EOT Trade Alert – June 18, 2009

June 18, 2009

Trade Alert:

   Buy BRLI August $35 CALLS at $1.20 or better (BJQHG)

Company Background:

Bio Reference Laboratories (BRLI) is an independent clinical laboratory.  The company operates in the New York metropolitan area, offering a long list of laboratory testing services.  Healthcare providers, like doctors and independent clinics, use them in the detection, diagnosis, evaluation, monitoring and treatment of diseases.

Short-Term Catalyst:

We’ve all heard about the health care reforms President Obama is angling for.  One of the key components to his proposed reforms is using technology to decrease costs.

It looks like Bio Reference Labs is one step ahead of the game.

Recently they brought on AirClic to help them streamline workflows.  Just seven months after starting the process, they’re seeing a huge return on their investment.

The most important piece is they’re now a more efficient company.

Bio Reference is growing at 20% per year and efficiency is always a big battle.  By improving now, their business can grow without big jumps in overhead costs.  All this efficiency drives earnings to their bottom line… and more earnings are always a good thing.

To add more fuel to the fire, the first signs of investor demand for healthcare stocks are emerging.

The healthcare sector is leading the S&P 500 higher today.  And there’s nothing better than a hot company in a hot sector.

Trade Details:

Option Ticker Symbol:	BJQHG
Underlying Stock Symbol:	BRLI
Current Bid-Ask Price:	$0.70 – $1.05
Option “Buy Up To” Price:	$1.20
Break-Even On Stock At Expiration:	$36.20
Maximum Risk Per Contract:	$120

Exit Strategy:

BRLI is trading at $31.75 per share.  Resistance levels will be at $36.80 and again at $40.  Remember, we want this stock to move higher.  Support levels will be at $27 and $25.  Conservative investors should look to exit at the first support or resistance level. Aggressive investors may want to hold for a bigger move.

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Category: EOT Trade Alert