3 Stocks I Saw on TV: SHAK, URBN, MRO, CHK (March 07, 2016)
SHAK URBN MRO XOIL.X MRO CHK
Look, every night we watch the same shows; we watch Fast Money, Mad Money, and we want to use those ideas from those shows to MAKE some money. Good trading takes more than just hitting the buy button after the opening bell the next day. So lets go behind the TV screen and check out these 3 stock I saw on TV.
We’re going to start with Shake Shack ( NYSE:SHAK ) here. After the bell they reported earnings that actually beat revenues. They made $51million (man, that’s a lot of burgers) versus 50 million estimates, so they made an extra “mil”, not that big a deal. There outlook was in line. In other words they basically said exactly what the analysts were expecting them to say. Okay, that’s a problem because the P/E is 175.00, that’s a huge P/E. You can see the stock fell after hours, around $39.00 or so, but if this holds, right here, this new uptrend is actually still intact. So here’s the deal with Shake Shack ( NYSE:SHAK ): If you’re a patient investor who doesn’t mind holding a high P/E stock that also has high growth, then you can go ahead and buy this stock. But I would suggest this, wait a day or two, let this thing settle in. Now if it starts rallying right back then hurry up and grab it. But the more likely scenario, especially with the market where it is, the more likely scenario is this thing is going to meander around a little bit as everybody sells Shack and buys Chevron. So be patient with this. If again, you don’t mind holding a really expensive stock for a while, this could be your trade. For me, I just like the momentum stuff, so it’s not going to work.
Now, on the other hand, Urban Outfitters ( NASDAQ:URBN ). This is interesting, they actually missed revenues, but they beat earnings, 61 cents versus 56 cents were the estimates. Here’s the deal here: The stock cranks up, really nice move after the market, over 10 percent. Here their P/E is 15.00, remember Shake Shack ( NYSE:SHAK ) 175.00. Urban Outfitters ( NASDAQ:URBN ), their P/E is 15.00, and you’ve got now a new uptrend where where the stock is trading ABOVE the 200-day moving average. So here’s MY suggestion on Urban ( NASDAQ:URBN ): Don’t buy it first thing in the morning. I have no problem staying away from a stock that gaps up 11 percent in the morning, I just can’t chase that thing. If the stock rallies a day or two I really doubt that it’s just going to keep moving. It might, that’s called a breakaway gap, But more than likely this stock will oscillate up here for a bit and then start rolling over and pull back. If you can get this stock for under $30.00 or so I think it probably works.
Now, Marathon Oil ( NYSE:MRO ). On Mad Money Cramer opened the show talking about these energy companies, basically short squeezes, a lot of these things are on short squeezes. He used Marathon Oil ( NYSE:MRO ) as an example of what’s happening. First of all, again, short covering going on, on a lot of these names. What happened with Marathon Oil ( NYSE:MRO ) oil is: They had a secondary offering somewhere down here and of course that dilutes the shares so the shares drop, right? Well what did they do? They’ve sold move shares as opposed to selling more bonds or taking out loans from banks. They sell move shares, they get the money and this gives them the cash that they need to keep drilling. Remember, oil has absolutely been in the toilet for the longest time and that’s now where you want to go bottom fishing. But now that oil is back above $35.00 all these companies that were able to stay in business, that were able to keep drilling, I wouldn’t say they’re fat and happy, lets just say they’re happy to still be in business.
So Carmer’s point was: If they can be selling these secondary offerings, sure they’re diluting, but they get this cash that they can keep drilling; and this gives the banks come breathing room so they don’t have to write down the debt. Because if you remember (I’m going into way more detail than I planned to here) a while ago JP Morgan had to increase the allocation or the reserves that they had for writing down debt, just on companies like this. So if these guys can stay out of trouble with these secondary offerings, that’s going to do the market a world of good. It goes beyond them just getting to be able to get more black gold out of the ground. And so Marathon ( NYSE:MRO ) has already done that. The thing that Cramer was talking about, the stock that he was really talking about was Chesapeake ( NYSE:CHK ), which they haven’t done that. And so his suggestion is that if they issue a secondary, buy it, period. Any questions? I didn’t think so.
3 Stocks I Saw on TV Free Chart