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Insider Activity: Wyndham Hotels & Resorts (WH)

Posted: 20 Aug 2019 03:00 AM PDT

CEO and CFO pick up shares of hotel chain.

On Friday, August 15th, Geoffrey Ballotti, President and CEO of Wyndham Hotels & Resorts (WH), picked up 10,000 shares of the hotel chain, paying nearly $503,000 in total to do so. He was joined by David Wyshner, the company CFO, who picked up 2,000 shares, paying just over $100,000.

Both executives are following up on a 10,000 share buy made on August 14th by director Ronald Nelson, who managed to pay just under $500,000 in total as well.

Insiders have previously been sellers at the company at higher prices than where shares currently trade. Wyndham operates hotels under the Super 8, Days Inn, Ramada, La Quinta, and Wyndham brands in approximately 80 counties, with over 9,200 hotels and 817,000 rooms.

Action to take: Shares are down about 13 percent in the past year, and are now valued at under 15 times forward earnings, a fine place to start building a position in shares. While the company's 2.3 percent dividend yield isn't huge, with earnings growing by over 23 percent per year and revenue by 16 percent per year, the hotel chain is well-positioned to capture lower-and-middle market customers.

Speculators may want to look at the February 2020 $55 calls, which can be bought for around $2.50 and could more than double to $7 by expiration if shares go back to their old 52-week high of $62.

 

Unusual Options Activity: Apache Corp (APA)

Posted: 20 Aug 2019 03:00 AM PDT

Bet on drop in natural gas operator in next month.

On Monday, a staggering 33,000 contracts traded on the September 2019 $17.50 put option on Apache Corp (APA). With 31 days to expiration and with shares currently around $20.60, it's a bet that share will drop 15 percent in the past month.

With a prior open interest of 101 contracts, this contract led the day Monday for volume relative to open interest with a 325-fold surge in volume—indicating a high-conviction trade.

Apache Corp is an independent energy company that explores for, develops, and produces natural gas, natural gas liquids, and some crude oil. It has onshore assets in the Permian and Gulf Coast basis, and offshore asset in the Gulf of Mexico, as well as other operations worldwide.

Action to take: With shares cut in half in the past year, another 15 percent may not sound like much—but it is certainly possible in the volatile energy world. As natural gas prices tend to start moving higher in the autumn, this option is well-timed for a possible big score on one last drop in the natural gas space before a seasonal rally higher.

At $0.12 per option, or $12 per contract, it's a bet worth following—just look to take some quick profits, as the option's time premium will drop noticeably by the day with one month left.

 

Jefferies Upgrades Ceridian (CDAY) to Buy

Posted: 20 Aug 2019 03:00 AM PDT

Price target increased on long-term opportunities.

On Monday, Jefferies upgraded Ceridian (CDAY) from a Hold to a Buy. The investment firm also raised the price target on shares to $65 from around $58. Jefferies sees further upside from the company's Dayforce revenues, and more long-term opportunities moving shares higher.

Ceridian already has an average Outperform rating among analysts, but shares rose 3.5 percent on the day following the upgrade.

Ceridian is a human capital management (HCM) software company with business around the globe. Its Dayforce product is a cloud-based HCM platform offering all HR-backend solutions for payroll, benefits, workforce and talent management. The company was founded in 2013 and went public in 2018.

Action to take: With flat earnings and a low profit margin right now, shares trade at a hefty 78 times forward earnings. Shares are pricing in growth that isn't materializing right now, as reflected in a share price that's risen over 48 percent already in the past year.

Investors may want to look at buying a January 2020 $65 call option to bet on a further rally in shares—it's a speculation that may make a quick 20 or 30 percent in the next few months should shares rise higher. But with shares already near a 52-week high, the upside may be limited.

 

Trade and Stimulus Hopes Lead Markets Higher

Posted: 20 Aug 2019 03:00 AM PDT

Markets rally from recent panic.

The stock market rallied for a third day in a row on Monday thanks to favorable news over the weekend. In the United States, a delay on restrictions against Chinese tech firm Huawei provided a bullish note in ongoing trade war fears.

Meanwhile, China provided some more market certainty by unveiling an interest rate reform to reduce borrowing costs (and thus act as a stimulus) for companies there.

Elsewhere, Germany said it would boost its spending by as much as $55 billion in an effort to stimulate the slowing economy of Europe's manufacturing giant.

In addition to these measures, calm returned to the markets as the yield curve steepened following last week's inversion. The steepening yield curve is a vote of confidence by traders, and a sign that some of the biggest trade war fears are off the table—at least for now.

The strong rally in stocks and perception of improved trade led to a drop in gold prices, and a bounce in oil prices.

While some traders still see unresolved trade as a potential lurking issue, most traders are likely to step back and take a wait-and-see approach to the markets, at least until Friday when Federal Reserve chairman Jerome Powell comments on the economy and Fed policy at Jackson Hole, Wyoming, on Friday.

 
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