Earnings season for the Profit Catalyst Portfolio officially kicks off this week with earnings from recent portfolio addition Mueller Water (NYSE: MWA) this Thursday.

I issued a sell alert this morning on the MWA May $12.50 calls. The stock was trading above the $12.50 strike price when the alert was issued and has been bumping against that price ever since. I purposely issued an exit price slightly below where it was trading to help ensure sellers get filled on orders.

These are not very liquid options, so please be patient if you are not filled immediately. I expect good news from the company when it reports Thursday after the close of the market. It will host a conference call on Friday morning when we should get a better picture of order growth for its water diagnostic tools and services.

These calls are up 80% in four short trading days. I’d love to hear how you did on this trade (and any others).

Please drop me a line in this 90-Second survey so I can see what works and what doesn’t for subscribers:

The market continues to treat bullish events, like today’s news of the French election, with more vigor than it does bad news. I am always monitoring our portfolio for good exit and entry points. Please keep your eyes open for trade alerts to take advantage of any volatility over earnings season.

In the news around the portfolio:

ANI Pharmaceuticals (NSDQ: ANIP) has been a bit under the weather lately. Many pharmaceutical stocks were soft last week because drug distributor Cardinal Health (NYSE: CAH) warned it would miss estimates due to higher than expected drops in generic drug prices.

The critical language from Cardinal is lower than expected. On its conference call management noted that deflation in generic drugs has actually improved since the first half of the year but that the company had modeled a larger jump into its estimates.

Generic drugs make up almost three-quarters of ANI’s revenue, so any news interpreted as being negative for the group weighs on the stock. The fact that pressure in generic pricing is easing is good news for ANI. Also, new product launches grow the company’s revenue base. Just last week it released generic Indapamide tablets for hypertension and swelling associated with congestive heart failure. The annual U.S. market for Indapamide Tablets is approximately $9M.

Air Transport (NSDQ: ATSG) floated higher on the announcement of a new three-year maintenance contract with Frontier Airlines  The contract covers Frontier’s expanding fleet, consisting today of more than 60 Airbus A320-family passenger aircraft. Management noted, “The agreement builds on a relationship with Frontier that started in 2015 with PEMCO’s interior modifications to Frontier’s A319s and A320s.” The new three-year agreement covers heavy checks, induction checks, exit checks, drop-in maintenance, on-call maintenance, and away maintenance, and includes options for extension in two one-year intervals.

Big 5 Sporting Goods (NSDQ: BGFV) dropped a bit in sympathy with Foot Locker (NYSE: FL) who warned it would miss first-quarter sales expectations due to weak February sales. I encourage subscribers to buy the stock on the dip. Although Big 5 and Foot Locker are both sporting goods retailers, there are several critical differences:

1. Athletic footwear makes up 82% of Foot Locker sales. Also, a substantial portion of Foot Locker’s sales is to young males ages 12-25. The company blamed a late tax refund season on not putting cash into its customers’ pockets during the critical NBA All-Star season.
2. Big 5 receives just 28% of its sales from footwear and has a much more diverse customer base.
3. Foot Locker specifically called out a weak February for the miss. March and April rebounded strongly.
4. Investors already have insight into how Big 5 performed in February. On February 28 the company reported fourth-quarter earnings and noted that comp store sales were up mid-single digits quarter to date.

Big 5 has not announced details of its first quarter earnings announcement but based on prior year patterns it will likely be in the first week of May. I’ll be sure to update you when the date is released.

Impinj (NYSE: PI) has rallied nicely in the past two weeks, a promising sign as the company approaches its May 4 earnings date. An analyst at brokerage firm Pacific Crest says that checks with U.S. retailers indicate that there is “plenty of opportunity” for increased RFID penetration in the retail market.

Remember, Impinj’s RFID tags help retailers keep track of where inventory sits. The firm’s checks indicate that Kohl’s is only using RFID on 10%-20% of items. Checks also indicate that retail downsizing is creating only “relatively minimal headwinds” for RFID. The analyst thinks that Street estimates for Impinj are “conservative,” and he says that it can grow significantly. He has a $40 price target and an Overweight rating on the stock.

Put position Kroger (NYSE: KR) continued to creep higher on speculation that it is a possible buyer of Whole Foods (NYSE: WFM). I highly doubt Kroger has the financial flexibility necessary to fund such a big deal.

Whole Foods currently has a market cap of $11 billion and would certainly demand a premium to this price for a take-out. Kroger is already stuffed with $14 billion of debt and has a leverage ratio of 6.5x, a level where many banks would not agree to lend them more cash.

Kroger specifically noted in its recent SEC filing that “our indebtedness could reduce our ability to obtain additional financing for working capital, mergers, and acquisitions or other purposes.” Hold on to these puts as they do not expire until July.