, maybe it wasn't all WBD holdings;), but a sign of things to come for DJIM Russian names.

Also, the earning dates link waits for your participation on earning dates for DJIM plays when found.