Can Siemens Move Higher?

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With shares of Siemens (NYSE:SI) trading around $130, is SI an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework.

T = Trends for a Stock’s Movement

Siemens is an integrated technology company with activities in the fields of industry, energy, and health care. Siemens operates in six segments: industry, energy, health care, equity investments, Siemens IT solutions and services, and Siemens financial services. The company has equity investments in telecommunications infrastructure and household appliance companies as well as in a company that provides open communications, network, and security solutions.

Siemens is launching a new $100 million fund to back early stage startups working in the areas of industrial automation and other digital technologies that can transform manufacturing. This comes after Siemens made two notable startup investments over past few months — in 3-D visualization startup Lagoa and CounterTack, the developer of next-generation cyber security software.

Corporate venture capital has traditionally been considered “dumb money,” but as one TechCrunch report noted in November, some of them are increasingly looking more like traditional VCs. Indeed, in October, 48 venture funding rounds valued at more than $719 million included CVC investor participation. This represented a 14 percent participation rate, the highest month in the CrunchBase dataset.

T = Technicals on the Stock Chart Are Mixed

Siemens stock has struggled to make significant progress in recent years. The stock is currently surging higher and looks poised to continue. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Siemens is trading between its rising key averages, which signals neutral price action in the near-term.

SI

Source: Thinkorswim

Taking a look at the implied volatility (red) and implied volatility skew levels of Siemens options may help determine if investors are bullish, neutral, or bearish.

Implied Volatility (IV)

30-Day IV Percentile

90-Day IV Percentile

Siemens options

21.94%

33%

30%

What does this mean? This means that investors or traders are buying a minimal amount of call and put options contracts as compared to the last 30 and 90 trading days.

Put IV Skew

Call IV Skew

March Options

Average

Average

April Options

Average

Average

As of Monday, there is average demand from call and put buyers or sellers, all neutral over the next two months. To summarize, investors are buying a minimal amount of call and put option contracts and are leaning neutral over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.

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