006. Piggish Play - Long Aerovironment (AVAV)AVAV is a growing player in the Aerospace/Defense sector that is positioned to literally and technically launch into orbit. The precise nature of the stepping-stone type of growth combined with the structurally harmonic base makes for an ideal long-term bullish candidate for the next 6 months - 1 year. I very rarely hold anything this long and I will inevitably continuously avoid drawdowns in a position-practitioner sort of way, but will nevertheless maintain a sizeable equity position for at least 6-12 months.
Why you might ask?
Because I am both fascinated and bullish on recent developments in the aerospace/defense sector. I find the space to be both imminently breaking out and limitless in terms of potential growth. The recent news regarding space travel privatization is one of the cooler and more positive societal updates that nobody seemed all that interested in for longer than a day. The news today about Virgin Atlantic is just another subtle sign that things like space exploration are much closer to reality than most tend to believe. And I don't blame them because it does seem more like fantasy than it does a tangible bottom-line-beating monster of a sector.
Now, while Aerovironment is not as directly involved with things like resource procurement from another planet or limo rides to the moon, it is fundamentally important to the process, should they come to fruition in the near future. Also, it is quite literally a more grounded business model altogether.
The company reports earnings tomorrow and my research indicates that we could be in for a nice bottom beat and an even nicer topline beat. For a growth company in the second stage like we have here, the topline beat is most important for increased likelihood and strength of a post-earnings breakout. Thus, given all the positive buzz surrounding the sector and the high probability of a supporting bottom-line beat, this stock should see a significant upside over the next month.
At a minimum, my price target is 105 before I dare sell a single share. The technical aspects presented in the chart provide additional support for this move and it seems to oscillate to the beat of some harmonic sequence, as evidenced by the sharp, exact nature of its pivotal angles.
Conclusion: I am playing this as a long equity position only. I'm not going to hedge it and I will not even include the position in my regular trading account. I feel that bi-weekly checkups should suffice, assuming that the stock does indeed present an excellent report and also continues to move higher the day after. So, am going to enter half the position now and half the position after the report. To go through all this research and not be confident enough to enter before the report would be a total waste of time. On the other hand, I am a trader and not a gambler/pure-speculator. This method offers a fair compromise, but I don't think it much matters how you plan on strategically entering.
I will be less on top of this play as I am the other Piggish Plays because of its long term nature. Will periodically provide updates over the next coming months, though.
- Astro-not-a-swing-Pig-today
NASDAQ:AVAV
