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- Insider Activity: Cleveland-Cliffs (CLF)
- Unusual Options Activity: Home Depot (HD)
- Job Growth Slows, but Wages Start to Rise
- NY Attorney General Launches Probe Into Facebook
| Insider Activity: Cleveland-Cliffs (CLF) Posted: 09 Sep 2019 03:00 AM PDT
Multiple insider buys over past few weeks. Multiple insiders have been buying shares of Cleveland-Cliffs (CLF) in the past few weeks. Directors John Baldwin, Eric Rychel, Ann Harlan and Robert Fisher have been buyers, as well as CFO Keith Koci. Overall, since the start of August, insiders have picked up over 60,000 shares, paying close to $8 per share on average, with the total coming out to over half a million dollars in insider buys. With the company's share price around $7.50, traders have a chance to buy in at a discount to the average recent insider buy. Cleveland-Cliffs is an iron ore mining company that operates internationally by selling its ore to integrated steel companies and producers. Action to take: With shares trading at just 2 times earnings—and 5 times forward earnings, they're cheap. And with a 3.2 percent dividend yield, investors could do well buying here and taking advantage of the company's 28 percent share drop in the past year. Given the struggling sector the company operates in, speculators may want to sit this one out, but traders could boost their returns by buying around $7.50 and selling $8 call options against their position to improve their returns. The January $8 calls go for about $0.75, or 10 percent of a $7.50 cost basis.
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| Unusual Options Activity: Home Depot (HD) Posted: 09 Sep 2019 03:00 AM PDT
Volume soars on late September calls. The September 20th $245 call options on Home Depot (HD) saw nearly 8,900 contracts trade against an open interest of 123. That's a 72-fold surge in volume that the company's shares, trading around $230, can rise another $15 in the next 11 days. With a cost of just $0.14, or $14 per contract, any move higher could move the option higher on a percentage basis. Given the 52-week range of shares, another 6.5 percent rally in shares seems over-optimistic. Home Depot is a retailer with a focus on hardware, tools, and other home products, with thousands of locations worldwide. Action to take: Home Depot is a fantastic company, but shares are looking fairly valued here around 23 times earnings. The company next reports earnings in October, and should likely continue to do well given hurricane season prep and the strong, but slowing, real estate market in the United States. Speculators should look at a January 2020 call option with a $245 strike instead. While it will cost more, shares are more likely to move higher after earnings in October. Investors should look at buying shares on a market pullback. At current prices, a drop under $210 could be likely in the next sizeable market pullback, which would represent a better starting point for building a long-term holding in the company.
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| Job Growth Slows, but Wages Start to Rise Posted: 09 Sep 2019 03:00 AM PDT
August jobs growth fails to meet expectations. Job growth is slowing in America, based on the latest data for August from the Bureau of Economic Statistics. 130,000 jobs were created in America, below the 160,000 consensus. Not only that, job growth for 2019 has averaged 158,000 jobs per month, against a gain of 223,000 jobs per month on average in 2018. One bright spot, however, has been that wages have started to rise, with a 0.4 percent monthly increase and a 3.2 percent year-over-year increase. With unemployment still near record lows of 3.7 percent, wage growth is a sign that employers are acting competitively for workers, bidding up the price of labor in the process. The labor force participation rate, another measure of overall employment in the economy, also creeped up to 63.2 percent, an increase from 62.7 percent a year ago. Leading sectors showing job growth included health care and financial activities, as well as a boost in temporary government jobs ahead of the 2020 census. The mining sector showed the largest drop in jobs. The jobs data was strong enough to send markets higher on Friday, and took some pressure off of Treasury yields. However, the data still gives investors caution, and the likelihood of more interest rate cuts by the Federal Reserve to stimulate the economy following their first cut in 11 years in July is likely.
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| NY Attorney General Launches Probe Into Facebook Posted: 09 Sep 2019 03:00 AM PDT
Seven other states and District of Columbia join the probe. A multistate investigation of Facebook (FB) for possible antitrust violations was announced, led by New York State Attorney General Letitia James. The probe will focus "on Facebook's dominance in the industry and the potential anticompetitive conduct stemming from that dominance." Facebook shares fell nearly 2 percent on the day. The probe is separate from the antitrust concerns and investigation currently underway by the Federal Trade Commission, which recently accepted a $5 billion settlement from Facebook over privacy policies. State attorneys general in Colorado, Florida, Iowa, Nebraska, North Carolina, Ohio, Tennessee, and the District of Columbia are joining New York State in the probe. Action to take: Shares of Facebook rose more than the value of the $5 billion fine from the FTC following their announcement, as there had been fear of a bigger fine. The company has done well year-to-date, and while dominating the industry, there are still other competitors that force the company to continue innovating in the social media space. Overall, we see shares as a buy under $190 for the long haul. Fears of a large settlement with various state governments will likely keep a lid on prices for the foreseeable future, so speculators may want to trade the other social media names instead.
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