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Saturday, February 24, 2024

PD – Trade of the Day

Copper just hit a new high and both PCU and Phelps Dodge are just about to cross their all-time highs.

I like PD a little better although the p/e is 7.4 vs PCU’s 6.4. Both stocks have been kept from skyrocketing by economic worries that are quickly evaporating.

The key difference is that, since hitting it’s high of $138.49, PD has been hit by 4 consecutive analyst downgrades:

  • Citigroup 9/6 – Hold to Sell
  • Legg Mason 10/5 – Buy to Hold
  • Morgan Stanley 10/6 – Overweight to Equal-Weight
  • Friedman Billings 10/19 – Outperform to Market Perform

I want to give a big Baaaah! to the sheep at Friedman who hit their call right at the bottom, talking their followers out of 15% in 30 days!

Anyway, the company is excellent with great fundamentals and money is pouring into this small sector. Phelps has underperformed PCU by 1/2 over the last 18 weeks and over the past 5 years – BUT – in the past year and 3 years, PD has outperformed PCU by 50% and 10% respectively.

That indicates to me that PD has momentum over PCU although it still lags far behind in appreciation.

The main reason this stock is the trade of the day though is that today is the first day of options expiration week and we can do some bargain hunting.

As of Friday’s close, there is virtually no premium on the November 130 calls. Any time you can rent a $130 stock for a .65 premium for a week, take it!

For those of you who like actual stock, there is a $5 dividend being paid in December (must own on 11/16) and another $10 promised for next year.

There is strong put action on this stock so maybe someone knows something I don’t or maybe we have another opportunity to be the wolf when the sheep are all heading our way!

Remember, making 10% on a quick trade is excellent – do not be greedy!!!

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