9 Option Trades on Dividend Stocks & Gold

Equity market volatility has increased significantly since I last wrote about a covered call option strategy in July.  Using Born To Sell I have identified some potential covered call opportunities on dividend stocks that have been featured on Scott’s Investments within the past month.   If you are a buy-and-hold investor comfortable holding any of the names below over the long-term but seek to increase income in the short-term, selling a covered call might be an appropriate strategy to consider.  You must also be comfortable selling the underlying stock at the strike price, thereby limiting your potential upside.


Some important notes, the first being that commissions and taxes are not included in any examples.  Second, the bid as of today’s close is listed.  Finally, I prefer to sell covered calls expiring over the next 1-2 months. This allows greater flexibility and the opportunity to “roll” covered calls each month or two when the current position expires.


Yesterday I wrote an article on the dividend growth stocks Walgreen (WAG), Nordisk (NVO), and Murphy Oil (MUR).  Below are two potential trades on WAG and MUR, since NVO has a limited open interest in its options I have excluded it:

Underlying Security Underlying Stock’s Last Price Expiration Month Strike Implied Volatility Current Bid
MUR 51.54 Sept 55 37.09% 0.45
MUR 51.54 Oct 60 35.64% 0.4
WAG 35.5 Sept 37 28.68% 0.34
WAG 35.5 Oct 39 31.53% 0.51

The Dividend Champion Portfolio is a regular portfolio featuring approximately 10 of my top Dividend Champion stocks for the month.  The portfolio typically holds lower volatility stocks, so finding covered call opportunities even in today’s higher volatility environment can still be challenging.  Nevertheless, below are three potential trades using stocks in this month’s portfolio:

Underlying Security Underlying Stock’s Last Price Expiration Month Strike Implied Volatility Current Bid
ED 56.32 Oct 60 17.52% 0.25
KMB 68.52 Sept 70 15.80% 0.25
SYY 27.84 Oct 29 21.01% 0.35

Gold (GLD) is not a dividend stock, but it is a current holding in my ETFReplay portfolio and a popular choice among many investors. If you are a long-term gold investors looking to leverage your current position in GLD for added income, 2 trades to consider:

Underlying Security Underlying Stock’s Last Price Expiration Month Strike Implied Volatility Current Bid
GLD 179.1 Sept 185 32.61% 2.5
GLD 180.1 Oct 192 31.55 3.6

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Disclaimer: No current positions in stocks mentioned. Please note that Scott’s Investments is not a financial adviser. Please consult your own investment adviser and do your own due diligence before making any investment decisions. Please read the full disclaimer at the bottom of Scott’s Investments.

3 Top Dividend Growth Stocks

I have published an exclusive article today on Seeking Alpha titled 3 Top Dividend Growth Stocks, which features Novo Nordisk A/S (NVO), Walgreens (WAG), and Murphy Oil (MUR).

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Disclaimer: No current positions in stocks mentioned. Please note that Scott’s Investments is not a financial adviser. Please consult your own investment adviser and do your own due diligence before making any investment decisions. Please read the full disclaimer at the bottom of Scott’s Investments.

Gold and Stock Predictions

Chris Vermeulen of (“TheGoldandOilGuy”) gives us his analysis on the US Stock Market via the S&P 500 (SPY) and Gold (GLD).  He is bullish in the short-term on equities, bearish in the long-term. His take on Gold (GLD) is bearish in the short-term and bullish in the long-term. Some excerpts from the full free article are below.

He also has a free 10-minute video analysis of the dollar, oil, gold, silver, bonds, and stocks right here.

For now, I continue to believe that equity markets will rally in coming weeks as conditions are extremely oversold. The price action so far today makes sense as the wild price swings helped flush out weak hands that were long. Consequently, the snap back rally pushed shorts into stop levels as well.

A significant move lower does not seem likely at this point, but a retest of the recent lows is possible, if not probable. I would remind readers that stock market crashes generally happen within the context of an oversold market. While the likelihood of a crash is remote, it is still possible and tight risk definition in this environment is warranted regardless of which side of the tape a trader is playing.

He continues:

In the short to intermediate term, I believe we will see higher prices and a test of the key S&P 1,220 area or possibly a re-test of the key S&P 1,250 price level which corresponds with the March 2011 pivot lows. Additional resistance would come in around the 1,260 – 1.270 area which marks the neckline of the recent head and shoulders pattern which triggered the selloff in the S&P 500. The daily chart of the SPX below illustrates the key resistance areas:

His take on gold,

 Some traders argue that gold prices are going to rally back sharply in short order, which I find hard to believe. Instead, I am of the opinion that we could see additional downside in the weeks/months ahead in gold prices. There is an ominous pattern starting to form on the gold daily chart which if it is carved out and triggered, it could produce the next leg of this selloff. 

While it is far too early to determine if a head and shoulders pattern will be carved out or if lower prices take place, I am of the opinion that this selloff will offer an attractive entry point for longer term investors. At this point it is a bit too early to get involved, but if my analysis is accurate the next leg of the gold bull market will be potentially extreme.

While I believe stocks will rally in the short to intermediate term, I am of the opinion that we have officially entered the next phase of the bear market. The next wave lower in stocks is going to be just as severe as the likely rally in gold.

The reason I believe gold will rally is primarily due to future weakness in Europe. If European banks have a credit crisis, a sovereign nation unexpectedly defaults, Germany leaves the Eurozone, or a currency crisis transpires gold prices should soar while U.S. equity prices tank.

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Disclaimer: No current positions in stocks mentioned. Please note that Scott’s Investments is not a financial adviser. Please consult your own investment adviser and do your own due diligence before making any investment decisions. Please read the full disclaimer at the bottom of Scott’s Investments.

5 Stocks with Strong Fundamentals and Mometum

Each month I update a fundamental/technical screen at Scott’s Investments and track the results real-time. July’s list of 18 stocks is here and the top 10 rated stocks returned an average of  -6.54versus -11.03% for SPY. The entire list of stocks last month returned an average of -9.94%.

The screen looks for the following:

  • earnings growers still reasonably priced as judged by the PEG ratio 
  • low debt 
  • a history of high return on equity and investment, and 
  • price momentum as gauged by the percentage the stock is trading to its 250 day high. 
  • The stocks are then ranked based on fundamental factors as compiled by stockscreen123.

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A mere 5 stocks qualify for this month’s list.  The market sell-off and volatility in August has trimmed the number of stocks trading near 52 week highs.  Apple (AAPL) is number one on this month’s list, despite the resignation of Steve Jobs. The company has no debt, a PEG ratio of .73, and ROE of 41.99%.  The Jobs resignation could take time to affect the material operations of Apple. It is too early to say if it will have any significant material impact, so until the numbers and momentum say otherwise, Apple remains on the top of this month’s list.

Wet Seal Inc. (WTSLA), an apparel store for women, is a repeat stock on this list. The company bounced off its 200 day moving average after its second quarter earnings report. It was highlighted by:

  • Net sales were $148.8 million compared to net sales of $131.5 million for the prior year second quarter.
  • Net income was $2.2 million, or $0.02 per diluted share, as compared to $1.6 million, or $0.02 per diluted share, in the prior year quarter. Excluding the after-tax effect of the non-cash asset impairment charges, net income would have been $2.8 million, or $0.03 per diluted share, in the current year quarter, and would have been $2.2 million, or $0.02 per diluted share, in the prior year quarter.
  • The Company generated cash flows from operations of $9.5 million during the second quarter, and ended the quarter with $147.8 million of cash, cash equivalents and short-term investments, and no debt.
  • For the third quarter of fiscal 2011, earnings are estimated in the range of $0.05 to $0.06 per diluted share.
From a technical perspective, it is not difficult to see some key resistance levels to watch.  If the stock can break the low $5s, it would be a bullish sign.  It looks to be forming a triple top if it cannot break this level.  The longer the stock waits to break this level, the more bullish a breakout above the level becomes (monthly chart):


Below are the remaining 3 stocks in the list.  Giant Interactive has an interesting technical setup as well, as I posted on Stocktwits:


Ticker Name Options Rank Mkt Cap PEGLT Dbt Tot2 EqQ ROE% 5YAvg
AAPL Apple Inc. Here 94.28 355613.5 0.66 0 31.92
BIRT Actuate Corporation Here 92.62 299.61 0.64 0 18.35
WTSLA The Wet Seal, Inc. Here 78.48 503.62 0.91 0 15.16
NVEC NVE Corporation Here 64.59 300.95 0.79 0 24
GA Giant Interactive Group Inc (ADR) Here 39.89 1954.94 0.93 0 19.8



Disclaimer: No current positions in stocks mentioned. Please note that Scott’s Investments is not a financial adviser. Please consult your own investment adviser and do your own due diligence before making any investment decisions. Please read the full disclaimer at the bottom of Scott’s Investments.

Stocks to Watch This Week

Last week we only had 2 stocks on our 8/19 “Stocks to Watch This Week” list.  The list is based on stocks reaching 52 week highs on two times relative volume on Friday.  When the US equity market struggles as it has in recent weeks, this is reflected in the number of stocks qualifying for the list.  This week we have 4 stocks and one ETF.

Stocks that are bucking the trend by trading higher while the overall equity market drifts lower are ones to watch.  They may not be “immediate” buys or perhaps their trend is even ready to reverse.  However, by looking for positive price trends, especially when driven by a company’s earnings growth and quarterly report, we can  create a list of stocks to watch. 

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Last week STAAR Surgical (STAA) and Susser Holdings (SUSS) were the two qualifying stocks.  STAA finished the week up 18.71% and SUSS up 3.97%.  STAA is also one the four companies on this week’s list.  It had no official news last week, so it appears accumulation has continued after its earnings were announced August 2nd.  The stock appears ready to consolidate at these levels since it is overbought:

Chart courtesy of Finviz



Sturm, Ruger, & Co. Inc. (RGR) also shows up on this week’s list.  The company designs and manufacturer’s firearms.  It has been in an upward trend since the middle of June.  The company has solid fundamentals and has been buoyed by a strong second quarter earnings report in late July, highlighted by:

  • Quarterly net sales of $79.6 million and earnings of $.57/share, compared with second quarter net sales of $64.4 million and earnings of $.43/share in 2010.
  • Quarterly dividend of $.142/share, an increase over the $.097/share paid in May
  • The purchase of $2 million in company stock via a stock repurchasing plan.  $8 million remains for future stock repurchases
The company has no debt and a current ratio of 3.2 : 1. It trades at a forward P/E of 16.87 with expected EPS growth of 11%+ next year.  The stock has shown strong momentum, $24/share may have proved to be an optimal entry point in early August after its post-earnings “pop” followed by a brief pullback.  If another consolidation is to occur soon, I would watch $28-$30 as a potential next level of support and a potential entry point:
Below is the entire list of 5 securities for this week:
Ticker Company Industry Market Trend Forecasts Market Cap Price Change Volume
CORN Teucrium Corn Exchange Traded Fund Here
50.07 2.60% 371705
RGR Sturm, Ruger & Co. Inc. Sporting Goods Here 615.71 32.56 4.29% 411336
RLRN Renaissance Learning Inc. Multimedia & Graphics Software Here 455.67 15.52 0.13% 435393
STAA STAAR Surgical Company Medical Equipment Wholesale Here 294.28 8.25 6.87% 580383
WCN Waste Connections Inc. Waste Management Here 3917.62 34.66 0.49% 1581670

Disclaimer: No current positions in stocks mentioned. Please note that Scott’s Investments is not a financial adviser. Please consult your own investment adviser and do your own due diligence before making any investment decisions. Please read the full disclaimer at the bottom of Scott’s Investments.

Weekend Readings

The Risk-On Trades are Back – Chris Vermeulen (GoldAndOilGuy)

The End of the World, Part 1 – John Mauldin

Large Absolute Breadth Numbers - Tom McClellan

Key Takeaways from Recent Hedge Fund Activity – MarketFolly.com  via The Big Picture

The Geopolitics of the United States, Part 1: The Inevitable Empire (pdf) – Stratfor, via John Mauldin

RT Leuchtkafer Letter to IOSCO (discussing High Frequency Trading) – Themis Trading

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Disclaimer: No current positions in stocks mentioned. Please note that Scott’s Investments is not a financial adviser. Please consult your own investment adviser and do your own due diligence before making any investment decisions. Please read the full disclaimer at the bottom of Scott’s Investments.

Mid-Week Investment Readings

Lots of good reading this week! Also for those of you who podcast, I heard a good interview with Satyajit Das on this week’s The Disciplined Investor podcast.

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13-Year-Old Uses Fibonacci Sequence for Solar Power Breakthrough

 The Recession of 2011? (pdf) John Mauldin

High-Frequency Trading: Is That Real Liquidity or a Robotic Illusion? AllAboutAlpha

Bespoke: A Look at Historical U.S Sector PE Ratios – Bespoke, via Investment Postcards from Cape Town

Bear Market Far From Over – Comstock Partners

A Possible Model for the Price of Gold - CrossingWallStreet

Whack-a-Mole – John Hussman

Richard Russell: Fair Chance that Most of Bear Market is Behind Us – courtesy Investment Postcards from Cape Town

Dynamic Economic Decision Making (pdf) – John Silvia via John Mauldin

What Happens When Monetary and Fiscal Policy Hit the Wall? Macro Tides

Disclaimer: No current positions in stocks mentioned. Please note that Scott’s Investments is not a financial adviser. Please consult your own investment adviser and do your own due diligence before making any investment decisions. Please read the full disclaimer at the bottom of Scott’s Investments.

Adding Alpha with Leveraged ETFs?

I had a thought tonight while mowing lawn – can individual investors add portfolio alpha by allocating a small percentage of their portfolio allocation to a strategy which rotates into leveraged ETFs?  In other words, can we decrease portfolio volatility and increase portfolio returns by rotating a small percentage of our portfolio in and out of leveraged ETFs?  I performed a similar test earlier this year but it involved a 50% allocation to leveraged ETFs, which is way too high for most risk-adverse investors.  The full results and methodology of that test are available here.

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First, some important caveats.  The results below are over a very limited time period, primarily due to the relatively short trading history of leveraged ETFs.  Thus, be careful not to project historical returns into the future.  This is an important point that is too often overlooked.  Second, leveraged ETFs carry additional risk. They are intended as short-term trading vehicles and I would recommend reading the prospectus for the two ETFs discussed below (SDS and SSO) at Proshares website.  Compounding — the likelihood of the funds’ returns over periods longer than one day to differ from the target returns — is a critical concept to understand before investing in leveraged ETFs.  Finally, commissions and taxes are not included in the results and will impact returns.

Now, onto the fun stuff.  The results of these backtests are courtesy of ETFReplay.com (check it out). I started with a basic buy and hold portfolio of 5 ETFs that might represent a typical investor portfolio. The portfolio consists of the following ETFs and I included the month/year trade data was available on each ETF:

  • AGG – iShares Barclays Aggregate Bond (Sept. 2003)
  • DBC – PowerShares DB Commodity Index (Feb 2006)
  • EFA – iShares MSCI EAFE Index (Aug 2001)
  • VNQ – iShares MSCI U.S. REIT (Oct 2004)
  • VTI – Vanguard MSCI Total U.S. Stock Market (May 2001)
If an investor had bought and held this portfolio in equal weight, the returns since 2006 are below. Note that for the beginning of 2006 DBC was not held and the portfolio was re-balanced February 15, 2006 to include DBC in the returns:
Total Return: 29.1% vs 4.6% for SPY
Volatility: 20.7% vs 24.4% for SPY
Compound Annual Growth Return: 4.6% vs .8% for SPY
Sharpe Ratio: .13
Correlation to SPY: .92
Strategy drawdown: -45% vs. -50.9% for SPY
Bottom line: A diverse buy-and-hold portfolio still suffered significant portfolio drawdowns in 2008.  It has taken 2-3 years to gain back what was lost in 2008.  The portfolio still outperformed SPY on returns and volatility, but remained highly correlated to SPY and I suspect that the individual investor may not be satisfied with an equity curve resembling a thrilling roller coaster.
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Next, I took the same buy and hold strategy and allocated 90% of my hypothetical total portfolio to it.  I then used 10% of my hypothetical portfolio and allocated it to a relative strength strategy that rotates between SHY ( Barclays Low Duration Treasury), SDS (-2x ProShares Leveraged Short S&P 500), and SS0 (+2x ProShares Leveraged Long S&P 500).  The strategy (which I will refer to as “leveraged rotations strategy”) involves buying the single ETF among these 3 which has the highest ranking on a semi-month basis.  The ranking is determined by the 3 month returns, 20 day returns, and 20 day volatility of each ETF.  Three month returns are given a 40% weighting, 20 day returns a 30% weighting, and 20 day volatility a 30% weighting.

First, for information purposes, the results of the leveraged rotation strategy on its own:

Total Return: 73.4% vs 4.6% for SPY
Volatility: 40.5% vs 24.4% for SPY
Compound Annual Growth Return: 10.3% vs .8% for SPY
Sharpe Ratio: .33
Correlation to SPY: -.39
Strategy drawdown: -31.6% vs. -50.9% for SPY

Bottom line: On its own this strategy benefited from the singular down move in 2008/early 2009 and the singular up move since March 2009.  However, with volatility of 40.5% this is not a “sleep well at night” strategy.   Please note that the SSO and SDS did not begin trading until October 2006, so for most of 2006 the strategy was in cash.

What if we combine this strategy with a buy and hold strategy?  Can we increase returns and lower volatility? Below are the results if we allocate 90% of our portfolio to the buy-and-hold strategy and 10% to the leveraged rotation strategy.  The start date for the test was 2006:

Total Return: 38.8% vs 4.6% for SPY
Volatility: 16.9% vs 24.4% for SPY
Compound Annual Growth Return: 6% vs .8% for SPY
Sharpe Ratio: .21
Correlation to SPY: .88
Strategy drawdown: -38.5% vs. -50.9% for SPY

Bottom line: We see a slight increase in returns and lower volatility.  However, we still see a significant portfolio drawdown but less than buy-and-hold by itself.  Given that the strategy incurs several (92) trades (and potentially commissions) over 6-7 years, the added returns could be negligible, depending on the portfolio size.

If we increase exposure to the leveraged rotation strategy to 20% while holding 80% in a buy-and-hold strategy, total returns increase to 46.9% and volatility decreases to 14.7% when compared to a 90/10 allocation:

Conclusion: The added benefit of rotating into leveraged ETFs shows very limited promise but not enough for me to rush out and implement this strategy with my own money.  In addition, the short trading history of these vehicles means it is too early to offer any conclusions with confidence. In the coming days I will analyze and publish results of portfolios combining leveraged/short ETFs in combination with other portfolio strategies.

Disclaimer: No current positions in stocks mentioned. Please note that Scott’s Investments is not a financial adviser. Please consult your own investment adviser and do your own due diligence before making any investment decisions. Please read the full disclaimer at the bottom of Scott’s Investments.

10 Microcap Value Stocks

On a monthly basis I conduct a close replication of AAII’s (American Association of Individual Investors) “Shadow Stock” screen. The goal is to find small, undervalued stocks with high price momentum over the past 52 weeks.  It is a highly speculative, risky strategy that can potentially undercover a hidden gem or two.

The screen and date below is courtesy of Stockscreen123. I use the following screen criteria to identify high momentum value stocks, which closely replicate the AAII Shadow Stock screen:





  • No over-the-counter stocks
  • No financial stocks
  • Market cap > $20 Million and < $200 million
  • Previous EBITDA quarter and trailing twelve months are positive
  • Share price > $1
  • Price/book < .80
  • Price/sales < 1.2
  • Top 10 stocks are selected based on highest 52 week returns
  • Minimum average daily volume > 5k shares
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    The results for this month are at the bottom of the article and last month’s list is here.  The screen for last month returned -16.67%, versus -15.49%.  Given that many of the stocks on the list are relatively illiquid, real results will differ.


    In June I discussed in-depth the difficulty in valuing some Chinese stocks.   The Chinese companies under the most scrutiny are those which began trading in the US via reverse mergers, which is the practice of a private company acquiring a public company (many times penny stocks which have little or no value) in order to bypass the lengthy and expensive process of going public.  Allegations (and in some cases proof) of accounting fraud have plagued the Chinese small-cap sector, especially those companies which began trading via reverse mergers.  The non-Chinese firms still warrant additional due diligence, as all of these stocks have low market caps and often have very low volume.


    Cobra Electronics (COBR) was featured in-depth last month, when I noted support was at $3-$3.25 and resistance at $4-$4.25.  The stock hit resistance at the end of July, shortly after earnings.  The stock has sold off hard since then with the overall equity market.  The market reacted well to the stock’s earnings which were announced July 29th.   The company reported $.08/share net income for the quarter. Sales for the quarter increased from $25.7 million to $28.9 million and gross margins increased from 26.5% to 28.4%.   The company offered no specific guidance but stated that they “anticipate higher profitability in 2011″.


    COBR expects profitability in 2011 and trades at a price/book of .63 and price/sales of .18.   My concern with such a small company (market cap of $21 million), is that there is a lack of liquidity and the stock has a high beta at a time when the overall market has shown signs of weakness.  Thus, investors could be left holding the bag if the market continues to struggle.


    Daily chart courtesy of Finviz



    Rocky Brands (RCKY) is another name that has traded down significantly along with overall equity market after it announced earnings July 26th.  The company increased earnings despite lower sales due to a decrease in sales under military contracts.  The stock currently trades at a forward P/E of 6.26, a price/book of .74, and has a strong balance sheet with a current ratio of 6.63.  It has increased earnings for 8 consecutive quarters on a year over year basis. It could be a name to watch as well if the market continues to drag it further (daily chart):





    The rest of the names on the list:

    Ticker Name Market Update Rank MktCap Pr2SalesTTM Pr2BookQ
    GFN General Finance Corporation Here 99.31 71.32 0.41 0.65
    FFHL Fuwei Films (Holdings) Co., Ltd Here 98.05 32.21 0.35 0.36
    ROIAK Radio One, Inc. Here 97.52 61.13 0.2 0.65
    SURW SureWest Communications Here 96.21 165.14 0.68 0.61
    COBR Cobra Electronics Corporation Here 94.7 21.45 0.19 0.64
    UWN Nevada Gold & Casinos Here 94.48 21.88 0.46 0.72
    TIII Tii Network Technologies, Inc. Here 92.66 30.54 0.49 0.73
    RCKY Rocky Brands, Inc. Here 89.3 82.24 0.33 0.76
    SKH Skilled Healthcare Group, Inc. Here 88.58 178.31 0.21 0.59
    TGX Theragenics Corporation Here 85.65 54.36 0.66 0.66

    Disclaimer: No current positions in stocks mentioned. Please note that Scott’s Investments is not a financial adviser. Please consult your own investment adviser and do your own due diligence before making any investment decisions. Please read the full disclaimer at the bottom of Scott’s Investments.

    Stocks To Watch This Week

    The US Equity market had another volatile week and stocks have struggled to attain new highs.  Investors with exposure to gold and bonds have done well this month and I’ve reiterated a relative momentum ETF strategy that has capitalized on this trend by investing in GLD, IEF, TIP, and PCY.

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    US stocks reaching new 52 week highs have all but disappeared.  Each week I post a “Stocks to Watch This Week” list on Scott’s Investments. The list is comprised of stocks hitting 52 week highs on Friday, on a minimum of 2 times relative volume, minimum average volume 50,000 shares, and closing the day on Friday higher than they opened.  Last week’s list had two names, First Cash Financial Services (FCFS) and Mistras Group (MG).  Both were down this past week.  FCFS remains on my radar but closed this week near the bottom of its upward channel and 50 day moving average so this next week it will be important to watch closely:

    Chart courtesy of Finviz

    This week we have 2 names on the list.  STAAR Surgical (STAA) rocketed higher this week on no material news.  However, the previous week the company posted better than expected results and bumped guidance. The company is a leading developer, manufacturer and marketer of minimally invasive ophthalmic products.  They reported revenue growth for the quarter of 19%, or $2.6 million, to $16.3 million.  Net income was $.02 per share versus a loss of $.05 the previous year’s quarter.  The company increased guidance and expected gross margins to 66.5% for the full year and expects profitability in all four quarters.

    Clearly, STAA has caught someone’s attention as volume has increased since earnings and the share price has trended upwards.  Given that the company has a market cap of $247 million, volatility should be expected in the underlying share price. It looks overbought at current levels but a consolidation from $6-$6.50 could present a buying opportunity.

    Susser Holdings (SUSS) operates convenience stores and distributes motor fuels in Texas, New Mexico, Oklahoma, and Louisiana. The company operates through two segments, Retail and Wholesale.  Like STAA the company hit a 52 week high on Friday on no material news.  Earnings were reported August 10th and the market evidently took a liking to what they heard.

    The company reported that Adjusted EBITDA rose 36.1 percent from the second quarter of last year to $60.9 million.  Gross profit was$158.9 million, which was up 18.7 percent from the second quarter of 2010.
    Revenues totaled $1.4 billion – a 35.1 percent increase from a year ago – which is the result of a 42.3 percent increase in combined fuel revenues and an 8.7 percent increase in overall merchandise sales. Net earnings were $23.7 million, or $1.36 per diluted share in the latest quarter, versus a net loss of $1.9 million, or $0.11 per diluted share, in the same quarter last year.

    The company raised guidance FY 2011 sales growth and currently trades at a PEG ratio of .94 and forward P/E of 15.77.  The company has a heavy debt burden but has been able to refinance some of its debt and anticipates ramping up new store construction in 2012 and 2013.

    Stocks that are bucking the trend by trading higher while the overall equity market drifts lower are ones to watch.  They may not be “immediate” buys or perhaps their trend is even ready to reverse.  However, by looking for positive price trends, especially when driven by a company’s earnings growth and quarterly report, we can  create a list of stocks to watch.

    Disclaimer: No current positions in stocks mentioned. Please note that Scott’s Investments is not a financial adviser. Please consult your own investment adviser and do your own due diligence before making any investment decisions. Please read the full disclaimer at the bottom of Scott’s Investments.