This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

DWA: Reader's Choice (includes video)

WEBINAR: Basic Options Strategies to Trade Our 2012 Pick Wedsnesday, May 9 at 6pm ET CLICK HERE FOR INVITE AND TO REGISTER.

DreamWorks (DWA) is one very interesting stock right now! To begin, consider this evidence: 1) at worst, DWA will have flat earnings over the current fiscal year; 2) for fiscal year 2013 (ending in December) DWA is projected to increase their 2012 fiscal year earnings by at least 10%; 3) DWA has zero debt and $1.00 per share in cash; 4) DWA has a float of 66 million shares, and 19 million of those shares have been sold short. Yes, 29% of the common share float of DWA is now sold short!

I had a decade of experience trading the stock and especially the options of another great movie making corporation. That company back, in the 1980s, was known as MCA. You would know them today as Universal Studios and of course, Universal Theme Parks. MCA was not a stock to trade for anyone with a questionable ticker or high blood pressure because itcould move from a 35 volatility to a 70 volatility or higher while you took your first bite of your lunchtime sandwich.

Those wild days trading MCA for me are still quite vivid. And one good movie can catalyze a big stock price move, like "Back to the Future" among others did such for MCA. But never, ever was MCA shorted the way DWA has been shorted today.

DWA is a well-managed company in a hit and miss business -- movie making. It has no debt, cash on hand and some of the best talent in that business. What might be forming for DWA's common stock now is much higher volatility as we go into the summer movie season. On, and by the way, it has Madagascar 3D ready for release on June 8.

Technically DWA has been trying to make a tradable, decent bottom. The $20 level has been tough resistance, however. It has been on a steady downward path in price since it hit $37 in November 2010. Thus, DWA has to overcome technical resistance to turn bullish. But with so much short covering potential as upside firepower that resistance can be quickly overcome given the right circumstances.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,055.00 -43.45 -0.25%
S&P 500 1,998.78 -4.59 -0.23%
NASDAQ 4,588.2060 +7.9350 0.17%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters