On June 12, I published a Trade of the Day titled “Calling On Our Resident Car Expert.”
The article featured the rapid growth of Ferrari (NYSE: RACE).
At the time, I wrote, “I’ve never traded it… but it intrigues me.”
So to get a better handle on Ferrari, I consulted our very own car expert, Karim.
You see, you may not know this, but Karim worked in a performance car shop during his summer holidays in college, where he learned which cars were made well – and which were not.
He concluded that Porsches are built to last – telling me that they’re pretty much the only car you can take from the street to the track and back to the street again without doing a thing.
He would know, too…
He’s owned three Porsches – and he’s getting ready to pick up another one for the fall driving season. So when I came to him asking about cars – and specifically about Ferrari – I knew I could count on his expertise.
He said…
Ferrari is one of the truly unique brands that capitalizes on its “wow” and “rarity” factors. Its classic and limited-production cars are the highest-priced sellers at auctions. Its sales are off the charts, and it has very strong fundamentals. Revenues are still growing (albeit at a lower rate), but net income continues to grow impressively.
At the time, I knew I wanted to play Ferrari, but I wanted to wait for a pullback before entering. After all, I never like buying such a rapid upside chart.
Here’s what I said back in June…
If we see a pullback to around the $145 level, we could have a possible entry point. The $145 level is the last instance where resistance turned into support.
Fast-forward to today…
As you can see below, Ferrari did indeed pull back to this $145 support level in early October. And ever since, it’s been shooting higher – recently touching $170.
The bounce was fueled by earnings – as Ferrari reported in early November that its earnings rose 11% to 0.90 euros per share in Q3 while revenues increased 4% to 915 billion euros. Since analysts had expected Ferrari to post earnings of 0.84 euros on sales of 901 million euros, this was a strong beat.
Looking ahead, Ferrari now expects 2019 earnings per share of 3.70 to 3.75 euros, which is up from its previous guidance of 3.50 to 3.70 euros. The company also raised its 2019 revenue outlook to 3.7 billion euros from its previous 3.5 billion euros.
Action Plan: If you missed the pullback to $145, we must now increase our next buy target. Specifically, a pullback to $160 is your next buy spot.
You don’t want to miss the next pullback, do you?
[adzerk-get-ad zone="245143" size="4"]About Bryan Bottarelli
Whether it was selling the Star Wars figures he collected as a little boy for 50 times their value or using the $125 he made cutting grass to buy a Michael Jordan rookie card that he later sold for $1,500, it was always clear that Bryan Bottarelli was a born trader – possessing the unique ability to identify opportunities and leverage his investments.
Graduating with a business degree from the highly rated Indiana University Kelley School of Business, Bryan got his first job out of college trading stock options on the floor of the Chicago Board Options Exchange (CBOE). There, he was mentored by one of the country’s top floor traders during the heart of the technology boom from 1999 to 2000 – trading in the crowded and lively Apple computer pit. Executing his trades in real time, Bryan learned to identify and implement some of his most powerful trading secrets… secrets that rarely find their way outside the CBOE to be used by individual traders.
Recognizing the true value of these methods, Bryan tapped into his entrepreneurial spirit and took a risk. He walked off the CBOE floor and launched his own independent trading research service called Bottarelli Research. From February 2006 to December 2018, Bryan gave his precise trading instructions to a small, elite group – most of whom have been followers ever since.
As a “play tactician,” Bryan uses his hands-on knowledge of floor trading to shape opportunities and chart formations into elegant, powerful and profitable recommendations. And by using the same hedging techniques taught by professional floor traders, Bryan is able to deliver his readers remarkable gain opportunities while strictly limiting their total risk.
Along the way, Bryan has developed a cumulative track record that could impress even the most successful hedge fund manager.
He now spends his days moderating one of the most elite trading research forums ever created: The War Room.
