MGI

[David Randolph]

MGI has reported earnings yesterday and the company rose guidance for full year results:

«Shares of MoneyGram International (MGI:NYSE - commentary - research - Cramer's Take) were among the NYSE's winners Thursday, rising 7% after the money-transfer company posted third-quarter results that were better than Wall Street's expectations.

The company earned $29.5 million, or 34 cents a share, on revenue of $246.4 million. Analysts polled by Thomson First Call were expecting earnings of 26 cents a share on revenue of $236.9 million. MoneyGram posted net revenue -- total revenue minus total commissions -- of $126.6 million. A year earlier, the company earned $24.5 million, or 28 cents a share, on revenue of $216.2 million. Net revenue was $111.8 million a year ago.

Looking ahead, MoneyGram forecast fourth-quarter earnings of 27 cents to 30 cents a share, in line with analysts' expectation for earnings of 28 cents a share. The company now expects full-year earnings of $1.22 to $1.25 a share, up from its previous guidance of $1.11 to $1.15 a share. MoneyGram also boosted its net revenue forecast to $490 million to $500 million from $465 million to $485 million. Analysts had projected earnings of $1.16 a share. Shares were trading up $1.50 to $22.81.»

With 2005 earnings of $1.25 we get a P/E Ratio of $23.25/$1.25 = 18.6 and a growth rate of 31% in earnings per share.

Also the company is buying back its shares, which is always welcome:

«Share Repurchase

    The company's Board of Directors increased its share buyback authorization
by 5 million to 7 million shares, effective August 19, 2005. The company bought
back 683,300 shares at an average price of $20.62 per share during the quarter
for a total of 2.5 million shares purchased under the authorizations. There are
approximately 4.5 million shares remaining under our authorizations.»

JP Morgan has a $26 dollar price target on MGI, but that usually means nothing.

All things balanced I think MGI is undervalued at this point, the chart shows a stock at its all time high, so no resistances ahead, so the conclusion must be that I will buy MGI for the 3 Stocks on Fire Portfolio at today's open.

[Ramsburg]

Bought MGI @ $23.15 for the 3Stocks Portfolio

[David Randolph]

I know this isn't a sexy trade (sexy trade? where did this came from? maybe from the late hours, it is 3am here in Cascais, I'm at the office and my wife at home, sleeping) but it seems to be a safe trade.

I'm expecting to take out 20% here and move on. So I'll be selling at $27.78.

[David Randolph]

What an impressive run, isn't it?

I will sell MGI at $27.78 for a 20% profit without a doubt in my mind. Why sell there? You're right, perhaps I should keep it, but I don't know, not exactly on fire with this big market cap, right?

Until the stock gets to $27.78 I have time to think and see what is the opportunity cost of holding 6.66% of the 3 Stocks on Fire Portfolio in MGI.

[David Randolph]

MGI: HOLD

[David Randolph]

After 5 white marubozus in a row the fall yesterday can only be considered as "normal" profit taking. The stock continues to be extremely bullish and I have little doubts that higher prices are coming. I'll continue holding MGI.

Insiders have been buying some shares at current prices ...

[David Randolph]

No reason to sell MGI here. I'll continue holding it.

[David Randolph]

MGI is consolidating its recent gains. The trend is still bullish after a strong breakout. I want to keep this stock.

[David Randolph]

Nice white candle from MGI, although volume wasn't so great. Let's see if it can break $25 tomorrow, bull trends have no resistance. JP Morgan has a $26 price target for MGI, at present moment I think this advance phase will go beyond that level.

[David Randolph]

More volume and more upside for MGI, as expected. Just let the profits run.

[David Randolph]

MGI is approaching the JP Morgan price target of $26. I believe the stock will surpass that, but I don't want to live ahead of time. For now, at this exact moment, I can't think of anything else but hold, but I can change my opinion anyday (but not intraday).

I'm thinking of taking profits at MGI when I have a 20% profit ... that seems a bit ridiculous, why 20%? Why not 10, or 30%? Why not hold it for as long as the trend remains bullish?

I'm afraid I don't have a good answer for this question. The stock is already a mid cap so I don't expect spectacular short term returns, and the 3 Stocks on Fire Portfolio is a position trading portfolio, not a long term investment portfolio. Probably that's why I feel 20% as adequate.

But for tomorrow's session, I'll just continue holding MGI.

[David Randolph]

Another positive day for MGI, though it wasn't on volume above average. I see no reason to sell MGI now, let the profits run.

[David Randolph]

And profits are running, indeed 

I was right when I bought this stock. Now I'm facing the sometimes more difficult part of the speculation game, which is: sit tight !

If you're right, sit tight, let the profits run.

[David Randolph]

We've had a micro pullback on MGI today, certainly nothing to be worried about. There were no news, volume was low and the close was higher than the open. This means just a pausing day before the uptrend resumes, I believe.

[David Randolph]

Selling at the open isn't a good way for the bears to take the lead on a bullish stock. I don't know why MGI had such a lower open, I guess it was because the stock is up a lot in the short term, but that's not a valid reason to sell.

Bulls took the opportunity they had and bid the stock up the entire day to close near the highs. Volume was a bit heavier, which is a positive. Letting the profits run on MGI.