-=Trader Wizard Ezine - October 3, 2004=-



	Trader Wizard Perspective Daily global capital markets advice "Blog" posted before the NYSE morning bell and throughout the trading day.

	Who is Trader Wizard?

	Trader Wizard's Mission My goal with this Ezine, other than enjoying the challenge of a weekly ‘buy or sell’ recommendation, is to continue the independent investor information, education and facilitation process started with Trader Wizard.

	Articles by Trader Wizard

	Teekay Shipping (Bahamas) Gold Break-Out More China Trading Possibilities Foreign Brokerage Possibilities Two China Opportunities From Russia with Love Glitter of Gold Matter(s) of Ethics India Stocks re-visited Investor Strategy for Brazil

	Security Traders - Writers Guild

	Security Traders - Recommended reading: The Stock Market Jungle Please visit our sponsor.


BUY or SELL Recommendation on 3M
	3M Company (NYSE: MMM) Oct-01 close: $79.69 RECOMMENDATION: SELL Strategy: Buy MMM=MQ January 2005 Puts Strike@85 Last Price October 01 (MMM=MQ Jan-05 close @ $6.20) OneChicago Single Stock Futures (MMM1C): MMM1C Z4 (Dec 04) $79.59 Among general reading, here is material I used to make this decision: EasyStock Interactive charts: Monthly, Weekly, Daily, Hourly, 30-Minute plus Reuters data at Yahoo Finance and the ValueLine study. Also Motley Fool discussion of PEG.

The case for selling (the stock):
	1. Poor 2nd quarter sales were due to a poor global economy, but with much higher fuel costs the economic background has even worsened. There is serious potential for a poor earnings report and guidance. 2. The technical indicators have turned negative against a presently bullish sentiment for the stock. That sentiment is fragile as we saw after the 2nd quarter report was released when the stock fell 5% immediately. 3. The Guru screens are weak: Lynch P/E/Growth is 0%, Fool Growth is 32%, Zweig Growth is 15% and O’Shaughnessey Growth/Value is 25%. 4. Past 5-year growth in sales (~3.5%), in cash flow (~4.5%), in earnings (~3.5%), in dividends (~4.0%), and book value (~3.0%) does not support a PE of 23.1 and a PEG ratio that exceeds 1.6. 5. Antitrust legal action has started and the potential implications are serious.

The case against selling (the stock):
	1. There is enormous support on Wall Street for MMM. It is a defensive, low-beta (~0.52) stock that portfolio managers tend to turn to when the Dow becomes overbought. ValueLine has published a very positive report and of 16 Wall Street analysts, there is exactly zero who rate the stock Underperform or Sell, and their 2004 (consensus) earnings estimates at $3.77 are well above mine at $3.65.

Trader Wizard's expectation for this trade:
	1. The MMM=MQ puts are highly leveraged to the stock price. Within 60 days, I anticipate MMM to re-test its $75 support level and within 120 days, I believe the $72-$73 support level will be tested later, based on a fair value price of 20 times my estimate of 2004 earnings of $3.65 ($73.00). If so, the $6.20 MNZMQ puts would double, for a 100% gain. Beware that the potential risk/reward here is not as impressive as earlier recommendations, and I am not as confident with the recommendation itself.

Trader Wizard Profit & Loss:
	The ‘Trader Wizard buy or sell’ Ezine will soon present a calculation of P&L for individual trades and for all trades (both open and closed) for the prior 12 months.

DISCLAIMER: As TRADER WIZARD earns no revenues, nor profits, from any content, which is provided solely for the purposes of investor education, information & facilitation, we shall not be held responsible for the actions of individuals, parties, or corporations taken in response to the ideas, thoughts, concepts, or information presented in this web site. Anyone who believes otherwise ought to contact Bill Cara and immediately cease reading the TRADER WIZARD content.

Re-sending this ezine to any number of colleagues is encouraged; provided you also cc: Referrals@TraderWizard.com. In return, we will provide recipients with a FREE subscription and ensure that all e-mail lists are kept strictly private. To subscribe click here.
TRADER WIZARD Ezine ©2004