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goldminingXpert (29.38)

WNR: Where We Stand Now (Updated Thesis)

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September 15, 2008 – Comments (1) | RELATED TICKERS: WNR

Here's an update on my thinking on WNR. This is turnng into an earnings/analyst play as the hurricanes are done. The regional gas shortage is gravy, but this stock is going up regardless. It makes a wonderful hedge for all your short positions.

WNR is minting money... yet the earnings estimates for WNR are a paltry 18 cents for the current quarter. They made 24 cents on a lousy crack spread last quarter. They are making, at $75 gulf spread, money 7x as quickly as when the gulf spread was at $10 (most of Q2--the 24 cent quarter). I'd be deeply surprised if WNR doesn't make 50 cents plus... one analyst has WNR making 56 cents... do the math, that means a P/E of 9.

You're going to see either a big spike in analyst expectations... good. Or, you're going to see an absolutely monsterous earnings beat (this is what I'm hoping for... planning on playing a large Out of the money call position into earnings as the analysts are dumber than rocks on this company. There are 7 analysts and no buy ratings! Yet the thing has doubled as the majority of analysts maintained "underperform" and even "sell" ratings. The median price target of the analysts is 6 bucks! One ANALyst has a price target of $2.75--yes that is right, he has a price target down 75% from here! As I said, dumb as rocks! Once the analysts all upgrade the stock en masse... well... plus the short squeeze... the upcoming ban on naked shorting... let's just say my $15 Dec calls will be deeply in the money by the time we get to December.

The outlook for September opex is cloudy. The Sept $12.5's remain a good risk vs. reward play as people do not realize how low inventories will be on Wednesday. Resistance on the stock is at $12.50... this puts your $12.5 calls at the money when we retest resistance on Wednesday, should it break, you can get a multi-bagger. Lower gasoline inventories open the door to a further divergence: oil prices should continue to slide, but gas prices will rise as people see that we have the lowest inventory levels since 2005 (and possibly lower than that.) This widens the crack spread and then the shorts are, so to speak, history.

1 Comments – Post Your Own

#1) On September 15, 2008 at 11:04 PM, daayoo (< 20) wrote:

I'm with you 100%

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