Dykstra: Checking Up On Amdocs' Health

Now that Comcast and Halliburton are out of the way, it's time to focus on a new deep-in-the-money, or DITM, play for today -- Amdocs(DOX Quote - Cramer on DOX - Stock Picks). Amdocs provides software and services solutions to companies throughout the world to move them toward integrated customer management. On Friday, April 20, Amdocs announced a seven-year contract with AT&T(T Quote - Cramer on T - Stock Picks) to manage its consumer wire line wholesale business. On April 23, Robert W. Baird upgraded Amdocs, citing the AT&T deal as a source for $50 million in new annual revenue.

Amdocs, which closed at $36.94 Wednesday, reports earnings after the close today. While the AT&T deal will not be reflected in this report, look for Amdocs to post strong results. In January, Amdocs lowered its guidance for 2007, but I believe the company is in a strong position to beat its expected earnings this quarter.

Many companies took a cautious approach in providing guidance for this coming quarter, as many were unsure of the direction of the broader economy. But the slew of positive earnings data show that the cautious guidance has given way to strong results.

In order to benefit from Amdocs' earnings with DITM calls, I will place a limit order to buy 10 contracts of the October 30 calls (DOXJF) at $7.90 or better. If the stock rises before this buy order hits, it is important to exercise restraint as an investor and not chase the stock.

Game of Life

Baseball continues to march through April with little change in the standings. The Mets and Braves continue to battle for the top spot in the NL East, with the rest of the division below .500. The Brewers have created a little cushion in the NL Central, while the Dodgers and Padres are atop the NL West.

The Red Sox continue to lead the AL East, and the Yankees dropped into the cellar. The AL Central is a four-team race, with only the Royals seemingly out of touch at this point. The AL West has the A's and Angels ahead of the pack.

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