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The Week Ahead: Ford Motor Company (F), Tesla Motors Inc (TSLA), Dollar General Corp. (DG), and VMware, Inc. (VMW)

Surveying sentiment on F, TSLA, DG, and VMW in light of the week's events

by 6/3/2013 11:27:06 AM
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Ford Motor Company (NYSE:F)

F has been on a tear over the past month, setting one two-year high only to beat it a couple days later. This morning's report that the American automaker's May sales for new cars increased 14% over last year (compared to Edmunds' projection of 13% growth), as well as 16% over April, is yet another positive sign for the Detroit-based company.

Nevertheless, in the options pits, Ford is struggling to gain respect. Schaeffer's put/call open interest ratio (SOIR) on the stock is 1.06, which means that put open interest is outstripping call open interest for options set to expire in the next three months. Statistically, the ratio ranks in the 94th percentile of its annual range, confirming unusually high levels of put open interest.

Continued technical strength, however, could lead to an unwinding of pessimism among options traders, potentially resulting in a contrarian boon.

Tesla Motors Inc (NASDAQ:TSLA)

Tomorrow, TSLA will be holding its annual shareholder meeting -- and, to be sure, those stockholders have much to cheer about. In 2013 alone, the electric automaker has gained over 170%, much of which was sparked by a May 8 earnings release that revealed the company's first-ever quarterly profit (which also happened to top consensus estimates).

Despite Tesla Motors' impressive record on the charts, a lofty 31.5% of its shares have been sold short. And though analysts are tilted in a slightly bullish direction -- with eight "buys" or better, versus three "holds" or worse -- the stock's consensus 12-month price target remains lodged at $74.30, a significant discount to the current per-share price. Positive developments arising from the shareholder meeting could be just the thing to set off a series of upward price-target revisions, spurring TSLA on to further gains.

Dollar General Corp. (NYSE:DG)

DG will be entering the earnings confessional tomorrow before the market opens, and the company is expected to deliver first-quarter earnings of 71 cents per share. The discount retailer has consistently beaten estimates -- specifically, it has topped Wall Street expectations during each of the past seven quarters -- which has more often than not been followed by positive price action on the stock.

Sentiment toward Dollar General is stacked on the positive side of the ledger, too. Thirteen of 18 analysts covering the stock rate it a "strong buy," compared to just five tepid "holds." Plus, after last week's upward price-target revisions from Deutsche Bank and Nomura, the security's consensus 12-month price target is $58.10 -- roughly a 9% premium to the equity's current perch. Meanwhile, Guggenheim raised its price target on the stock by $4 to $61 this morning. A disappointing earnings report, however, could leave a few of the more weak-kneed bulls hitting eject, prompting a round of downgrades and/or negative price-target modifications.

VMware, Inc. (NYSE:VMW)

VMW President and Chief Operating Officer Carl Eschenbach is scheduled to speak on Wednesday during the Bank of America 2013 Global Technology Conference in San Francisco. His firm, which specializes in virtualization and cloud infrastructure, has been a recent target of options bulls, boasting a 10-day call/put volume ratio of 4.20 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). The ratio ranks in the 95th percentile of its annual range, which means traders have rarely been so call-heavy toward the stock.

Such bullishness is surprising, considering VMware's technical struggles. Over the past 40 sessions, the stock has trailed the broader S&P 500 Index (SPX) by 12 percentage points. What's more, the equity fell to a new two-year low of $67.97 today. Should this trend persist, call buyers may be forced to close their positions, pushing VMW shares even further south.


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