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Two Ways To Play: Costco Gets an Upgrade


Strengthen your portfolio in good times and bad.


Shop at Costco?

From Cantor Morning News, Costco (COST) was upgraded to Buy from Neutral by Goldman Sachs. The firm cited valuation and the group's business model - and said the recent sell-off in shares presented a compelling entry point for investors.

Goldman also noted the warehouse model "carries greater relevance" in today's tough economic environment. Year to date, Costco shares have fallen 11.24%.

From the Bull Pen: A compelling entry point may be correct. Note the strong support at $60. Bulls playing the upside can consider sell stops below that level.

From the Bear Cave: What's the business model that isn't working? Sears (SHLD)? The stock is on the short-ban list and bears also need to be wary of a potentially vicious bear market rally. But when the time comes, the stock near $100 could be an opportunity for downside entry.

HP's New iPaq Phone

The Wall Street Journal reports Hewlett-Packard (HPQ) will release a new smart phone in an effort to extend its business beyond corporate users and gain more ground with consumers.

The device is the latest version of its iPaq phone and will have a touchscreen and keypad. It will use Microsoft's (MSFT) Windows Mobile 6.1 operating system and have email and Internet capabilities. The phone is expected to debut in Europe within the next 2 months and then be sold in retail stores worldwide.

From the Bull Pen: Those bullish Hewlett-Packard can consider placing a sell stop below $42. And although this news may be bearish longer term for niche tech company Research In Motion (RIMM), bulls can consider a quick upside trade with sell stops below $60.

From the Bear Cave: Bears can consider IBM (IBM). If the stock can muster a rally to its 200 DMA, it would still remain in a strong downtrend. But note this stock is also on the short-ban list, which is effective through October 17th.

For more ideas in real time throughout the trading day, check out Minyanville's Buzz & Banter.

Quick Check Around the World

Asian trading closed mostly lower with the Hang Seng -2.90%, Nikkei -1.94%, Sensex -3.81%, Taiwan +0.68% and Shanghai -0.16%.

A quick check across the pond finds the CAC +0.04%, DAX +0.31%, FTSE +0.04%

As of 8:10 a.m. EST, S&P Futures are trading +3.3 points to 1127 and Nasdaq futures are up +2.2 points to 1512.

A Look At Commodities

Commodities are mixed. Crude oil is trading -0.03 to 93.94. Gold is -1.30 to 843.40. Silver +0.1650 to 11.285, and copper +0.75 to 266.00.

The dollar index is -0.110 to 80.334.

On the Radar


8:30 Change in Nonfarm Payrolls: -100 k cons.
8:30 Unemployment rate: 6.1%.
8:30 Change in Manufacturing Payrolls: -50 k cons.
8:30 Avg. Hourly Earnings (m/m): 0.3% cons.
8:30 Avg. Hourly Earnings (y/y): 3.6% cons.
8:30 Avg. Weekly Hours: 33.7 cons.
10:00 ISM Non-mfg composite: 50.0 cons.

TGIF! Good luck!

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No positions in stocks mentioned.

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