Add YUM Calls

Plus: Watch CCJ & USO

PLAY: Buy the YUM January 2010 30 Calls (WRJ AF) at market, good for the day. Place a protective stop limit at $2.90 and implement our scaled-selling technique as your position achieves gains of 50% (and greater).

Dear Bottarelli Research Member,

I have a number of potential opportunities to present to you this week, but we’re only going to act on one of them. After all, in a market like this, I’m interested in seeking out the top investment opportunities, carefully monitoring them, and striking only when the timing is exactly right. One such opportunity comes in Cameco Corp. (CCJ – NYSE), a global producer of uranium.

Like most commodities, uranium has been extremely weak in 2008. The precautious drop in oil prices, combined with the global credit crunch, has stymied the powerful growth of various alternative energy initiatives — including nuclear power. As I write, uranium prices have fallen -50% on the year. But if you look closely at the recent CCJ chart, the stock has quietly been moving up recently without anyone noticing.

This offers you an early indication that a resurgence in nuclear energy may not be as far off as you think. After all, a rebound in the price of crude oil would surely put the spotlight back on nuclear energy again, which would ignite powerful demand for uranium.

Plus, as developing countries continue to move towards nuclear power (in combination with support from our new U.S. political leaders), any advancement in nuclear power plant developments would also spark an up-tick in uranium prices. Therefore, if you feel that oil prices will not remain this low for long, and you also believe that nuclear power will continue to develop as a viable energy source on a global scale, then CCJ represents a great way to play both trends using a single play.

As another added bonus, there are only a handful of publicly traded uranium companies on Wall Street, which means that from an investment perspective, you have a major supply/demand disequilibrium. In other words, any up-tick in uranium prices would equate to a flood of investment dollars all moving into the same company — CCJ. Therefore, I’ll keep a close eye on CCJ for a forthcoming LEAPS play. For now, let’s patiently wait for a more attractive entry price.

Along the same lines, we could also have a very powerful opportunity in shares of the United States Oil Fund (USO – NYSE). The USO is an investment vehicle that seeks to emulate the price performance of West Texas Intermediate light, sweet crude oil. As I’m sure you know, the unprecedented rise and fall in oil prices has been one of the most shocking price moves we’ve seen in decades. Oil hit an all-time high of $147 per barrel less than one year ago, and it’s now just hit a multi-year low around $32 per barrel. This is truly an amazing price swing, which can be seen from the USO chart below:

In less than 12 months, we went from running out of oil to having way too much oil supply. To me, these swings were way too over-extended (on both the upside and the downside), which typically means that the true price lies somewhere in between.

As a median price, I think $65 to $70 per barrel is probably the most appropriate and realistic level for oil. If we see prices recover to $65 in 2009, shares of USO could be in for quite a powerful bounce-back move. Therefore, USO is another one I’m closely watching for a possible upside LEAPS play. But for now, let’s keep moving.

In the meantime, we have a powerful opportunity in shares of Yum! Brands (YUM – NYSE) that we can act on now.

The YUM play piggy-backs on our recent McDonand’s (MCD – NYSE) position, which is a beneficiary of the global recession. You see, every consumer in the world is now being forced to stretch their spending dollars like never before. As a result, virtually every retailer is reporting sharp losses in 2008. But in contrast to these struggling retail companies, YUM and MCD are each reporting year-over-year growth around 10%. In a market where the Dow and the S&P 500 have each lost over 45% year to date, that’s a remarkable performance.

YUM operates brand-name restaurant like KFC, Pizza Hut, Taco Bell, Long John Silver’s, and A&W All-American. As of last December, YUM operated over 35,000 restaurants in 100 different countries, and most of their forecasted growth in 2009 will come from China. Therefore, you can argue that YUM is perfectly positioned to benefit off any prolonged global recession.

At the same time, YUM is also planning to launch a new grilled menu for their KFC chain, which has been a sales laggard here in the United States. This strategy for U.S. profit growth, combined with their overseas strength, should help shares continue moving higher for most of 2009.

From a chart perspective, a move from $30.00 to $40.00 could easily occur by Q2 2009. Based on the success we’ve had with our McDonald’s June 55 Calls (MCD FK), I’d like to add a similar position in YUM and continue profiting off this trend. Here’s the play…

PLAY: Buy the YUM January 2010 30 Calls (WRJ AF) at market, good for the day. Place a protective stop limit at $2.90 and implement our scaled-selling technique as your position achieves gains of 50% (and greater).

UPDATES

Genentech March 80 Calls (DWN CP), Teva Pharmaceuticals January 2010 45 Calls (WTX AI), & Cubist May 20 Calls (UTU ED): Despite some mid-week market weakness, all three biotech plays have continued to inch higher. Hold for more upside.

ETH February 15 Puts (ETH NC): I can’t see any way for a high-end home furnishing store to please investors right now. My stock price forecast of $6.00 to $7.00 per share remains intact. Hold.

Verizon April 30 Puts (VZ PF) & Salesforce.com May 25 Puts (CRM QE): Both of these charts signal weakness at their 50-day and 200-day moving averages. As the buying strength gives out, each could fall sharply. Hold.

MCD June 55 Calls (MCD FK) & ADM January 2010 20 Calls (WRA AD): We took 50% profits on half of each of these two positions, which leaves us holding the remaining half for more gains. Going into 2009, both companies continue to be well-positioned to extend their upward growth. Be sure to lock in additional profits as these play achieves 100% profits. Hold.

iShares MSCI Emerging Markets Index March 24 Puts (MBY OX): Our downside play on the deterioration of emerging markets continues to look strong. Be sure to lock in HALF of your profits at the 50% level. Sell half at 50%.

Casey’s General Store February 30 Puts (CQO NF): We locked in 57% profits on half of this position, which leaves us holding the remaining half for more selling pressure. Sell remaining half at 100%.

AKS January 2010 15 Calls (YDF AC), Ultra Financials June 8 Calls (UUF FH), Excel Maritime March 15 Calls (EKN CC), & Tesoro January 2011 5 Calls (ZGC AA): For the second straight week, I’ll say it: “What a major come-back!” The ability of these stocks to post sharp snap-back rallies sets a positive tone going into 2009. In particular, the precipitous fall in oil prices should be a major upside catalyst for an oil refiner like TSO. Maintain all four of these positions for more recoveries. Hold.

Apex Silver Mines January 2010 2.5 Calls (YSB AZ), Southern Peru Copper January 2010 25 Calls (YPV AE), & Barrick Gold January 2010 40 Calls (WRX AH): On the same hand, we witnessed a major upside move in metals early this week, and this sets a very positive tone going into 2009. All three of these positions carry January of 2010 expiration dates, so we have all of the 2009 trading year to achieve strong profits. Hold.

FINAL DAY TO LOCK IN YOUR SPECIAL “END OF YEAR” OFFER

This is it! Today is your last day to lock in our heavily reduced renewal price for 9 additional months of LEAPS service. This special “End of Year” offer is the lowest price in the history of Bottarelli Research LEAPS, and as we head into 2009, I want to ensure that you maintain your place in our elite trading group. That’s why I’m offering you the opportunity to add 9 months onto your membership for the lowest price of the year. Please don’t miss out.

This special offer expires at midnight tonight, so give yourself an early Christmas present and lock in this discounted membership offer now! Details below:

https://www.bottarelliresearch.com/renew/?service=leap&offer=150264F1RS

ADMINISTRATIVE NOTE: Due to the Christmas Holiday next Thursday, where will be no LEAPS alert on Saturday December 27^th. From all of us here at Bottarelli Research, have a wonderful holiday season!

Sincerely,