TradingTips.com

TradingTips.com

Unusual Options Activity: Wheaton Precious Metals (WPM)

Posted: 22 Oct 2019 03:00 AM PDT

Bet on decline in shares over next few months.

Over 7,500 contracts traded on the January 2020 $26 put options on Wheaton Precious Metals (WPM). Against the prior open interest of 190, it's a 40-fold surge in volume.

With shares of the stock currently trading around $26.50, the option trades close to in-the-money, and could start moving penny-for-penny with shares should they decline in the coming days. For the trader to make money on the options, which cost around $1.40, shares would need to fall to $24.60.

Wheaton Precious Metals operates silver and gold ore mines, with agreements for 19 operating mines and 9 in development. Shares have rallied 54 percent in the past year as silver prices have surged.

Action to take: Although precious metals have done well so far this year, their prices are likely to take a breather as new economic data is digested.

The put options look like an interesting trade, and anyone bullish on precious metals may want to buy this option to hedge their other metals holdings, given the uncertainties there. Investors should avoid shorting shares directly in this space, as the precious metal companies are prone to large jumps that could force an investor out of their position before it becomes profitable.

Shares of the company are likely to move with the price of precious metals, so investors interested in going long shares should wait for a lower price, of perhaps $20 or under.

Insider Activity: Emmaus Life Sciences (EMMA)

Posted: 22 Oct 2019 03:00 AM PDT

Vice Chairman adds to holdings.

Willis Lee, Vice Chairman and COO at Emmaus Life Sciences (EMMA), recently bought 7,890 shares, increasing his total stake by nearly 3 percent to 282,000 shares. The buy cost just under $21,000.

This follows up on an 11,000 share buy he made last week, and the company's Chairman and CEO has been active in the past months as well. Overall, insiders have been only buyers in the past three years, with a recent uptick in buying as shares have dropped.

Emmaus Life Sciences is a biotech company engaging in the discovery, development, and commercialization of treatments for rare and orphan diseases. Shares have dropped 66 percent in the past year.

Action to take: The fears in the biotech space in the past year have created a buying opportunity in shares. Although the company is currently operating at a loss, it does have several products up and running, and is likely to bring more to market in time. With more cash than debt on the balance sheet, Emmaus has the financial strength it needs to power through, and today's shareholders will likely be rewarded in time with steep capital appreciation.

The company has no options available for speculators to trade, however, with shares under $2.75, they're priced lower than many options and, unlike options, carry no strike date on which they expire.

  • The Stock of the Century — Buy This Stock RIGHT NOW!

    What if you could buy one tiny stock today for $10 — at the center of a growing tech industry — that experts believe will explode a massive 77,400%?
    Wall Street legend Paul Mampilly recently identified this as the stock of the century.
    Buying up a handful of shares of this small company now could change your life and even make you millions. Click here now.

Two Stocks Trouncing This Earnings Season You Should Buy Now

Posted: 22 Oct 2019 03:00 AM PDT

The market is undervaluing these companies following their earnings beat.

Nearly 25 percent of the companies in the S&P 500 will report earnings this week. But many companies have already reported—and so far, this earnings season has been great.

For all the fears of an economic slowdown, for all the fears of a trade war—most companies are just doing what they do best, offering products and services that remain in demand. It's no surprise that most companies can beat expectations when fear has driven those expectations down.

Of the companies that have already beaten earnings this quarter, we've found two worth buying now… and a third that reports at the end of the month. These are three companies that, despite having beat on earnings and expectations, are still a bit out of favor with the market. That's where the value is, so it's exactly where we want to be as investors.

Company #1: Schlumberger (SLB)

A giant in the world of oil and natural gas drilling and production equipment, Schlumberger (SLB) shares have slumped in the past year, down 43 percent compared to an 8 percent rally in the S&P 500 index.

That's in spite of the company either meeting or beating its earnings expectations in the past year, including a three-cent beat in the third quarter. With shares trading at 19 times forward earnings, they're not the cheapest stock out there, but this industry-leading giant will continue to profit whether oil prices go higher or lower.

With the large number of companies in the oil and natural gas space so leveraged that they need to produce at any cost or go under, Schlumberger is set up to profit from the industry no matter what happens.

Thanks to the drop in share price, the company's $2 annual dividend works out to a 6.5 percent yield right now. While that could end up getting cut on a big drop in earnings, the company's double-digit earnings growth, in spite of the challenging market for oil, shows that whether there's a boom or bust in the commodity space, the companies that supply and service that space end up making the most consistent profits.

Shares of Schlumberger are a buy up to $35.00.

Company #2: Genuine Parts Company (GPC)

An international distributor of automotive equipment, parts, and materials, a company like Genuine Parts Company (GPC) should really be slumping if the trade war is as bad as news headlines make it out to be. A slowing economy tends to hit the auto industry hard.

But it isn't.

This is another company that's done fine on earnings, beating expectations by 3 cents per share in the third quarter. Even when the company has missed expectations in the past year, it's made money. Shares of Genuine Parts Company have traded flat in the past year, and trade at 17 times forward earnings—a bit of a discount to the market, but still about 15 percent below the company's old 52-week high.

With a recent bump in the dividend from $3.01 to $3.05, shares now yield just over 3 percent. The company is a great bet on global trade remaining robust, new trade impediments or not. Shares are a buy up to $105.00.

Bonus Company #3 Likely to Beat Earnings: Altria Group (MO)

The tobacco companies have gotten plenty of market attention in the past year. With a long-term decline in tobacco use, many have seen the companies as a dead-end investment until they start aggressively investing in the faster-growing marijuana space, or with more vaping products. Yet companies that have done so have faced significant challenges this year as tainted vaping products have led to a number of health concerns and even a few deaths.

Enter Altria Group (MO). The tobacco firm, which owns the top-selling brands in the United States, has had significant challenges related to the stake it purchased last year in e-cigarette manufacturer Juul. That's led to a 27 percent slump in shares in the past year, which has pushed the company's dividend up to 7.7 percent.

Shares of the company missed in the last two quarters as a result, and while the company won't report earnings until October 31st, the selloff has been overdone and shares are already starting to trend up.

Other competitors in the space like Philip Morris International have already reported earnings and surprised to the upside. Investors who buy Altria now should benefit from this trend—and an earnings beat now would likely send shares up immediately. Consider buying now, while they're still under $47.50.

  • The Stock of the Century — Buy This Stock RIGHT NOW!

    What if you could buy one tiny stock today for $10 — at the center of a growing tech industry — that experts believe will explode a massive 77,400%?
    Wall Street legend Paul Mampilly recently identified this as the stock of the century.
    Buying up a handful of shares of this small company now could change your life and even make you millions. Click here now.
Posted by: at

No comments:

Post a Comment

Subscribe to: Post Comments (Atom)