Putting $18 Limit on Cray

By Linda McDonough • August 3, 2016

Cray cratered today on a bad number, dropping almost 30% from its close yesterday. Continued delays integrating new chips from Intel and Nvidia combined with a recent fire at a production facility took 2016 revenue estimates down over $100 million.

Most of the revenue looks pushed out and not lost entirely but we’re still working through the details. In the meantime we suggest investors put a stop of $18 on their holdings. Just as we like to average into a stock we like to average out as well. This means if the stock hits $18 I would sell half your position and wait for more guidance.

More to come as I work through the estimates for 2016 and 2017. The good news is the balance sheet looks strong with $5 per share in cash. This was a risk when I recommended the stock but the degree of the revenue cut is more than I had factored in.

Stock Talk

Comments Oldest First

Comments Guidelines

Jon D.

08/03/16 ‐ 12:04pm ET August 3, 2016 at 12:04pm ET

speaking of the stocks in general it seems like CRTO had good earnings but is not up. We still good with this one? Id buy more if the vote of confidence is there.
Thanks
Jon who knows you understand earnings lingo better than I

Jon D.

08/03/16 ‐ 12:08pm ET August 3, 2016 at 12:08pm ET

Thanks for the stop Sugg I did that in my account

Ho tecksan

08/03/16 ‐ 9:59pm ET August 3, 2016 at 9:59pm ET

Hi Linda
Any fresh advise on IBP & LSCC before their reports . One on 5 August & the other 9 August. Appreciate

Robert Frick

08/05/16 ‐ 9:54am ET August 5, 2016 at 9:54am ET

Linda is traveling and having a tough time connecting to Stock Talk, and she just sent me this to respond to your question: “Industry data on home building has remained strong which gives me more confidence in Installed Building Product’s (NYSE: IBP) ability to hit its targeted revenue and earnings. Lattice Semiconductor (NASD: LSCC) is a bit harder to get a read on. Industry data has been mixed but we are specifically looking for some color on how the roll out of the company’s new Wi-Gig technology is going.”

Ho tecksan

08/08/16 ‐ 8:05am ET August 8, 2016 at 8:05am ET

Thanks Robert & Linda
I got it . Appreciate

Craig Telfer

08/04/16 ‐ 10:59am ET August 4, 2016 at 10:59am ET

Linda, Insight would be greatly appreciated as Ho has asked.

Rocco Consalvo

08/04/16 ‐ 11:27am ET August 4, 2016 at 11:27am ET

Hi Linda, thanks for the quick advice on CRAY. $18.00 could be a good “buy” option on a strong company having some potholes in the road and as usual people strongly over reacting. The next couple of days I’ll be watching closely. Your thoughts on this. Finally, your recent e-mail on the “Tiny Dot Stock”- Being a subscriber to “Growth Stock Strategist “, doesn’t that give me privy to the name of the stock your backing without further costs and further sign up fees? Thank you, Rocco.

Rocco Consalvo

08/04/16 ‐ 7:08pm ET August 4, 2016 at 7:08pm ET

Please reply on both questions.

Add New Comments

You must be logged in to post to Stock Talk OR create an account

About The Author

Linda McDonough

Bio | Archive

Linda McDonough is a veteran hedge fund analyst who loves to break down company financial statements and identify market inefficiencies to uncover big opportunities. She believes in a boots-on-the-ground approach that includes surveying customers, interviewing company executives, or doing whatever it takes to see what others don't.

She's now brought her experience as a hedge fund analyst to subscribers of her Profit Catalyst Alert service. Her system identifies small- and mid-cap stocks that are about to move due to catalytic events that few others can identify...until it's too late. These events often times result in massive gains for her followers.