TreeHouse Foods Inc. (NYSE: THS) Q4 2011 Price Target

Recent price: 66.06$

P/E Ratio: 26.08

3 Months Target Price: 48$

Company Description

According to Reuters, TreeHouse Foods, Inc. (TreeHouse) is a food manufacturer servicing primarily the retail grocery and foodservice distribution channels. The Company’s products include non-dairy powdered coffee creamers, private label soups, salad dressings and sauces, sugar free drink mixes, hot cereals, macaroni and cheese, skillet dinners, Mexican sauces, jams and pie fillings, pickles and related products, infant feeding products, aseptic sauces, refrigerated salad dressings, and liquid non-dairy creamer. TreeHouse operates in three segments: North American Retail Grocery, Food Away From Home, and Industrial and Export. On March 2, 2010, the Company acquired Sturm Foods, Inc. (Sturm), a manufacturer of hot cereals and powdered drink mixes. On October 28, 2010, it acquired S.T. Specialty Foods, Inc. (S.T. Foods), a manufacturer of macaroni and cheese and skillet dinners.

Confidence Margins

Strong resistance $66.03 (-7%)

Light resistance $62.55 (-1%)

Light support $50.02 (+19%)

Strong support $46.73 (+25%)

Recommendation

This company is incredibly overvalued compare to it's more successful peers. Such high levels of valuation, even considering improving fundamentals, cannot justify multiples that are so far away from the industry. TreeHouse Foods Inc will be subject to a correction in the coming quarter.

Entry strategy

For the cautious investor:

Sell short the stock for 65$ or more.

For the risk-taking trader:

The November 2011 50$ out-of-the-money put option contract seems to be the right position to take, they can be acquired for about 55$ per contract.

Exit Strategy

For the cautious investor:

Buy to cover when the stock reaches 48$, or keep it until 46$ if you are more bearish in your own analysis.

For the risk-taking trader:

The contracts should be kept until the underlying reaches 48$. This should provide a good return if the underlying reaches the target price as the contracts will get deep in the money.

DryShips Inc (NASDAQ: DRYS) Q4 2011 Price Target

Recent price: 2.64$

P/E Ratio: 4.16

3 Months Target Price: 5$

Company Description

According to their SEC Filings, DryShips Inc. (DryShips) is a holding company. The Company is engaged in the ocean transportation services of drybulk cargoes and crude oil worldwide through the ownership and operation of drybulk carrier vessels and oil tankers and offshore drilling services through the ownership and operation of ultra-deepwater drilling units. As of April 12, 2011, the Company owned, through its subsidiaries, a fleet of 35 drybulk carriers comprised of seven Capesize, 26 Panamax and two Supramax vessels, which has a combined deadweight tonnage (dwt) of approximately 3.2 million dwt, and had contracts for two Panamax newbuilding drybulk carriers of 76,000 dwt. In May 2010, DryShips agreed to acquire a Panamax vessel, the MV Amalfi (ex Gemini S), which was delivered to the Company in August 2010, and agreed to sell one of its Panamax vessels, the MV Xanadu. In addition, it sold its Panamax vessel, the MV Primera. In August 2011, the Company acquired majority of OceanFreight Inc.

Confidence Margins

Strong resistance $7.11 (+135%)

Light resistance $4.95 (+31%)

Light support $2.52 (-5%)

Strong support $2.11 (-20%)

Recommendation

DryShips is a company that has it's stock subject to a lot of volatility. It however presents an impressive buying opportunity at current price, it is cheaper than on our last analysis. First, profitability is coming back to the company even if capital expenditures are rapidly increasing. The spin-off of the Ocean Rig subsidiary has partially materialized but it will greatly increase shareholder value while reducing the debt load of the holding company.

Entry strategy

For the cautious investor:

Buy the stock for 3$ or less.

For the risk-taking trader:

The January 2011 5$ out-of-the-money call option contract seems to be the right position to take, they can be acquired for about 10$ per contract.

Exit Strategy

For the cautious investor:

Sell when the stock reaches 5$, or keep it until 7$ if you are more bullish in your own analysis.

For the risk-taking trader:

The contracts should be kept until the underlying reaches 5$. This should provide a very interesting return if the underlying reaches the target price as the contracts will get in the money.

Natural Alternatives International, Inc. (NASDAQ: NAII) Q4 2011 Price Target

Recent price: 3.77$

P/E Ratio: 5.35

3 Months Target Price: 6$

Company Description

According to Reuters, Natural Alternatives International, Inc. is a formulator, manufacturer and marketer of nutritional supplements and provides strategic partnering services to its customers. The Company offers a range of nutritional products and services to its clients, including scientific research, clinical studies, ingredients, customer-specific nutritional product formulation, product testing and evaluation, marketing management and support, packaging and delivery system design, regulatory review, and international product registration assistance. It provides private label contract manufacturing services to companies that market and distribute vitamins, minerals, herbs, and other nutritional supplements, as well as other health care products, to consumers both within and outside the United States. It develops, manufactures and markets its branded products under the Pathway to Healing product line.

Confidence Margins

Strong resistance $7.11 (+89%)

Light resistance $4.95 (+31%)

Light support $3.00 (-20%)

Strong support $2.50 (-34%)

Recommendation

Companies operating close to the healthcare industry are not viewed in a favorable manner by Wall Street lately. This provides investors with a good opportunity to invest in a company that is temporarily out of favor. Natural Alternatives International might just prove to be an excellent acquisition.

Entry strategy

For the cautious investor:

Buy the stock for 4$ or less.

For the risk-taking trader:

As the company has no publicly traded option contracts, the use of leverage might be the way to get some excess return on this position.

Exit Strategy

For the cautious investor:

Sell when the stock reaches 6$, or keep it until 7$ if you are more bullish in your own analysis.

For the risk-taking trader:

Same strategy as for the cautious investor.

First Majestic Silver Corp. (NYSE: AG) Q4 2011 Price Target

Recent price: 17.24$

P/E Ratio: 22.68

3 Months Target Price: 27$

Company Description

According to the company itself, First Majestic owns three producing silver mines and two development projects through four separate wholly owned Mexican subsidiaries. The La Encantada Silver Mine is held by Minera La Encantada, S.A. de C.V., the La Parrilla Silver Mine and the Del Toro Silver Mine are held by First Majestic Plata, S.A. de C.V., the San Martin Silver Mine is held by Minera El Pilon, S.A. de C.V., and the La Luz Silver Project is held by Minera Real Bonanza, S.A. de C.V. First Majestic's largest operation; the La Encantada Silver Mine was expanded several times since 2006 to reach the current capacity of 3750 tpd. Production reached close to 3.8 million ounces of silver in 2010 and is anticipated to reach approximately 4.5 million ounces of silver in the form of Dore bars in 2011. 

Confidence Margins

Strong resistance $30.00 (+74%)

Light resistance $26.88 (+56%)

Light support $14.18 (-18%)

Strong support $10.32 (-40%)

Recommendation

Recently, we have witnessed a pullback in the price of precious metals. As long as investors' fears about a potential economic double-dip are not eased, we should see an upside in the price of silver and consequently to price of the stock of companies such as First Majestic Silver Corp. 

Entry strategy

For the cautious investor: 
Buy the stock for 18$ or less. 


For the risk-taking trader: 

The January 2012 30$ out-of-the-money call option contract seems to be the right position to take, they can be acquired for about 55$ per contract. 

Exit Strategy

For the cautious investor: 

Sell when the stock reaches 27$, or keep it until 30$ if you are more bullish in your own analysis. 

For the risk-taking trader: 

The contracts should be kept until the underlying reaches 27$. This should provide a very interesting return if the underlying reaches the target price as the contracts will get in the money.