We are now entering spring, the season that many consider the most enjoyable time of year as the temperature climbs higher, Opening Day is just a week away, and the Final Four is upon us. Furthering the excitement, the stock market made a strong run last week to once again enter positive territory on the year.
last week's column
, I highlighted the technical analysis necessary to find a proper entry point in a stock. That theme will continue with today's selection,
In analyzing the technicals of a stock, a great starting point is to look at the 50-, 100- and 200-day moving averages. These provide a guideline of certain breakout and support points. Traders use these averages as indicators for when to buy and sell stocks, and as a result, these are essential points for investors to be aware of.
The charts for Autodesk show that the stock recently dropped to its 200-day moving average, where it received significant support and rebounded nicely. The stock price is now within striking distance of its 100-day and near its 50-day moving average.
Autodesk, whose software helps developers and manufacturers manage and implement their design schemes, should continue to benefit from the support at its 200-day moving average, and if it should lose a little ground I would expect it to receive a nice boost upward. With the stock price closing Friday at $38.38 and approaching the 50-day and 100-day averages, Autodesk has the potential for a strong breakout.
With over half of its revenue coming from overseas, Autodesk has benefited from growth at home and abroad. Fourth-quarter revenue in emerging economies grew 44%, and that segment will continue to account for an ever-larger portion of Autodesk's overall revenue. With many domestic economists worried about a late-year slowdown, Autodesk's presence and growth abroad provide an attractive target for investors.
Not only is Autodesk a fast-growing company, it has no debt and a return on equity of about 39%. For a company to achieve 39% return on equity while taking on no liabilities is a sign of a healthy balance sheet and a company worth investing in. The return on equity shows that the management at Autodesk is doing the right things to increase the value of the company and the value to its shareholders.
A P/E of 31 and a forward P/E of 21 indicate that Autodesk is in a great position to continue rising, and the stock provides a great opportunity for profit using deep-in-the-money calls. I have an order in to buy 10 October 32.50s (ADQJZ), using a limit order of $7.70 to buy the strike price. This will give us the ability to control 1,000 shares of Autodesk common stock for about seven months. Definitely a "lock and load" situation!
Autodesk has also been scouted and picked by other funds, including:
The Game of Life and the Player's Club
With the regular season set to begin on April 1, there have been a few newsworthy items in baseball. Brian Cashman, general manager of the Yankees, announced that Alex Rodriguez will not be offered a contract extension at the present time. A-Rod has an opt-out in his contract this year; his existing contract will pay him $27 million a year for the next four seasons. Both the Yankees and A-Rod are stating publicly that the desire is for Rodriguez to remain a member of the Bronx Bombers.
Meanwhile, in Beantown, the Red Sox have to be pleased with the most recent outing of Daisuke Matsuzaka, their $103 million investment. In 5 2/3 innings of work, Dice-K gave up one run, one hit and a walk in his most dominant outing of the spring.
On the back end of the rotation, Boston announced that Jonathan Papelbon will be the closer this year. Papelbon generated Rivera-esque numbers last year with 35 saves and a microscopic ERA of 0.92 in 59 games prior to going on injured reserve on Sept. 1, 2006, with shoulder problems. Despite those numbers, the Red Sox gave serious consideration to putting Papelbon in the starting rotation this year.
The penultimate weekend in college basketball has yielded the Final Four, who will compete in the semifinals on Saturday, March 31, and the finals on Monday, April 2. Two No. 1 seeds, Florida and Ohio State, and two No. 2 seeds, Georgetown and UCLA, remain in the hunt for the national championship.
Obviously, none of the four qualify as Cinderellas; however, each team has a compelling story behind them. UCLA, with the shadow of John Wooden looking over them and Bill Walton in the stands, could increase their record for NCAA basketball championships to 12. Ohio State, a freshman-laden squad anchored by Greg Oden, could share stories with Jerry Lucas, John Havlicek and a guy known more for his coaching, Bobby Knight.
Florida, returning all of its starters from last year's national championship team, would be the first repeat champion since Duke in 1991 and 1992. That could be a major selling point for staying in school.
Nonetheless, as I said in a previous column, a national championship for the Georgetown Hoyas would be a Cinderella story with a déjà vu component. The Hoyas, coached by John Thompson III and featuring Patrick Ewing Jr., staged a phenomenal comeback to overcome North Carolina in overtime to advance to the Final Four. Proud fathers John Thompson and Patrick Ewing were there to witness the victory.
Again, in an interesting bit of symmetry, yesterday marked the 25th anniversary of North Carolina's 1982 NCAA championship victory over Georgetown, on a last-second shot by a freshman named Michael Jordan. The coach of that Georgetown team was John Thompson, and his star player was Patrick Ewing. It will be fascinating to see which storyline wins out next Monday night.
In pro hoops, Kobe Bryant, a guy who bypassed college, joined the ultra elite club of Wilt Chamberlain and Michael Jordan as the only players to score at least 50 points in three consecutive games. Kobe has now scored 50 points in four consecutive games. His streak came to an end last night when he "only" scored 42 points. Also, I just thought I would mention that Tiger won at Doral for the sixth time in preparation for the Masters.
The Player's Club salutes the efforts and marvelous achievements of these athletes. Cinderella stories will always be part of the lore of sports. With guaranteed recurring cash flow, the Player's Club wants athletes to be able to relive those stories with their loved ones.
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.