In honor of Father’s Day, we’re bringing you seven dad-inspired option trades from our OptionsZone experts who use options trading information for their picks.
From the makers of the top items on dad’s wish list this year to the companies that help him keep the family automobile running smoothly, these trades should make dad and everyone else some dough.
Happy Father’s Day to the dads out there, and good luck trading to all!
#1 Genuine Parts (GPC)
By Sam Collins
Most dads love to tinker with their cars, and Father’s Day is the perfect day to give pop something that will dress up his set of wheels — a gift from Genuine Parts Company (NYSE: GPC)?.?
This leading wholesale distributor of auto replacement parts beat Q1 forecasts by a mile as a result of cost-cutting coupled with better sales. Earnings estimates from several research houses should boost the stock.
S&P recently raised their earnings estimate, stressing a history of stock buybacks and acquisitions, and a strong balance sheet. Their 12-month target is $49. Our trading target is $43 to $44 within 30 days.?
But this is a tough overall market, so with the stock at $40-plus, let’s go longer term with the GPC Nov 40 Calls at $3.25 with a target of $6.50 by October.
#2 Polaris Industries (PII)
By Chris Johnson and Jon Lewis
Dads who like careening through the outdoors know Polaris Industries Inc. (NYSE: PII), which makes off-road vehicles (snowmobiles, ATVs, etc.) and Victory motorcycles.?
The company was recently upgraded based on an improving leisure vehicle market, especially within the ATV segment. The company is also gaining market share and should benefit from recent restructuring efforts, including a partnership with Bobcat.
The stock has been a huge performer this year, ga! ining mo re than 40%. The shares are currently fighting their way back to the $65 level, the site of a five-year high reached in April. Beyond that lies the all-time high just above $70.?
With an improving economy and gaining market share in an industry that craves discretionary spending, look for PII to reach new highs this year. Buy December calls to allow plenty of time for the stock to move higher.
#3 Apple (AAPL)
By Michael Shulman
Apple Inc. (NASDAQ: AAPL) products are on the top of many dad’s wish lists this Father’s Day. The family is getting him an iPad — the kids will steal it for movies, the wifey poo will borrow it to read the Times Literary Supplement, and dad will move all his Kindle books to the new gadget.
And as a present to himself, dad is going to buy the new iPhone. After 114 attempts, Dad finally got a confirmation from Apple and AT&T Inc. (NYSE: T) when he registered for the 4G iPhone on June 15.
Apple is selling an iPad every two seconds, and the 4G phones will be backordered for a long time. Apple is a long-term winner, so look at AAPL LEAPs.
#4 Harley-Davidson (HOG)
By Sam Collins
Many “real American dads” wish for a “real American bike,” and there is only one — it’s gotta be a Harley. Harley-Davidson, Inc. (NYSE: HOG) is the premier maker of “heavyweight” touring, custom and performance motorcycles, and they are built in the US of A.
HOG beat Q1 earnings forecasts by more than 30%, and recent reviews by several research firms have resulted in opinion upgrades. The stock is at around $28, down from over $36 in April, and resting on its 200-day moving average with buy signals from our internal indicators.?
The stock’s trading target is $32, but longer term could reach analysts’ forecasts of $37. This is a tough sto! ck marke t to predict short term, so let’s buy the HOG Nov 26 Calls at $4.50 with a target of $8 by October.
#5 AutoZone (AZO)
By Chris Johnson and Jon Lewis
In our day, an early memory of your father was the carefully choreographed driveway dance, as dear ol’ dad lowered himself under the car to fix the latest rattle, bump or clank that had infected the family automobile. But those times soon disappeared, as we took the car to the mechanic because we were too busy or had something better to do with our time.
But now convenience has been trumped by tighter budgets, meaning that more people are headed to the local AutoZone , Inc. (NYSE: AZO) to buy anything from oil to starters to tailpipes. The result has been strong performance from the auto parts chain, performance that we believe will continue through 2010.?
In addition to positive fundamentals, the shorts have remained bearishly positioned as the stock has climbed. For example, 58% of the analysts covering the stock have it ranked a “hold,” despite the fact that AZO is making new highs in 2010. The bears will shift their position on this stock and pump it higher before its bull run is over.
Look at AZO September calls, which give driveway mechanics all summer to buy AZO products.
#6 Salesforce.com (CRM)
By Michael Shulman
One of the most famous fathers in American literature is Willy Loman — the failed salesman from Death of a Salesman. Many Willy Loman types have been laid off in the past two years, and are still unable to find work.
The No. 1 IT company serving salespeople is Salesforce.com (NYSE: CRM), the maker of a technology platform for customers and developers to build and run business applications, reducing costs for licensees. But the number of licensees depends on the economy and the number of Willy Lomans going back to work.
Consid ering the latest jobs numbers, I’d look at put options on CRM. You should never short a stock based on valuation alone, but at 120 times earnings, this is a stock waiting to blow up once any bad news hits. The price has been sustained in part by rumors of a buyout. That’s not going to happen at this price. When you look at puts, the farther out, the better.#7 Apollo Group (APOL)
By Michael Shulman
For the dads who have been laid off and can’t find work, or those who want to earn more to provide for their families, the answer may be going back to school. The University of Phoenix, which is owned by the Apollo Group, Inc. (NASDAQ: APOL), is the largest private university in the United States.
It’s a great growth business that is being fueled by federal loan money. But that loan money is on the verge of being cut back. With loan default rates around 9%, and a graduation rate of 16%, one of the lowest in the country, APOL will become a target for a budget-cutting Congress and a newly energized Department of Education.
Look at some long-term put options on APOL.
The Secret to Banking Giant Options Gains
CLICK HERE for the money-doubling secret we were banned from sharing, plus two free trades to get you started.
No comments:
Post a Comment