Stocks to watch for the week of April 1, 2013

Stocks to watch for the week of April 1, 2013
Michael Fowlkes, InvestorsObserver

Monsanto reports fiscal second quarter earnings April 3

What's happening with MON: Monsanto MON will report its fiscal second quarter results before the market opens on April 3. Going into the report, analysts forecast earnings of $2.58, which if hit would mark a 13.1% increase over the $2.28 it earned during the same period last year. Monsanto has a long history of posting better than expected numbers, but it failed to hit estimates for fiscal fourth quarter, and will be looking to extend on its better than expected first quarter. So far in 2013, the stock has already managed to post an 11.5% gain.

Technical analysis: MON was recently trading at $105.12, just $0.67 under its 12-month high and $35.42 above its 12-month low. Technical indicators for MON are Bearish and the stock is showing signs of a possible trend reversal. The stock has recently seen support above $99. Of the 18 analysts who cover the stock 12 rate it a "strong buy", four rate it a "hold", and two rate it a "strong sell". The stock receives Standard and Poor's 3 STARS "Hold" ranking.

Analysts' thoughts:We expect to see a strong quarter for Monsanto. Because of the recent spike in the stock's price, an earnings miss poses substantial risk for a sell off, while on the other hand, better than expected earnings will not likely have a material impact on the stock to the upside. The recent jump in shares has put the stock trading with a P/E of 25, which is higher than what we like to see, and believe the stock does not offer a lot of value at its current price.

Stock-only trade: If you're looking to establish a long stock position in MON, consider buying the stock when it is below $100 and sell if it falls below $93.50 or dips more than 10% or take profits if it gets to $119.50.

Option trade: If you are looking for a hedged options trade on MON, consider a May 90/95 bull-put credit spread for a 40-cent credit. That's a potential 8.7% return (61% annualized*) and the stock would have to fall 9.2% to cause a problem.

Speculative call-only trade: For those of you with an appetite for higher risk and bigger returns, consider buying the October $100 call. If MON rises just 5.9% you can pull in a 20% or better profit on the option. However, if the stock moves lower, this kind of trade could lose a significant amount.

General Mills trades near all-time high

What's happening with GIS: General Mills GIS is trading just shy of its all time high stock price. After being stuck in a tight sideways pattern for three years, GIS really started to move at the beginning of 2013, and has risen more than 20% since the start of the year. With the economy in recovery, people have once again started buying name-brand products, and General Mills has been benefitting as a result.

Technical analysis: GIS was recently trading at $48.79, just $0.16 below its 12-month high and $12.04 above its 12-month low. Technical indicators for GIS are bullish and the stock is in a strong upward trend. The stock has recently seen support above $46.50. Of the 17 analysts who cover the stock nine rate it a "strong buy", three rate it a "buy", and five rate it a "hold". The stock receives Standard and Poor's 4 STARS "Buy" ranking.

Analysts' thoughts:Despite the recent run up in the stock's price, we believe there is still more upside left for investors. GIS is still trading with a P/E of just 18, so it has not yet become too expensive to consider buying. The global economy continues its recovery, which will keep demand high for name-brand products in the short term. On a long-term basis, the global population continues to expand, which will provide the company room to grow in the future.

Stock-only trade: If you're looking to establish a long stock position in GIS, consider buying the stock when it is below $46 and sell if it falls below $42 or dips more than 10% or take profits if it gets to $55.

Option trade: If you are looking for a hedged options trade on GIS, consider a July 40/45 bull-put credit spread for a 45-cent credit. That's a potential 9.9% return (31.4% annualized*) and the stock would have to fall 6.8% to cause a problem.

Speculative call-only trade: For those of you with an appetite for higher risk and bigger returns, consider buying the October $47 call. If GIS rises just 3.0% you can pull in a 20% or better profit on the option. However, if the stock moves lower, this kind of trade could lose a significant amount.

DELL takeover battle gets even more confusing

What's happening with DELL: With Dell's DELL business in trouble, the company's founder, Michael Dell, has offered $24.4 billion to take the company private, which would translate to a $14.25 per share offer. So far, it does not seem like this offer will get approval, as more people join the battle against Mr. Dell's offer. Blackstone has reportedly offered a number far greater than Dell's, and activist investor Carl Icahn has offered $15 for 58% of the company's stock. The man leading the Blackstone offer is none other than Dave Johnson, Dell's former M&A manager who left the company in January to work at Blackstone. Mr. Dell told his executive team in January that Johnson would remain a close and personal advisor, but now just three months later, the two will battle it out over the direction of the PC maker.

Technical analysis: DELL was recently trading at $14.34, down $2.51 from its 12-month high and $5.65 above its 12-month low. Technical indicators for DELL are bearish and the stock is in a strong upward trend. The stock has recently seen support above $13.75 and resistance under $14.50. Of the 22 analysts who cover the stock one rates it a "strong buy", 19 rate it a "hold", one rates it a "sell", and one rates it a "strong sell. The stock receives Standard and Poor's 3 STARS "Hold" ranking.

Analysts' thoughts: With so much uncertainty surrounding the future of the company, we do not expect to see too much movement in the stock. While there may be additional offers made on the stock going forward, for now the offer by Michael Dell is the most likely, and as a result the stock should hover around the $14.25 offer that he has already made. Should a more attractive offer start to gain traction, it is unclear whether or not Mr. Dell will have the financial backing to increase his offer, but we believe that he will try whatever he can to keep the company he founded under his control. Based on this, we believe there is still upside potential should a new deal surface, but do not expect to see any selling pressure unless it becomes obvious that shareholders are going to shoot down any potential deal.

Stock-only trade: If you're looking to establish a long stock position in DELL, consider buying the stock when it is below $14.25 and sell if it falls below $12.90 or dips more than 10% or take profits if it gets to $16.25.

Option trade: We do not see any hedged option trades we like on the stock at this time.

Speculative call-only trade: For those of you with an appetite for higher risk and bigger returns, consider buying the November $14 call. If DELL rises just 4.3% you can pull in a 20% or better profit on the option. However, if the stock moves lower, this kind of trade could lose a significant amount.

Conagra reports fiscal third quarter results April 3

What's happening with CAG: Conagra CAG is due to report its fiscal third quarter results before the market opens on April 3. Going into the quarterly report, analysts have forecast earnings of $0.56, versus $0.51 during the same period last year. Conagra has posted better than expected earnings during each of the last five quarters, which is a major reason why the stock is trading just under its 52-week high. The stock has risen more than 20% since the start of the year.

Technical analysis: CAG was recently trading at $35.59, just $0.07 below its 12-month high and $11.95 above its 12-month low. Technical indicators for CAG are bullish and the stock is in a strong upward trend. The stock has recently seen support above $34.75. Of the 11 analysts who cover the stock six rate it a "strong buy", one rates it a "buy", and four rate it a "hold". The stock receives Standard and Poor's 5 STARS "Strong Buy" ranking.

Analysts' thoughts:Conagra has been trading strongly higher since last summer, and we expect to see additional strength in the months ahead. The company recently expanded its operations through the acquisition of private label manufacturer Ralcorp Holdings. The addition will add a significant amount to the company's revenue. In addition to the Ralcorp acquisition, the company has also recently entered into a joint venture with CHS Inc. (CHSCP) and Cargill Inc. to form Ardent Mills. The economic recovery has been helping all food manufacturers, and we expect to see a bullish trend continue for Conagra.

Stock-only trade: If you're looking to establish a long stock position in CAG, consider buying the stock when it is below $35 and sell if it falls below $31.50 or dips more than 10% or take profits if it gets to $40.25.

Option trade: If you are looking for a hedged options trade on CAG, consider a June 29/34 bull-put credit spread for a 40-cent credit. That's a potential 8.7% return (36.5% annualized*) and the stock would have to fall 3.3% to cause a problem.

Speculative call-only trade: For those of you with an appetite for higher risk and bigger returns, consider buying the September $34 call. If CAG rises just 3.0% you can pull in a 20% or better profit on the option. However, if the stock moves lower, this kind of trade could lose a significant amount.

Gold Fields trying to bounce off 52 week low

What's happening with GFI: The last two months have been hard on Gold Fields GFI, with the stock recently notching a new 52-week low. At its current price, the stock remains just pennies over its 52-week low and looking for support. Gold prices have been on the slide, but that is not the only problem Gold Fields is facing. The company recently reported disappointing 2013 production numbers, which had a major negative effect on the stock's price.

Technical analysis: GFI was recently trading at $7.78, down $4.39 from its 12-month high and $0.18 above its 12-month low. Technical indicators for GFI are bearish and the stock is in a weak downward trend. The stock has recently seen resistance below $10.50. Of the four analysts who cover the stock one rates it a "strong buy", and three rate it a "hold".

Analysts' thoughts:Gold prices appear to have found some support around the $1,560 level, and have been attempting a rebound since the start of March. With the Federal Reserve indicating that it will continue its policy of monetary easing for at least another year, we do not see too much additional downside from its current level. If we are correct and gold starts to rebound, we expect to see the same from Gold Fields, but its rebound will be limited due to its poor 2013 production forecast. We do not expect to see a huge amount of upside to the stock, but feel as though we will not see the stock encounter additional selling pressure.

Stock-only trade: If you're looking to establish a long stock position in GFI, you can buy it at its current price of $7.80, but because of its recent weakness you want to make sure to put in a stop loss in case we see further deterioration in the stock. Sell if it falls below $7.05 or dips more than 10% or take profits if it gets to $9.

Option trade: If you are looking for a hedged options trade on CAG, consider an October 9/11 bear-call credit spread for a 23-cent credit. That's a potential 13.0% return (23.1% annualized*) and the stock would have to rise 16.8% to cause a problem.

Speculative call-only trade: For those of you with an appetite for higher risk and think the stock could bounce back, consider buying the October $7 call. If GFI rises just 8.5% you can pull in a 20% or better profit on the option. However, if the stock moves lower, this kind of trade could lose a significant amount.

*Annualized returns provided for comparison purposes only

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At the time of writing, Mr. Fowlkesdoes not have direct ownership in any of the stocks mentioned.