zman’s Energy Brain

oil, gas, stocks, etc…

  • Blog Stats

    • 101,681 hits
  • Seeking Alpha Certified
  • Hello and Welcome - I’ve created this blog for the purpose of discussing energy related topics - primarily but not limited to oil and natural gas - and their potential impact on stocks, options, and futures. I am an amateur investor/trader and make no assurances about the opinions expressed on this blog. Please consult your financial advisor before buying, selling, borrowing, or otherwise risking capital based upon ideas taken from this site. Any advice construed from this website is worth what you paid me for it.
  • RSS Subscribe with a reader

  • Subscribe via RSS with

    Powered by FeedBurner

  • pfblogs.org logo

Monday Morning Addendum – Hershey’s Call

Posted by zmann on October 16, 2006

Oil is not the only commodity in my world. I have other interests including something of a  sweet tooth. The only chart that I know of that’s uglier than the oil and gas charts is sugar.

http://charts3.barchart.com/chart.asp?jav=adv&vol=Y&grid=Y&org=stk&sym=SEF7&data=A&code=BSTK&evnt=adv

Talk about ugly. Sugar had been trending up with ethanol prices, which had been moving with oil. Now that oil and ethanol have fallen, sugar is correcting hard and I wouldn’t expect ethanol or sugar to move up until next spring when gasoline demand picks up.

That sugar chart is ugly unless of course your #1 cost just happens to be sugar, like at HSY. Even better if your stock hasn’t done much lately…

http://finance.yahoo.com/charts#chart1:symbol=hsy;range=1y;charttype=line;crosshair=on;logscale=on;source=

… and people don’t expect much more than 3-4% growth out of you annually, and you’ve missed by a few percent for 3 of the last 4 quarters before hitting the estimate spot on for the last one.

HSY has results out Thursday, October 19. Expectations are for earnings of $0.81 and that hasn’t changed more than a penny in the last 90 days even though the company is tracked by 17 candy analysts. I bet these guys get slapped a lot “Hi, I’m a candy analyst, what’s your name”. Anyway, trading at $53.25, I’m thinking about bidding on the Nov 55 calls at a nickel below bid ($0.45) this week to see if I can pick it off. The Nov 50s can also be had for very little premium. The Oct 55s at $0.20 are more than a little risky for this kid, but I may go for them as well bidding $0.10 in a go for broke (probably broke) fasion.

I think the pair trade here (puts) is Imperial Sugar (IPSU) although I haven’t really started working it up yet so we’ll see.

Advertisements

One Response to “Monday Morning Addendum – Hershey’s Call”

  1. Lars said

    Don’t know if this cocoa farmers strike will affect HSY, but its something to watch.
    http://www.resourceinvestor.com/pebble.asp?relid=24769

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

 
%d bloggers like this: