DMND 27.80 Bullish DD links,catalysts,foward events, and technicals.
For those who dont know the stock was hit on these news events.
http://www.bloomberg.com/news/2011-11-23/diamond-foods-says-director-death-unrelated-to-accounting-probe.html?cmpid=yhoo
Solvency.
The company also has a $600 million credit line that it can use to pay interest payments if unexpected events happen and it can’t pay its debt.
Good info on the stock in this site.
http://www.wikinvest.com/stock/Diamond_Foods_(DMND)
Bullish case.
1. Earnings coming in December. DMND may have a run up into earnings and continuation higher after the report. I have seen this pattern before in beaten down stocks. We could get some accounting updates from the company in the CC call. If earnings are anywhere near expectations it should give a lift to the stock because it was at 96.10 peak in sept now it is at 27.80.
Earnings date dec.8 "not confirmed".
http://www.411stocks.com/stocks.asp?symbol=dmnd
yahoo earnings saying dec.6 "not confirmed"
http://biz.yahoo.com/research/earncal/d/dmnd.html
2. If it is only a minor accounting revision in regards to the walnut farmer payments it could provide another bullish catalyst to the stock. See Jeffries analyst comments on this issue.
Jeffries
http://www.thestreet.com/_yahoo/story/11322606/1/diamond-foods-dragged-down-by-doubts.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA
3. Value investing funds, event-driven and special situation hedgefunds, may look to accumulate the stock after this approximate 70% drop in the stock. It is trading at a 2 year low while it has been posting strong growth every year. The record volume in this stock on Wed. could be a sign of that starting to occur. Approximately half the float traded that day alone.
More research on the value case here, and be sure to read the comments section.
http://seekingalpha.com/article/307105-diamond-foods-oversold-value
4. DMND is one of the top 7 most shorted stocks out of more then 8000 listed stocks in the market 53% of the float is short .
www.highshortinterest.com
That is a very high percentage of the float short.
Many shorts have a huge gain in this stock as they shorted from higher levels. They may take some or all of the profits off the table providing a near term lift in the stock ahead of earnings.
Article talking about the short interest here.
http://seekingalpha.com/article/307822-selling-diamond-foods-stock-for-under-40-you-must-be-nuts
5. The stock is very oversold by almost any technical measure you can find rsi, stochastics,macd etc. It has a "pincher" set up on the daily. ADX line is at 55.
Chart
http://stockcharts.com/h-sc/ui?s=DMND&p=D&b=5&g=0&id=p43610527007
Pincher play defintion and video here.
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=54408472
http://pincherplay.com/what-is-a-pincher-play/ defintion here
6. A large snack company may see DMND as a bargain at these levels and make a bid for the company. This is just speculation on my part .
7. Spokesman for both PG and DMND have said this week that they are still committed to the Pringles deal.
http://www.bizjournals.com/cincinnati/news/2011/11/23/pg-still-committed-to-sale-of.html
8. Analysts who cover the stock may come out and defend it at these depressed price levels.
9 If we see more insider buying that would also be a bullish sign . Insider buying has often put in a bottom for a oversold stocks.
http://finance.yahoo.com/q/it?s=DMND+Insider+Transactions
These are some of the bullish scenarios that can happen. The bear case has been made in many articles and postings that you can read through on the boards and the news.
All these thoughts are my opinion. This could be a very speculative stock ,risk capital only imo. So do your own research.
As of this Wed I got long the dec $25.00 2011 calls for a bounce trade and may add to the position or liquidate the position at any time. I will try and post my adds or exits in a timely matter . Best of luck to all traders and investors long or short. Happy Thanksgiving to you out there!
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I like to scalp, day trade and swing trade. My posts are my opinion only.Do your own research and due diligence . You could lose all your investment following my trades. Never trade with more then you can afford to lose. I'm not an investment advisor. | |
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