Hot Stocks: Chiquita Brands International, Eastman Chemical Co., and Monster Worldwide Inc.

7/30/2010 10:57 AM

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The Dow Jones Industrial Average (DJIA) has rebounded from early losses, with traders finally coming to grips with the deceleration in U.S. economic growth. At last check, the Dow was off a mere 12 points, up from an opening plunge of about 90 points. Checking in with trading activity on the New York Stock Exchange (NYSE), we find that bullish investors have turned their attention toward Chiquita Brands International, Eastman Chemical Co., and Monster Worldwide Inc.

Chiquita Brands International Inc. (CQB) reported that its second-quarter net income rose to $95 million, or $2.06 per share, as the company benefited from the sale of a majority stake in its fruit-smoothie business and improving profitability in Europe. "Revitalizing Europe is our most important priority and we made solid progress executing a business improvement plan...," Chiquita Chairman and Chief Executive Fernando Aguirre said in the earnings release.

CQB shares have rocketed more than 10% higher in the wake of the report, with the stock now poised to closed its first week above its 10-week and 20-week trendlines since late April. However, it appears that CQB has run out of steam near the $15 level. However, if the equity can push past this technical hurdle, it could spark another strong upleg for CQB. Short interest accounts for more than 15% of the stock's total float, and a break out above long-term support/resistance in the $15 region could send these bears scrambling for the exits.

While not as hot as CQB, the shares of Eastman Chemical Company (EMN) have rallied more than 3% so far today. EMN traders are reacting to strong second-quarter earnings, which surpassed the Street's view by 40 cents per share. The company also guided for third-quarter earnings to come in above the current consensus estimate.

EMN shares find themselves in a bind similar to CQB. The stock has rallied above its 10-week and 20-week moving averages, and EMN has seven reclaimed potential round-number support in the $60 region. However, most investors already have seats on the EMN bullish bandwagon, with the stock's Schaeffer's put/call open interest ratio (SOIR) of 0.19 arriving in the 98th annual percentile and eight of the 11 analysts following the shares rating them a "buy" or better. Only short sellers remain bearish on the stock, with 7% of EMN's float sold short. But these bears won't be in any hurry to buy back their bets unless the stock can move past resistance near $62 per share.

Earnings is the name of the game today, as Monster Worldwide Inc. (MWW) topped the consensus second-quarter earnings outlook while guiding to a narrower-than-expected full-year loss. MWW shares have rallied roughly 3.5% to test support/resistance in the $14 region. This area provided support for the stock from August 2009 through June 2010.

There is plenty of sideline money that could be brought to bear on MWW. For instance, short interest accounts for nearly 14.5% of the stock's total float, while nine of the 15 analysts following the shares rate them a "hold" or worse. If MWW can maintain today's momentum, it could force these bears to reconsider their losing positions.

-posted by Joseph Hargett (jhargett@sir-inc.com)
7/30/2010 10:57 AM