Lululemon Athletica Inc. (NASDAQ: LULU) has been one incredible performer. This week it was given the downward-dog position. FBR Capital Markets said enough is enough and the firm downgraded the stock to Underperform from Market Perform in a valuation call. Its price target is $80.00.
The reason we are attracted to this call is not just that Lulu has been a great performer and not just because it is an expensive stock by most metrics. Its chart has started to fade after a monumental move to the upside. Please take a look at the chart (see below) from Stockcharts.com because this shows that our first key moving average violation has taken place. If we could do a tag-along call, ours would be called “The Broken Chart of the Week.”
Mosaic Co. (NYSE: MOS) is a multi-call ‘pick of the week’ rather than just one call. Its stock has recovered from its secondary offering, in part due to analyst upgrades in support of the stock. Over the last week alone we have seen upgrades from Susquehanna, Stifel Nicolaus, and J.P. Morgan. Our own take is that Mosaic can rise through about $72 next week before it starts to stall near-term. As of right at the close on Friday, Mosaic’s stock was up five straight days as the analysts helped an oversold situation here.
NASDAQ OMX Group Inc. (NASDAQ: NDAQ) is a very interesting call if you consider that the merger exchanges are happening and that the exchange had to back off the NYSE Euronext (NYSE: NYX) buyout. Of all the exchanges, Goldman Sachs raised NASDAQ OMX to “BUY” as it said the exchange is less reliant upon transaction fees than all major peers. Goldman Sachs is also more optimistic for NASDAQ earnings power over the next two years or more than the rest of Wall Street. Shares were up over 4% at $25.38 late on Friday versus a 52-week range of $17.18 to $29.71.
VirnetX Holding Corp. (AMEX: VHC) is controversial enough of a stock on its own and it fits right into the controversial world of intellectual property companies rather than being an operating company that makes products and sells them. The company is a patent royalty company that pursues patent cases in internet security software and technology with almost 50 patents. It has gone after Microsoft, Apple, and many others, and it has either won case rulings or gotten settlements from companies. This week came an upgrade to Outperform by Cowen & Co. with the note that this could be worth 40% more. This call is gutsy, but controversial, and it had shares up over 5% at $24.34 right before the close on Friday against a 52-week range of $5.07 to $28.89.
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JON C. OGG
