Another Successful Trading Recommendation

Quick Update on Family Dollar:

Yesterday, Family Dollar Stores ("FDO") reported earnings that disappointed the Street. For my readers and followers, this was not a surprise. Early Tuesday, July 6th, I wrote the following:

FDO shares have risen nearly 40% since the start of the year. If estimates do come in below analysts’ consensus as I anticipate, shares should fall quite precipitously.

I also gave a Trading Recommendation on the stock--Buy Puts. The day after the earnings announcement (Wednesday), shares closed with an 8.22% drop. On Tuesday just before the close, I actually followed my own advice and bought August puts, which I sold the next day for an 80%+ gain.

So far this earnings season I have given my readers correct Trading Recommendations on both Research in Motion ("RIMM") and FDO. RIMM fell 10.84% the day after its announcement and FDO dropped 8.22%. Monday, July 12th, marks the official beginning of the season. Estimates and recommendations have already been posted for companies like AT&T, UPS, CSX, Seagate Technology, United Healthgroup, IBM, Intel, Google, Exxon Mobil, and Hewlett-Packard.

If you are not already a Follower, be sure to click the "Follow" button in the right portion of your screen so you can catch all of my new posts as soon as they're released!

Disclaimer:
· At the time of publication, I do not have any open positions.
· Opinions, estimates and projections contained in this report are of the author as of the date published and are subject to change without notice.
· This report is not, nor should it be construed as, an offer to sell or solicitation of an offer to buy any securities.
· Unless otherwise noted, all research reports provide information of a general nature and do not address the circumstances of any particular investor.
· It is important to do your own due diligence on any position you enter.

Blackberrys, Seach Engines, Oil -- Oh My!

Research in Motion

Q1 Rev:  $4.28 Bil

Q1 EPS:  $1.30

Q1 INCOME STATEMENT
Three Months Ended May 29, 2010
Revenue	$4,276,408
Cost of Sales	$2,387,169
Gross Margin	$1,889,239
	44.18%
Operating Expenses:
R&D	$276,094
SG&A	$516,797
Amortization	$88,596
Total	$881,487
Income from Operations	$1,007,752
Investment Income	$7,322
Income before Taxes	$1,015,075
Provision for Income Taxes	$294,372
Net Income	$720,703
EPS
Basic	$1.30

Analysts are expecting Q1 revenue and earnings per share to come in at $4.35 Bil and $1.34, respectively. The June 24 announcement is shaping up to be a bad day for RIMM shareholders.  Some may consider my estimates “close” to consensus, but don’t forget the old cliché “miss by an inch, miss by a mile.” 

Trading Recommendation:  Buy Puts

Visit http://tsmithson.blogspot.com/search/label/Research%20in%20Motion to read more about RIMM.

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Google

Q2 Rev:  $5.23 Bil

Q2 EPS:  $6.82

Income Statement
Three Months Ended June 30, 2010
Revenue	$7,060,054
Costs:
TAC	$1,827,402
Cost of Revenue	$785,035
Gross Margin	$4,447,617
Operating Expenses:
R&D	$862,072
S&M	$642,131
G&A	$462,810
Total	$1,967,012
Income from Operations	$2,480,605
Investment Income	$55,909
Income before Taxes	$2,536,514
Provision for Income Taxes	$556,563
Net Income	$1,979,951
Non-GAAP Adjustments	$2,207,201
Diluted EPS	$6.82

Expectations are for revenue of $5.02 Bil and EPS of $6.58.  My estimates are modestly higher than consensus with a 3.65% EPS surprise.  Given the stock’s lackluster performance over the past couple of months, this earnings announcement could serve as a catalyst for an overdue rally.

Trading Recommendation:  Buy Calls

Visit http://tsmithson.blogspot.com/search/label/Google for past articles relating to Google.    

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Exxon Mobil

Q2 Rev:  $89.86 Bil

Q2 EPS:  $1.29

Income Statement
Three months ended June 30, 2010
Total Revenue	$89,863
Costs & Other Deductions	$78,429
Income before Taxes	$11,434
Income Taxes	$5,144
NI w/ NC Interests	$6,290
NI Attributed to NC Interests	$172
Net Income	$6,118
EPS	$1.29

Analysts are missing the mark, once again, with Exxon Mobil.  Their performance last quarter was abysmal.  Currently I am forecasting second quarter revenue of $89.87 Bil.  Consensus is $98.92 Bil—a $9 Bil difference!  One would assume that after missing by over $6 Bil last quarter, some major revisions would be made.  Apparently that isn’t the case. 

Trading Recommendation:  Buy Puts

Visit http://tsmithson.blogspot.com/search/label/Exxon%20Mobil to see my past performance with XOM.


I encourage each visitor to click the “Follow” button in the upper-right portion of the screen.  By doing so, you are able to catch all of my new posts as soon as they’re released!  Also, don’t forget to sign up as an email subscriber!  Earnings season will be starting up again very soon--don't miss out!

RIMM/GOOG/XOM Ownership

Author:   NO

Author’s Family:  NO

Disclaimer:
· Opinions, estimates and projections contained in this report are of the author as of the date published and are subject to change without notice.
· This report is not, nor should it be construed as, an offer to sell or solicitation of an offer to buy any securities.
· Unless otherwise noted, all research reports provide information of a general nature and do not address the circumstances of any particular investor.

What Lies Ahead...

When I started this blog, I never expected to receive such an outpouring of support from so many unknown readers and followers. After nearly two months of projections and dissemination, statistics clearly show that more than 70% of the time, the estimates posted here have been closer to actual earnings than analysts' consensus.

So what's next? Well, throughout the month of June, I will be reassessing RIMM, GOOG, XOM, EBAY, KFT, and HPQ in order to make any necessary revisions for the upcoming quarter. Afterward, I will be posting new analysis and earnings estimates for many more U.S. companies. These may include such widely-traded stocks as MSFT, MCD, BA, INTC, AA, AMZN, CSCO, CAT, IBM, UTX, T, and WMT.

If you are not already a follower or an email subscriber, I encourage you to become one so you are alerted the moment a new post is published!


Disclaimer:
· Opinions, estimates and projections contained in this report are of the author as of the date published and are subject to change without notice.
· This report is not, nor should it be construed as, an offer to sell or solicitation of an offer to buy any securities.
· Unless otherwise noted, all research reports provide information of a general nature and do not address the circumstances of any particular investor.

1-Month Performance Report

Nearly a month ago I started this blog; I felt that I had the knowledge and capability to compete with big Wall Street analysts.  Over the past few weeks, the results of this experiment have far exceeded any of my expectations.  Time-and-again, I have seen my predictions prove more accurate than the Street’s consensus.  Since starting this blog, I have analyzed five very unique companies with operations ranging from oil and gas exploration to online advertising.  The results of my analyses compared to average analyst estimates are summarized in the table below.  Each yellow cell reveals the lowest percentage of error for the corresponding measure.  As is evidenced from the table, 69% of the time, my estimates are more accurate than the Street’s. 

So how can my analysis benefit you?  Those with the most accurate information are better able to maximize or protect their wealth by either buying undervalued stocks or selling overvalued ones.  The bottom line is this:  Information is King.

	Actual Results	Wall Street Estimates	% Error	Smithson's Estimates	% Error
Revenue	$11,318	$10,950	3.25%	$11,155	1.44%	Kraft
Q1 EPS	$0.49	$0.45	8.16%	$0.48	2.04%
Q1 EPS	$1.33	$1.41	-6.02%	$1.37	-3.01%	Exxon Mobil
Adj. Q1 EPS	$1.37	$1.41	-2.92%	$1.37	0.00%
Q1 Rev	$90.25	$96.41	-6.83%	$92.88	-2.91%
Q1 Rev	$2.20	$2.18	0.91%	$2.25	-2.27%	eBay
Q1 EPS	$0.42	$0.41	2.38%	$0.39	7.14%
Q2 Rev Guidance	$2.18	$2.20	-0.92%	$2.30	-5.50%
Q2 EPS Guidance	$0.38	$0.40	-5.26%	$0.39	-2.63%
Q1Revenue	$5,064	$4,950	2.25%	$5,161	-1.92%	Google
Q1 EPS	$6.76	$6.56	2.96%	$6.61	2.22%
Q4 Revenue	$4.08	$4.31	-5.64%	$4.35	-6.62%	Research in Motion
Q4 Gross Margin	45.7%	43.3%	5.25%	44.4%	2.84%
Q4 EPS	$1.27	$1.28	-0.79%	$1.34	-5.51%
Q1 Rev Guidance	$4.35	$4.33	0.46%	$4.36	-0.23%
Q1 EPS Guidance	$1.35	$1.22	9.63%	$1.29	4.44%
69% of the time, my estimates are closer to actual results than analysts' consensus!

The overwhelming success of this blog is not only measured by the accuracy of my projections, but also by the number of unique visits to the site.  After just shy of one month, several thousand unique visitors from all over the world have come to the site! 

I encourage each visitor to click the “Follow” button in the upper-right portion of the screen.  By doing so, you are able to catch all of my new posts as soon as they’re released!

Disclaimer:
· Opinions, estimates and projections contained in this report are of the author as of the date published and are subject to change without notice.
· This report is not, nor should it be construed as, an offer to sell or solicitation of an offer to buy any securities.
· Unless otherwise noted, all research reports provide information of a general nature and do not address the circumstances of any particular investor.