Dykstra's Deep-in-the-Money Call: Nvidia
Readers that got behind Tuesday's Boeing (BA) - Get Reportdeep-in-the-money call on Tuesday should be sitting pretty today.
On a day when its top execs announced a much-anticipated revised and delayed timeline for the rollout of the new 787 Dreamliner, Boeing's stock caught fire. That's probably because the company said the new schedule should not have an impact on its earnings this year, and that it expects strong earnings per share growth in 2009. When it's ready, the Dreamliner should be a big hit, because the aircraft uses lightweight technology, burns less fuel and is said to reduce jet lag.
Boeing was one of yesterday's best performers. It opened at $76.31 and traded as high as $79.90 before ending the session at $78.60 a share. That's a 4.77% gain and that's a win.
The market, however, has been in a bit of a holding pattern as of late. The
Dow Jones Industrial Average
lost slightly more than 49 points on Wednesday, marking the sixth day in a row the Dow has moved fewer than 100 points in any direction.
Bad news from
United Parcel Service
(UPS) - Get Report
coupled with crude oil hitting a new record of more than $112 a barrel, weighed on investors Wednesday and serves as further evidence to some that we're in a recession.
UPS was punished, dropping 3.7% during regular trading on Wednesday after saying it now expects to earn 86 to 87 cents a share in the first quarter vs. its previous estimate of 94 to 98 cents a share.
The package-shipper and deliverer said continued economic weakness as well as lower volume was to blame for the revision. UPS and competitor
FedEx
(FDX) - Get Report
are often viewed as good barometers for the economy's health.
Today, I'm going with
Nvidia
(NVDA) - Get Report
, which competes with
Advanced Micro Devices
(AMD) - Get Report
and
Intel
(INTC) - Get Report
and makes chips that are used in generating interactive graphics on both consumer and professional computing devices.
On Monday, AMD cut its first-quarter revenue projections and announced plans to trim its workforce by 10% by the third quarter. This bodes well for Nvidia's competitive success. Additionally, shares of the company are trading at just 11 times earnings for its fiscal year, which ends in January 2009.
Furthermore, the company's stock is trading near its 52-week low of $17.31 and well below its high of $39.67 during that time frame. Wednesday, the stock peaked at $19.70 and bottomed at $19.16 before closing at $19.50.
I am placing an order to buy 10 contracts of Nvidia's Sept. 15s (UVAIC) for $5.70.
If you would like to check out the premier edition of my new subscription newsletter The Dykstra Report, which is due out later this month, send me an e-mail here.
At the time of publication, Dykstra had no positions in stocks mentioned.
Nicknamed 'Nails' for his tough style of play, Lenny is a former Major League Baseball player for the 1986 World Champions, New York Mets and the 1993 National League Champions, Philadelphia Phillies. A three time All-Star as a ballplayer, Lenny now serves as president for several privately held businesses in Southern California. He is the founder of The Players Club; it has been his desire to give back to the sport that gave him early successes in life by teaching athletes how to invest and protect their incomes. He currently manages his own portfolio and writes an investment strategy column for TheStreet.com, and is featured regularly on CNBC and other cable news shows. Lenny was selected as OverTime Magazine's 2006-2007 "Entrepreneur of the Year."