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December 7, 2006
ABB: great company, but over-bought today, Thurs., Dec. 7, 2006, 6:28 PM
One company that is definitely going into my European 100 is ABB (NYSE: ABB), which is comparable in many ways to General Electric (NYSE: GE), but arguably better managed.
Download CS Dec 5 report on ABB.
What does Credit Suisse think of the stock of this Swiss company? The Outperform rating on ABB is not unexpected. CS points to the top-line outlook and margin improvement potential. They also take note of the likelihood that the stock's near-term upside may be muted.
I have had several readers thank me for the heads-up that I wrote back in October on ABB, which was widely broadcast by Seeking Alpha at the time.
Since that Oct 26 posting, ABB has had a run of +14.4 pct to the upside (from $14.81 to $16.94) in just seven (7) weeks. Kudos to Cara, but today's RSI is 87.6-87.9-84.3 for the M-W-D price series. Time to take some profit.
Even one of the world's great financial houses, Credit Suisse, agrees that the "near-term upside may be muted".
At the very least, the institutional money managers who are holding this stock as a core position in their portfolios ought to be writing covered calls. And after the stock falls back, use that premium income plus some put write premium at that time (ie, after the drop in price) to load up on call options.
NO POSITIONS
Posted by Posted by Bill Cara on December 7, 2006 06:28:30 PM | Category: 20 Industrials
Discourse
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