Quick-Hit Earnings Trades: Sell Targets

June 2, 2009

I hope you’ve been slowly trimming your shares of Graham (GHM) as I instructed you to last week. In intraday trading on Friday right after earnings, Graham got up to as high as $15.81 a share—a whopping 36% gain over our initial buy price of $11.62 on May 7! This is just what I expected after a strong quarterly report.

Here are the details: Though Graham’s fiscal fourth-quarter profits slid due to the recession, sales were actually UP by more than 9%. What’s more, the company significantly beat forecasts with earnings of 35 cents a share. Wall Street was expecting just 27 cents a share, which means GHM posted a nearly 30% earnings surprise! Shares took off as a result, and stayed firm even as we were taking our profits.

This is by far our best Quick-Hits Earnings Trade so far. Though everyone’s returns will vary, everyone who bought this stock soon after my recommendation on May 7 should have easily topped our goal of a double-digit gain in any sale you made.

The two stocks we are most likely to move out of next are Dollar Tree (DLTR) and Illumina (ILMN), both of which have been flirting with double-digit gains lately. Illumina was our first Quick Hit trade back in mid-April, and has given us quite a ride. But we’ve stuck with this stock and are very close to cashing out the big profit we expected. Dollar Tree, on the other hand, was recommended just two weeks ago and has been slowly trending up ever since. Keep a close eye on these two picks, and be ready to close them out as soon as your gains top more than 10%.

Quick-Hit Sell Targets

As you know, the goal of this series is to find double-digit gains in stocks that explode in the wake of earnings. We’ve done exactly that in two positions so far: Marvel Entertainment (MVL), which was sold on May 5, and Graham (GHM), which we have been moving out of for the past few days. Two other companies, Illumina (ILMN) and Dollar Tree (DLTR) have been flirting with a 10% gain for a few days and could cross that threshold within the next week.

To help you successfully exit your positions with a hefty profit, I want to give you specific exit points for each of our remaining Quick-Hit stocks. Two companies in particular, Panera (PNRA) and Myriad Genetics (MYGN) have been a bit disappointing, but I expect each of them to bounce back strongly in the weeks ahead. Let’s give them a little longer before we cash out.

The following returns are based the closing price the day I recommended each stock:

Illumina (ILMN)

Bought: April 16
Buy Price: $36.18
Sell target: $39.80
Return: 10%

Myriad Genetics (MYGN)

Bought: April 21
Buy Price: $40.77
Sell Target: $44.85
Return: 10%

Panera (PNRA)

Bought: April 23
Buy Price: $62.45
Sell Target: $68.70
Return: 10%

Dolby Labs (DLB)

Bought: April 28
Buy Price: $37.76
Sell target: $41.50
Return: 10%

Buckle (BKE)

Bought: May 5
Buy Price: $37.47
Sell target: $41.20
Return: 10%

Autozone (AZO)

Bought: May 12
Buy Price: $156.98
Sell target: $172.70
Return: 10%

Dollar Tree (DLTR)

Bought: May 19
Buy Price: $42.71
Sell target: $47.0
Return: 10%

I want you to make a note of these targets, and watch each of these companies closely. If any of them hit before our next issue, go ahead and sell and lock in your gain.

I will be in touch with you again on Thursday.

Take care!

Until then,

Louis Navellier