Branding is everything for any profit minded business entity in the 21st century. In fact, the importance of branding goes beyond the world of business as individuals, organizations and even campaign trains shell out a fortune on creating strong brand recognition. It is either you are heavily branded and you are recognized or you take the issue of branding with levity and you fade away into oblivion. In simple terms, your ability to corner and keep a significant market share in your industry is as dependent your brand visibility as it is dependent on the quality of your product or services.
Iconix Brand Group Inc. (NASDAQ:ICON) embodies all there is to do about branding as it runs a brand management company with a market capitalization of a modest $1.71B. The Company is engaged in licensing, marketing and providing trend direction for a portfolio of consumer and entertainment brands.
Why We Are Looking at Iconix Today?
Iconix is in my scope today because I have noticed an impressive momentum that could be advantageous for trading ICON options profitably. As at 2:08PM EDT today, the shares of Iconix are up 1.82% to $36.39 as the stock starts gearing up for a breakout.
The chart above with my annotations shows how the shares of Iconix have traded within the last one year. Shares of Iconix started with gains at the start of the last 52-weeks before the stock began a slow descent. In the last three months, the shares of Iconix have traded sideways to form a rectangle pattern. The rectangle pattern has a $33 support that has held in the last three months while the rectangle has a $36 resistance that has held in the same period.
The most interesting point to note is that the shares of Iconix have broken through that $36 resistance point today as the stock heads up above $36.44. The shares of Iconix are breaking out above that resistance point today and we’ll be watching to see if the breakout will be confirmed in the coming sessions.
Iconix Breakout is Here to Stay
The current $36.44 trading price of Iconix marks a 22.96% discount to its 52-Week high range of $44.81 from which the stock fell in June 2014. However, the shares of Iconix have suffered long enough and it appears that the stock is slowly climbing up to regain its lost glory.
To start with, Iconix trades at P/E of 13.75, which is significantly lower than the industry average of 15.64. More interesting is that the company reported EPS growth of 16.3% in fiscal 2014 and analysts have projected that the company will deliver another impressive result this year. It might interest you to know that analysts have forecasted a growth estimate of 11.5% in the company’s EPS this year. More so, the company’s long-term growth rate has been set at 15% to suggest a bullish outlook in the long term.
I am also drawn to the fact that analysts at Zacks are drawn to the stock as the stock holds a Zacks’s Rank of #2, which is equal to a “Buy” rating.
How to Trade ICON Options
I am optimistic about the prospects of ICON and buying ICON call options seems to be smartest move on the table. I recommend the ICON Aug 2015 35.000 call (ICON150821C00035000) at an asking price of $3.35.
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