First up is Dow Chemical (DOW) which last week hit a 52-week low. Rumors have started again that Dow is going to be acquired, this time by India’s Reliance Industries, in concert with several private equity firm that might launch a bid in excess of $50 per share. On Thursday when this rumor broke there was heavy trading in the Out of The Money February $40 and $45 calls with these contracts trading 6x and 10x their daily open interest. Heavy option trading as signed potential deals in the past In the 3rd quarter Dow is going to receive $9.5 billion in cash from Kuwait for selling off part of its business to Kuwait. Factor in the current $32 billion market cap and add a 30% premium and you get $47 per share as the buyout price, which ironical is just below its 52-week high. Catalyst: Rumors with heavy option trading could push this name higher

Snapback trade into next week. Oversold

Snapback trade into next-week. Oversold

Next up is CSX Corp (CSX) which reports earnings next week. The rail sector could be one of the best investments for your money over the next 10 years. But let’s see why CSX might explode off its earnings First off, agriculture products along with phosphates and fertilizers are in total bull markets and have been so for the past year. It is logical that if demand is high for such products then the demand for transporting them will be high. CSX is also conducting a huge campaign to return capital to shareholder with a $2 billion stock buyback plan. The railroads, with little capex or competition are likely the way that commodities will make their way from the Midwest to the West Cost en route to China. Down substantially, last quarter 3rd quarter profit rose 24% and beat earnings estimates. Earnings Catalyst: Increased domestic and international demand will help this company beat earnings.

Jacobs Engineering is an earnings and global growth play. The stock traded well last week and was flagged in our 3x2 trader system

Another stock you might want to check out is PetMed Express (PETS) PetMed has had a history of beating earnings estimates and this quarter should be no different. With a $20 million buyback which is just under 10% of its market cap and a 15% short position PetMed has $55 million in cash and zero debt. With a forward PE of 13.92 Wall Street is discounting PetMed’s growth potential. The past two quarters they have solidly beaten analyst’s expectations both on the top and bottom line, thus PETS is due for a snapback. Last quarter income was up 18 cents a share on revenue that shot up 18%. Analysts were looking for 17 cents a share.

Near its 52-week low Tellabs is also an earnings play. Last week we saw heavy call option trading in the $7.50 strike meaning investors are placing a bet that TLAB could move well past that strike price. Although telecom business has been mixed (news from T and VZ have been mixed thus far) Tellabs is poised for an earnings snapback rally. Beaten down analyst estimates should be easily beaten for TLAB

Near its 52-week low Cabot is also an earnings play. The second largest position for SAC Capital Cabot makes carbon, ink-jet, tires and chemical products. Cabot also has a large buyback in place which should support shares at these levels. CBT has a forward PE of 10.88—Again, beaten analyst estimates should be easily beaten