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Insider Activity: Granite Construction (GVA)

Posted: 22 Aug 2019 03:00 AM PDT

President and CEO, CFO buying shares this month.

On Tuesday, August 20th, James Roberts, President and CEO of Granite Construction (GVA), picked up 2,000 shares of the company, paying nearly $56,000 to do so. The increase in shares leaves him with just over 210,000 shares of the company.

This is his second buy of the year, having picked up 3,000 shares on August 15th. The company's CFO bought over 2,500 shares on August 12th and August 14th. A director also picked up 5,000 shares on August 7th.

Before these recent buys, insiders at the company were sellers on average back in late 2017, at a far higher price for shares. Clearly, insiders are starting to see value in yet another oversold, beaten down company.

Granite Construction is an infrastructure contractor and construction materials producer in the United States, with a focus on transportation, water, and materials segments.

Action to take: Although the company has had a loss in recent quarters, the shares are down over 37 percent in the past year and look ripe for a rebound. Infrastructure spending tends to be a recession-resistant (but not completely immune) segment of the economy. The company's balance sheet is relatively strong, with almost as much cash as debt right now.

Investors could look at shares up to $30, where they'll be getting a 1.8 percent dividend yield. Speculators expecting a bounce could look at the March 2020 $35 call options, which trade for around $1.25, or $125 per contract—but the options market on this company is thin.

 

Benchmark Gives Nvidia a Buy Rating

Posted: 22 Aug 2019 03:00 AM PDT

Investment firm cites company's unique position.

On Wednesday, a bullish report by Benchmark analyst Ruben Roy cited Nvidia (NVDA) as a company uniquely positioned to grow at a faster rate than its peers in the graphics processing space. The report cites the "increasing use of GPUs across a diverse set of growth markets."

The buy rating on the company sets a price target of $210 on shares, a 21 percent increase over the current price of $173.

Nvidia is an industry leader in graphics processing units—GPUs. The firm has largely been known for creating GPUs for gaming. However, new applications for high-end, next generation processing for technologies such as self-driving cars and cryptocurrency mining will offer the company a number of growth opportunities in the future, including ones that are off the market right now.

Action to take: We like Nvidia's positioning as well—having previously recommended a call option ahead of earnings last week that has already done well.

We see further upside in shares, and, over time, Nvidia can continue to move substantially higher as technologies requiring GPUs. This is a company worth owning for the long haul, particularly if the company is, in the word of Benchmark, in the "early innings" of future growth.

 

Existing Home Sales Rise Year-Over-Year for First Time in 16 Months

Posted: 22 Aug 2019 03:00 AM PDT

Rebound indicates some life in the real estate market.

On Wednesday, existing home sale data for July rebounded by 2.5 percent, more than offsetting the 1.7 percent slide in June. The number hit expectations exactly. Sales have now risen to a five-month high, and existing home sales show the first year-over-year rise in 16 months.

This data also correlates with the sale of new homes, which have also trended upwards in July, as well as pending-home sales, all showing some strength in the real estate market.

Thanks to the rise, existing home sales have now increased 0.6 percent on a year-over-year basis. Median sales prices also increased 4.3 percent over the past year, to $280,800.

The rise in home sales indicates strength in the job market, as well as the impact of low interest rates, which in turn make mortgages more affordable.

The west saw the biggest rebound in home sales, with an 8.3 percent increase.

Action to take: If your mortgage has an interest rate over 5 percent, this would be a great time to call back any of the lenders reaching out to you and to find a lower rate. The rule of thumb is that any mortgage rate 1 percent or more lower than your current rate will pay for itself within the first year. The rise in home prices may also allow you to take out some equity while lowering your overall payment.

 

Unusual Options Activity: ExxonMobil (XOM)

Posted: 22 Aug 2019 03:00 AM PDT

Surge in September put buying.

On Wednesday, over 5,000 contracts traded on the September 2019 $69.50 put options on ExxonMobil (XOM). With a prior open interest of 260, this was a 19-fold surge in volume.

With a current share price at $70, the options are just out-of-the-money. The option buyer could see a penny-for-penny move should the shares fall less than 1 percent from here.

ExxonMobil shares have traded as low as $64.50 in the past year, so a drop to those lows within the next month could make the option worth as much as $5, about a 270 percent gain from its current price around $1.35 (or $135 per contract).

However, that would require a considerable drop, even beyond the drops in oil prices that have occurred lately on trade war fears. Such drops in the oil market are common, but usually take place later in the year, not in September.

Action to take: At current prices, and with a dividend yield just at 5 percent, shares of ExxonMobil would be a good buy for the long haul here.

Anyone interested in building a position could consider selling the September $69.50 puts instead of buying them. If shares are higher than $69.50 in the next month, they'll make about $135, or gas money. If shares are under, they'll be assigned shares at $69.50 but also with $135 on the trade already.

 
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