CAL

[cmshop]

Look like it wll rise more...

[saffeysite1]

With oil spiking to near $70 a barrel.   The situaion in Iran is speculative, but the problem in Nigeria is real and  a bottom line for Oil right now.  So with that being sad, it doesn't look goodfor airlines in the short term.

I bought shorts on [email protected], [email protected].  I will look to buy shorts on CAL Monday.

[rickjust]

hi,
continental airways (cal) looks to be setting up for a nice short play .
last lot of headlines for the air industry
Airline Stocks: Fuel spike saps airline stocks
at MarketWatch (Fri, Jan 20) 
• Airlines worry capacity rise could squeeze fares
at Reuters (Thu, Jan 19) 
chart is bearish on a swing trade, check the moving averages crossing over.
entry 17.77
exit    16.36 (trailing stop)
stop loss buy to cover 19.10

[Terliso]

I suggets cover your short this thing is bouncing from 38.2 Fibonnaci Retracement & will try to re-test @ $20... I think so

[rickjust]

hi,
thanks terlisa, i stood on the sidelines today and watched it. i saw your fib lines . (forgot to check them)
anyway the short is still valid short term . lets see where it goes the next few days.
thanks
maxi

[Richard]

I agree with both you, in the sense that CAL is a short, and that the best time to short it is if it sinks below that (eyeballing here) $16.70 line. There doesn't seem to be much to catch it after that, and the macroeconomic tailwinds IMHO are in your face to the long side.

[David Randolph]

1. Introduction

I've been saying I should have at least one more airline on the 3 Stocks on Fire Portfolio and perhaps this is the time. I took a brief look at some airlines, including NWACQ (up almost 200% over the last few days), since AMR was also under chapter 11 protection in 2003 when it was trading just above a dollar and look where it is now, almost 30 times higher 

But NWACQ's problems seem much deeper than AMR's at the time, so it's really risky to play it, because common shares can be considered worthless overnight. But it can also give an investor ten times his money, if they emerge from Chapter 11 and common shares representative value is maintained.

I have to study it deeper to have a better clue of what's going to happen. Concerning CAL, that's an easy shot, going up for sure (as sure as it can be in the stock market).

2. Profile

Continental Airlines, Inc. (CAL), an air carrier, engages in transporting passengers, cargo, and mail in the United States. (complete profile here)

3. Technical Analysis
3.1. All History Chart



CAL is coming back after the 2001 - 2002 debacle. I could have bought there, at $5. What am I saying, If I could have, I would have, period.

3.2. Medium Term Chart



The medium term trend is clearly bullish. CAL is up 118% in 2006 so far.

3.3. Short Term Chart



I don't know if CAL will just continue to push higher in the short term or not, but it looks like it will. The trend is positive. Of course, there can be a pullback, but I believe that 3 months from now CAL will be higher than today.

4. Fundamental Analysis
4.1. Number of Shares Outstanding



We have this increase in the number of shares outstanding in 2006, but it was all in the beginning of the year and the company has been aggressively buying back shares since then.

The current market cap is 90,103,298*$44.38 = $4 B.

4.2. Balance Sheet



I like to see what's the book value of the airlines, it seems to be a better metric than the current ratio. The book value of CAL is roaring back and I expect it to be about 1.4 B by the end of 2007. When CAL had this book value in 1998 it was a $65 stock.

4.3. Revenues



I think that 07 estimate for revenues is conservative, it will probably beat that $13.85 B number. Revenues for 06 are expected to come in at $13.18 B, rising from $11.21 B in 05 (17.5% revenue increase).

The Price to Sales Ratio is $4 B/ $13.18 B = 0.3. The industry average is 0.36. This looks cheap.

4.4. Profits



After some years of steep losses, CAL will probably come back to its fat profits of more than $5 a share. Since revenues are much higher now, after total restructure, it may even do $10 EPS in 2 or 3 years down the road. Then CAL would be a $130 or so stock.

The current forward EPS multiple is $44.38/$5.39 = 8.23. This is attractive.

5. General Overview

CAL is in a sector that I'm a big fan for some time. I think it will do better than the overall airline sector in 07. But it's not a very powerful holding for the 3 Stocks on Fire Portfolio. Let me put it this way, CAL is a good running horse, but I wonder if I shouldn't look for faster ones?

I'm still thinking about that NWACQ play. Will it be another AMR? Well, I'm diversified enough to stand a big loss in one single position (just 6.66% on each holding), and the reward risk ratio seems to be something like 10/1.

Well, subscribers will know what I'll do (but you get a clue, check out NWACQ).

If you're new to 3 Stocks on Fire and want to receive daily analysis on your mailbox, please register.

[setravis]

"CAL" Threads have been Merged.
Please use the search before starting new threads on a Stock Pick.
Chances are a thread already exist.
So why not post whatever you have to comment about on that pick to that thread.
"Simplicity" My fellow traders.                                       
All history on a stock pick in 1 thread is awesome.                                    
Just trying to get threads together,so we don't have a numerous amount floating around on the same stock.                 
Thank You....and good luck with all your trades....make some $$$