Stocks Picks and the Put/Call Ratio

I haven’t made it through this week’s Barron’s yet and don’t see it happening.  I read more than half of it, but couldn’t get into it with most of the stocks they highlighted.  I was surprised to see Michael Santoli moving away from being a solid bear and even hinting towards a bullish lean soon.  I don’t think I’ve read his bullish side in months.  Maybe I misread it…

I did find a few stocks worth mentioning though.  Before listing them, I happened to check out the put/call ratio which signaled heavily bearish.  That could help explain the dump the market took on Friday (expiration day) and why yesterday faired so much better.  Once those options were out of the way the market could resume a more normalized cadence.  Monday morning still included a lot of the clean up from Friday.  That cleared and we headed back up.  I’m interested to see the put/call ratio in this coming week’s paper to see what type of change we’ve had. 

Anyway, to the stock picks…

On page M7 Kopin Tan keyed in on refining stocks VLO, SUN and TSO.  All are down right now, but could be due for a big run again soon.  SUN might have support at 70.  VLO could find a floor at 65.  TSO might bounce off of 45.

On page 23, Jonathan Laing focused on SHLD and thinks it could go as high as $300 if broken up and even $200 if Lampert turns it around.  I thought about this with most of the articles this weekend where they seemed to end with “If management can turn around this company it’ll be a good buy…”  Isn’t that obvious?  It’s like saying if a company starts making bigger profits it’ll be worth more.

On page 26 Andrew Bary tried to make MNST sound enticing, but I’m having a hard time buying a job posting site while the economy might be slowing.

On page 56 WMT was given a reasonable outlook in large part to its lower historical p/e ratio.

I had to move on to Smart Money magazine’s November 2007 issue to find any possible picks I like outside of Kopin’s.  I found three on page 102 that seem to fit my style possibly.  The article’s focus was on companies with strong balance sheets which could be wise investments with such turbulence out there now.

COH looks like it might be near support at 40.  This could make the December 37.50 or even 40 naked puts worth a sell. (EDIT: About an hour after I posted this COH missed earnings and dropped more than $5)

DHR is nearing support at 80 making the December 80 naked puts worth considering.

UTX is riding the trend line near 75 making the December 75 naked puts interesting.

JNJ was highlighted, but the option premiums aren’t rich enough for me.

Last and least I saw an advertisement that amused me.  There’s a new ETF for agribusiness with the ticker MOO.  That might sum up my attitude the past few days -  Not anxious about stocks, but amused by an ETF’s ticker.