JOY, the manufacturer of underground mining equipment is bucking the broad market weakness today (up ~1.4%) in front of their fiscal Q2 earnings report tomorrow morning before the open. The options market is implying about a 5% move one way or the other following the results, which is a tad higher than the 4 qtr avg of about 4.5%.
JOY is not a name that we talk about much, but the commentary and forward guidance from management could be instructive to bearish trades that Enis and I currently have on in CAT (here) and CMI (here). JOY gets almost 50% of their sales from outside the U.S. so any color on emerging market demand & headwinds of strong U.S. dollar could set the stage for how investors think about U.S. multinational stocks in the back half of the year.
The technical setup shows a stock that has been a major laggard ever since commodities topped about 2 years ago:
The 200 day ma in black is around 59, which could act as resistance on the upside. The key long-term support level is around the 49-50 area, where the stock bounced last summer. It’s only a 8 P/E name, but it’s not projected to grow earnings until 2015. If earnings stabilize, the stock’s cheap, but if they continue to contract, it’s a value trap.