When I get the chance to use deep-in-the-money (DITM) calls to invest in companies at the cutting edge of technology that also have extraordinary growth, I take advantage of the opportunity as quickly as possible.
Generally, it takes an exaggerated correction in a stock for its DITM calls to show up on my radar screen. As you all know, I only buy stocks where I can implement my DITM calls strategy. (For those of you that believe I was hit by too many pitches back when I played baseball, and want to question my approach, go to the "videotape" -- I display my results every Wednesday in my
Stat Book column.)
With the market continuing to soar, it's increasingly difficult to find cheap growth, but
presents just such an opportunity.
Sirf is a supplier of semiconductors and software products for global positioning systems (GPS) in phones and automobile navigation systems. While many may have encountered automobile navigation devices, the use of GPS in cell phones is only now becoming a standard feature. In the past few years, cell phones have come with gimmicky additions, such as cameras and MP3 players, yet I believe none of these will have the overall impact of the inclusion of GPS on cell phones.
Users will be able to find locations and directions all with one device in a way never before possible. What was once only available to soldiers and back-country hikers can now play a very practical and important role in the everyday lives of individuals.
Already GPS is becoming increasingly popular with cell phone users, and I believe this is only the tip of the iceberg.
Sirf traded as high as $32 in February before getting caught up in the general market selloff, and then it reported disappointing earnings on April 19 before it had the chance to recover. The earnings disappointment stemmed largely from a customer's delayed implementation of Sirf's products in its GPS systems.
Sirf's customer list is quite impressive, including
, LG Electronics, Matsushita,
, T-Mobile and others all relying on Sirf for GPS components. Today, Sirf holds dozens of patents from its PC chip approach to GPS.
Despite not meeting analysts' expectations this quarter, there are significant positives that can be deduced from Sirf's recent news, beginning with the fact that the company reiterated its revenue guidance for fiscal year 2007.
This means Sirf intends to make up for the missed first-quarter revenue in subsequent quarters. Also, the company's lowered earnings make it a good bargain.
To take advantage of this opportunity, I will place a limit order to buy 10 contracts of the December $15 (QIRLC) DITM calls at $8.30, or better.
Game of Life
As we enter June, baseball continues to wait expectantly as Barry Bonds remains nine home runs shy of Hank Aaron's career home run record of 755. A-Rod leads the majors with 20 homers, with Prince Fielder is close behind with 19.
In the divisional races, the Mets lead the Braves by 3½ games in the NL East, while the Brewers lead the Cardinals by 6½ games in the NL Central. The NL West finds the Padres, Dodgers, and Diamondbacks in a virtual dead heat for first place. In the American League, the Angels enjoy a 5½-game lead over the Mariners in the AL West, with the Indians have a slim 2½-game lead over the Tigers in the AL Central. In the AL East, the Red Sox continue with a double-digit lead (10½ games) over the Blue Jays, with the Yankees 12½ games behind.
Meanwhile, the much-anticipated Rocket launch, scheduled for today, has been delayed due to Roger Clemens' fatigued right groin. It is uncertain as to when the Rocket will be cleared; however, it appears as though he will need plenty of booster engines and perhaps some extraterrestrial help to propel the Yankees into contention.
In the Stanley Cup Finals, the Senators took Game 3 on home ice to cut the Ducks' lead to 2-1, with Game 4 tonight in Ottawa. In the NBA, Cleveland is rejoicing as the upstart Cavaliers took four straight from the Detroit Pistons to win the Eastern Conference Finals, after going down 2-0. Game 5 featured one of the greatest single performances in NBA playoff history, as LeBron James scored 29 of the Cavaliers' last 30 points in a thrilling double-overtime victory in Detroit.
In the series clincher in Cleveland, King James played a great all-around game, but the shooting star was Daniel Gibson, an unheralded rookie from Texas, who exploded for a career-high 31 points, hitting seven of nine from three-point land. For their accomplishment, the Cavaliers face the arduous task of toppling San Antonio, defended by the likes of Tim Duncan, Tony Parker and Manu Ginobli.
On the red clay at Roland Garros, the French Open slides into its second week with both Roger Federer and Rafael Nadal still alive. At Muirfield Village in Dublin, Ohio, on the course that Jack built, Phil Mickelson had to withdraw midway through the first round, and Tiger Woods did not have his usual snarl. The winner of The Memorial was K.J. Choi, who shot a 17-under-par 271 to win by one stroke over Ryan Moore. Despite shooting a final round 67, Tiger finished tied for 15th with a 279, eight strokes off the pace.
Always Remember: Life is a journey, enjoy the ride!
At the time of publication, Dykstra had no positions in stocks mentioned.
Nicknamed "Nails" for his tough style of play during his Major League Baseball career, Lenny Dykstra was an integral member of the powerful Mets of the mid-1980s, including the world champion 1986 squad, and the Phillies in the early 1990s.
Today, Dykstra manages his own stock portfolio and serves as president of several of his privately held companies, including car washes; a partnership with Castrol in "Team Dykstra" Quick Lube Centers; a state-of-the-art ConocoPhillips fueling facility; a real estate development company; and a new venture to develop several "I Sold It on eBay" stores throughout high-demographic areas of Southern California.