Alliant Techsystems (NYSE:ATK) — We added this stock to our list of short-sale candidates on April 19, 2011, at $79, and it has underperformed the market ever since.
This company is still the largest supplier of ammunition to the Pentagon and is also a significant supplier to NASA. Along with the cutback of government funds to NASA, ATK’s sales to the Department of Defense are estimated to decline 5% this year and 6% next year.
Earnings per share for FY 2012 were $7.93, down from $9.32, and analysts recently revised FY 2013 estimates lower to $6.44. The company will announce Q1 2013 financial results before the opening on Thursday, Aug. 9.
On July 12, I said, “Note the recent sell signal from the stochastic and the clearly defined bear channel. Sell ATK at the market or short the stock with a minimum downside target of $43.”
The low on July 24 was $43.08. Since then, a rally within the bear channel has popped it back to its 50-day moving at $47.52.
Sell ATK short at $47.50 or higher with a trading target of $41. But remember to protect all shorts with a stop-loss order and check with your broker for any special requirements. Short-selling is a speculative technique that carries more risk than long investments.
