Larry's Swing Idea For Wed. Sept. 8/04:

Nieman Marcus Group, Inc. has been selected as one of my top (long) swing ideas for this week. To reduce your capital outlay and increase your leverage, I recommend buying this Company's call options to maximize short-term profitability. Please read on for more details… 
     

Recommended Option Swing Play:

NIEMAN MARCUS GROUP, INC. (NYSE : NMG.A)
Last Close: $56.29 on 127,100 shares

After-Hours Close: $57.25 +0.98 on 2500 shares

Industry: Services   Sector: Retail Department

Employees: 15,100   Market Cap: 2.8 Billion
Institutional Ownership: 66.0%
Insider Ownership: 8.7%
Shares Issued & Out: 49.3 Million
Company Information: www.niemanmarcusgroup.com

Option Summary:
Option Information:www.optionsxpress.com
Symbol: NMGIK   Type: CALL   Exchange: AMEX
Last Close: $1.70   Strike Price: 55.00 
Strike Month: Sept. 2004
Position: Mid-Way: In-The-Money

Swing Data:
Swing Strategy: Buy Call Options (Bullish)
Trade Targets: Common Stock (4%) / Option (35%+)
Trade Composition: 25% Technicals / 75% Fundamentals
Trade Entry: when common trades above $56.90
Trade Exit: until swing target or stop loss is reached: 1 to 15 trading days max.

Potential Risk/s: bearish market conditions (sector price weakness), unexpected analyst downgrade/s, insider or institutional selling

Option Entry Strategy: Buy NMGIK "IF" NMG.A Trades Above $56.90
-buy call options (Sym:NMGIK) if the underlying common stock (Sym:NMG.A) trades "just above" its 1-day resistance level at $56.78 

Entry Tip: "If" NMG.A gaps upward and above $56.90 at market opening Wed. Sept. 8/04, wait 15 minutes before buying the options. Why? Because profit trading "often" occurs in the first 14 minutes of the trading session on stocks that gap open. I expect the stock to hit new intra-day highs shortly after. Alternatively, if NMG.A opens below $56.90 then simply buy your options "if" NMG.A trades above $56.90.  

Option Exit Strategy: Sell NMGIK "IF" NMG.A Rises 4% To $59.18
-close out or sell all of your call options (Sym:NMGIK) "if" the common shares (Sym:NMG.A) trades up 4% to our assigned swing target of $59.18.

Protective Stop: Place a 2% Mental Stop: Based On Common
As soon as you purchase your options, set your their initial (mental) protective stock 2% below the common's equivalent entry price. If at "any time" the common stock reaches your mental stop price, then sell all of your options immediately, at or near "the market". A "mental stop-loss" is simply a stop-loss price remembered in your head instead of being entered electronically in an online trading system. Also, stops should always be written down and modified (raised/call or lowered/put) frequently.

Stop & Exit Tip: "If" the underlying stock rises, raise your stop and place it about 2% lower than the common's intra-day high price. Then, modify or moved your stop every 45 minutes thereafter, need be. This ensures you will maximize your intra-day profits and minimize potential loss.

Note: The above option swing trading strategy is based on the pricing of the underlying common stock for a reason. Novice option traders often find it difficult to follow volatile option prices, intra-day. Thank-you!

 
Company Summary: The Neiman Marcus Group, Inc. (NYSE: NMG.A) operates specialty retail stores consisting of Neiman Marcus stores, Bergdorf Goodman stores, and clearance centers. Neiman Marcus stores offer women's and men's apparel, fashion accessories, shoes, cosmetics, furs, precious and fashion jewelry, decorative home accessories, fine china, crystal and silver, epicurean gifts, children's apparel, and gift items. The company also has stores operating under the name The Galleries of Neiman Marcus in Cleveland, Ohio and Phoenix, Arizona. As of September 15, 2003, the Company operated 35 Neiman Marcus stores, two Bergdorf Goodman stores, and 14 clearance centers.

Swing Catalyst:  Nieman Beats Guidance (9/7/04)   

Retailer Neiman Marcus Group Inc. stated its quarterly profit tripled, boosted by fewer markdowns as the upscale department store operator focused on controlling expenses in the latest quarter. The Company reported financial results for the fourth quarter and fiscal year 2004 after-hours Tuesday September 7, 2004.

The specialty store retailer handsomely beat both of the street's revenue and earnings forecasts for the quarter and for fiscal 2004 (year-end). In addition, the retailer ended their fourth quarter with $368.4 million in cash, a whopping 78 percent more than in the till last year. Nieman Marcus also hinted about acquisitions or other growth initiatives that could be in the works.

Neiman Marcus earned $21 million, or 42 cents a share in the fourth quarter of 2004. In the same period last year, the Company earned $7 million, or 15 cents a share, on revenue of $703 million. Excluding a charge for the impairment of the Chef's Catalog trade name, the Company earned $23 million, or 47 cents a share, in the latest quarter which was well above the First Call's (mean) guidance for 36 cents a share.

Moreover, an industry trend toward upscale retailers helped Neiman Marcus ring up total sales of $789 million, up from last year's $703 million, with the Neiman Marcus stores higher by 10 percent and Bergdorf Goodman revenue rising by 20 percent. Therefore, Nieman also beat analysts (mean) revenues expectations of $765.9 million for Q4 of '04. At present four wallstreet analysts are covering Nieman Marcus' stock. 

Furthermore, in the twelve months ended July 31, the Company earned $205 million, or $4.19 a share, on revenue of $3.55 billion. In the previous year, it earned $109 million, or $2.29 a share, on revenue of $3.1 billion. Also, because of the positive financial news released after-hours Tueday, NMG.A traded up 1.74% to $57.25 on 2,500 shares. NMG.A ended the after-hours trading session

Larry's Trade Summary: In summary, The Nieman Marcus Group, Inc. (NYSE:NMG.A) announced impressive fourth quarter results after-hours Tues. Sept. 7, 2004 that shattered both analyst's revenue and earnings forecasts. In the fiscal fourth quarter ended July 31, Neiman Marcus earned $21 million, or 42 cents a share, on revenue of $789 million beating both (mean) earnings and revenue guidance by 11 cents or 30% and by 16.8 million or 2.2%, respectively. Impressive top and bottom end results like these will attract day traders in early hours of trading on Wed. Sept. 8/04.

In the twelve months ended July 31, the Company earned $205 million, or $4.19 a share, on revenue of $3.55 billion. In the previous year, it earned $109 million, or $2.29 a share, on revenue of $3.1 billion. Hence, the Company's year over year annual sales and earnings per share growth rate was 14.5% and 83% respectively. The Company is in good financial condition with about US $368.4 million in cash with a present debt to equity ratio less than 0.36. The Company is also aggressively seeking strategic acquisitions to enhance shareholder value. Not to mention the Dallas-based retail chain continues to benefit their bottom line from full-price selling, inventory management and very tight expense controls.

After performing extensive technical and fundamental analysis on Nieman Marcus Group, Inc. I am rating its shares NMG.A a "Short-Term Buy" with a 15-day target on common at $59.18. Investors should expect to initiate their call option positions within the first 20 minutes of the trading on Wed. Sept. 8/04; to acheive optimal results. Also, please follow my trading instructions above. Good Luck!