ORM Market Commentary

Is The Tech Rally Over Or Is There More Room To Run?

Note that I may add more to this page or the Options Report later this evening/tomorrow morning.

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Notes: Google (GOOG, GOOGL), 6.50% weighting in the QQQ, reported a $0.29 EPS beat tonight as revenue jumped 11.1% to $17.73B. Cost per clicks fell 11%, but clicks on Google sites were up 30% from the year ago quarter. With better than expected results coming from the likes of Intel and Google (Apple and Microsoft earnings next week), look for the fundamentals to confirm the bullish price action we’re seeing this week.

PowerShares QQQ Trust (QQQ) Options Trade Idea

Buy the (QQQ) Oct $113/$116/$119 call butterfly for a $0.70 debit or better

(Buy 1 Oct $113 call ,sell 2 Oct $116 calls, buy 1 Oct $119 call, all in one trade)

Stop loss- None

1st upside target- $1.40 or a move to $116 in the ETF

2nd upside target- $2.25

Notes: Discovery Communications isn’t just a one trick pony, the $14B media company owns the Discovery Channel, TLC, Animal Planet, ID, and several other channels. DISCA’s notable shareholders are Liberty Media’s John Malone and Advance/Newhouse Communications. Earlier this year there were rumors that Disney was interested in acquiring Discovery Communications. While it would need the approval from their large shareholders, this could be a good deal for both parties. Of course it would mean a nice premium for DISCA owners, but for Disney it could mean synergies and a larger market share in the cable/satellite TV world. DISCA trades at a P/E ratio of 16.65x (2016 estimates), P/S ratio of 3.54x, and a P/B ratio of 4.20x. On May 9th, Macquarie upped their price target to $40 from $32. Q2 earnings are due out on August 5th.

Discovery Communications (DISCA) Options Trade Idea

Buy the (DISCA) Jan 2016 $35/$40 bull call spread for a $2.00 debit or better

(Buy the Jan 2016 $35 call and sell the Jan 2016 $40 call, all in one trade)

Stop loss- None

1st upside target- $4.00

2nd upside target- $4.95

Top Trade Idea of the Night (QLIK)

Notes: Qlik Technologies is the $3.5B data visualization software company that offers products such as QlikView and Qlik Sense. On April 23rd, they reported Q1 EPS of -$0.09 vs the Wall Street consensus estimate of -$0.14 on revenue of $120.3M vs the $113.9M estimate (+23% ex currency on a year over year basis). Given the projected acceleration in earnings (42% this year to 53% in 2016) and sales (9% to 18% in 2016 to $715M), Qlik could be a potential takeover target to the likes of Tableau Software or some other big competitors. Shares trade at a P/S ratio of 5.67x and a P/B ratio of 10.73x. On June 22nd, Cowen kept their buy rating and raised their price target to $43 from $41. Q2 earnings are due out on July 23rd (shares have moved higher after earnings on 4 out of the last 5 reports). (QLIK) trade idea from July 2nd

Qlik Technologies (QLIK) Options Trade Idea

Buy the (QLIK) July 24 weekly $39/$42 bull call spread for a $1.00 debit or better

(Buy the July 24 weekly $39 call and sell the July 24 weekly $42 call, all in one trade)

Stop loss- None

1st upside target- $2.00

2nd upside target- $2.90

Notes: Tidewater is a $1B provider of offshore service vessels and marine support services to the energy sector. As profitability erodes in the oil & gas industry, so does the top and bottom line for TDW. EPS estimates for 2015 ($2.05 to $0.61 in three months) and 2016 are in free fall, but valuations still aren’t cheap. TDW trades at a P/E ratio of 34.41x (2015 estimates), price to sales ratio of 0.69x, and a price to book ratio of 0.42x. On July 6th, Tudor Pickering downgraded the stock to hold from accumulate. Earnings are due out in early August.

Tidewater (TDW) Options Trade Idea

Buy the (TDW) Aug $20 put for $1.15 or better

Stop loss- $0.55

1st upside target- $1.75

2nd upside target- $2.50

ORM Market Commentary