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1. Chipotle Mexican Grill
11:41 A.M. EDT
I was going to work on a piece for the LakeView Restaurant & Food Chain newsletter on high P/E growth restaurants. These seem to be traded in the hands of the
Investor's Business Daily
crowd that prays at the altar of momentum.
In terms of
Chipotle Mexican Grill
, this company always sells at a huge P/E, but I would note that growth has slowed down. As
for a short earnings trade, Chipotle is much like
in that the stock will move in huge chunks after an earnings release and there is no telling in which direction it might move.
There is risk on laying a short on Chipotle for earnings. Take a look at some options plays. Maybe the May 85 straddle. Also perhaps the May 90 call/May 80 put strangle. If you are bearish, maybe the May 80 puts are a safer bet so that you don't get squeezed higher on a short play.
2. Patience Is Being Rewarded
10:27 A.M. EDT
So far, the plan to let the open guide us is keeping me from pulling the trigger. That said, traders should use today's highs in the
UltraShort Real Estate ProShares
UltraShort Financials ProShares
Direxion Financial Bear 3X Shares
UltraShort FTSE Xinhua/China 25 ProShares
as an area to watch as we go through the rest of the trading day.
I am still concerned about having a short bias into today's close with
earnings on deck. A break of Friday's lows in the SRS, SKF, FAZ and FXP would be the signal to cut your losses.
3. AT&T Looks Solid
8:47 A.M. EDT
looks pretty good to me from a quick read of the press release. EPS of 53 cents beat the 48-cent estimate. With the caveats that it was a quick read and that AT&T is complex, nothing jumped out at me suggesting the number was juiced by lots of one-time issues.
Subscriber metrics in wireless and wireline look good. Wireless margins look good. Management is saying the iPhone is working out better than expected. That may mean estimates go up as dilution from handset subsidies will be less.
The stock indicated up close to 3% in premarket. In a decent market, AT&T can trade into the $30s. In a weak market, it should provide defense with a 6% current yield and relatively good financial and operating metrics.
4. Gilead Wins, Genentech Shareholders Win, Roche (and Avastin) Lose
8:45 A.M. EDT
I see that Justin Ferayorni gave his thumbs up to
first-quarter report last night, so let me add my thumbs in the same upright position.
I'll have more detail in a column posting later this morning, but for now, let's just say that all that pre-earnings concern (even panic) about Gilead falling short was for naught. I'm as bullish as ever on Gilead and quite happy to see that the most defensive of biotech stocks in this still-gloomy economy remains that way.
In other news,
(now owned by
) announced this morning that treatment with its key drug Avastin did not prevent the recurrence of cancer following surgery in early-stage colon cancer patients.
The negative results from the so-called adjuvant Avastin colon cancer trial is a setback for Roche, which spent $47 billion to acquire Genentech in part to gain full rights to Avastin.
Hey Genentech shareholders, aren't you glad you agreed to sell your shares to Roche for $95 now?
5. Flipping the Switch at Packaging Corp.
7:37 A.M. EDT
I too listened to the
chairman's remarks on April orders that Jim "El Capitan" Cramer mentioned this morning. The company said that the last two days of March and the first 10 days of April saw a surge in bookings -- up about 15% from March's run rate.
He went on to state that "someone flicked a switch on."
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This article was written by a staff member of RealMoney.com.