Monday, April 18, 2011

Washington Federal Inc. (NASDAQ: WFSL) Q2 2011 Price Target

Recent price:16.02$
P/E Ratio: 13.35
3 Months Target Price: 17.50$

Company Description
Data provided by Reuters shows that Washington Federal, Inc. (Washington Federal) is a non-diversified unitary savings and loan holding company that conducts its operations through a federally insured savings and loan association subsidiary, Washington Federal Savings (the Bank). The business of Washington Federal consists primarily of attracting deposits from the general public and investing these funds in loans of various types, including first lien mortgages on single-family dwellings, construction loans, land acquisition and development loans, loans on multi-family and other income producing properties, home equity loans and business loans. It also invests in certain United States government and agency obligations and other investments. Washington Federal has 160 full service branches located in Washington, Oregon, Idaho, Arizona, Utah, Nevada, New Mexico and Texas. Through its subsidiaries, the Company is engaged in real estate investment and insurance brokerage activities.

Confidence Margins
Strong resistance $18.53 (+16%)
Light resistance $17.51 (+9%)
Light support $15.47 (-3%)
Strong support $14.53 (-9%)

Shares of Washington Federal Inc were recently down because it reported a profit of $25.82 million for the second quarter compared to $82.11 million last year. On a per share basis, profit was down to $0.23 from $0.73 in the previous year. On average, 13 analysts polled by Thomson Reuters expected the company to report a profit of $0.26 per share. As the worst of the fall is passed, now is the time to take a long position into this stock.

Entry strategy
For the cautious investor:
Buy the stock for 16.25$ or less.

For the risk-taking trader:
The July 2011 17.50$ out-of-the-money call option contract seems to be the right position to take, they can be acquired for about 40$ per contract.

Exit Strategy
For the cautious investor:
Sell when the stock reaches 17.50$, or keep it until 18.50$ if you are more bullish in your own analysis.

For the risk-taking trader:
The contracts should be kept until the underlying reaches around 17.50$. This should provide a satisfactory return if the underlying reaches the target price as the contracts will get in the money.

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