Tuesday, May 24, 2011

WESCO International Inc (NYSE: WCC) Q3 2011 Price Target

Recent price: 52.43$
P/E Ratio: 18.79
3 Months Target Price: 60$

Company Description
According to Reuters, WESCO International, Inc. is a North American distributor of products and provider of supply chain services used primarily in the industrial, construction, utility and commercial, institutional and government markets. It serves over 100,000 customers globally, through approximately 380 full service branches and seven distribution centers located primarily in the United States, Canada and Mexico, with additional locations in the United Kingdom, Singapore, China, Australia, Africa and the United Arab Emirates. WESCO sells electrical and industrial maintenance, repair and operating supplies (MRO), and electrical and non-electrical construction and original equipment manufacturer (OEM) products and services. Its primary product categories include general electrical and industrial supplies, wire, cable and conduit, data communications, control and automation and motors.

Confidence Margins
Strong resistance $64.90 (+24%)
Light resistance $59.08 (+13%)
Light support $46.93 (-10%)
Strong support $42.05 (-20%)

The recent earnings report seemed to disappoint investors even if profits for the previous quarter and revenue guidance for the rest of the year came in better than expected. At current prices, a long positions will yield good returns for investors.

Entry strategy
For the cautious investor:
Buy the stock for 53$ or less.

For the risk-taking trader:
The October 2011 55$ out-of-the-money call option contract seems to be the right position to take, they can be acquired for about 360$ per contract.

Exit Strategy
For the cautious investor:
Sell when the stock reaches 60$, or keep it until 64$ if you are more bullish in your own analysis.

For the risk-taking trader:
The contracts should be kept until the underlying reaches around 60$. 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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