Northrop Grumman designs, develops and manufactures aircraft and aircraft subassemblies and electronic systems for military use. NOC also designs, develops, operates and supports computer systems for scientific and management information. For the 9 months ended 9/30/00, net sales fell1% to $5.39B. Net income before disc. ops. & acctg. change rose 44% to $481M. Results reflect lower B-2 revenues, offset by increased operating efficiencies.

January 16, 2000

Northrop Grumman designs, develops and manufactures aircraft and electronic systems for military use. NOC also designs, develops, operates and supports computer systems for scientific and management information. Today, we welcome NOC to our split candidates list because since March 2000, the stock has more than doubled in price and trades near its 52-week high of $93.88. What’s more, NOC has 71.8 million shares outstanding and 200 million shares authorized. Since NOC recently just obligated itself for $5.1 billion in debt to buy rival Litton Industries, perhaps it would be a good time to split the stock and attract more individual and mutual fund interest. Moreover, the company has a good track record for beating earnings, as it has done so for the past five consecutive quarters. This will be a short-term play for us because earnings are scheduled for January 24. Currently, NOC has support at the 5-dma at $86.22 and at recent consolidation at $84.00. On the upside, resistance will likely be met at $88.00 and $90.00, two previous levels where NOC has been stopped. NOC is more than able to exhibit breakouts on volume exceeding 1 million shares; this is the kind of movement to look for when considering a new play. We will exit this play by this time next week unless our stop at $83.50 is triggered sooner.

Picked on January 16th at $87.31
Change since picked 0.00
Stop Loss at $83.50

January 18, 2001

Northrop Grumman designs, develops and manufactures aircraft and aircraft subassemblies and electronic systems for military use. The company also designs, develops, operates and supports computer systems for scientific and management information. NOC is now only four trading days away from announcing its fourth-quarter earnings. Ahead of that date, which could also bring a stock split, we are looking for a pop in the stock price. NOC has beat earnings the past five quarters and currently has enough authorized shares to split its stock. Intra day on Thursday, the stock dipped as low at $84.63 where it met with support at the 10-dma. This level of support proved sufficient to keep the stock from falling any further. Additional support can be found at the 100-dma at $83.04. Resistance is just above at the 5-dma at $86.90 and then up at $88.00, where the stock has struggled in the past. If you have your eye on NOC for a new play opportunity, you might consider another bounce off the 10-dma as a possible entry point or a move through resistance on volume over 600,000 by midday. We will exit this play no later than our report next Tuesday, if not sooner. The stock is now dangerously close to our stop at $83.50, so we'll need to see a move higher soon or we could be stopped out.

Picked on January 16th @ $87.31
Change since picked -2.13
Stop Loss at $83.50