Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Click here to see some testimonials from our members!

Monday Market Movement

There were no lines outside Best Buy early on Black Friday in Sacramento, Calif., but this year many customers waited outside to pick up online orders.Good morning!  

There's some issue with our site certificate, which is supposed to be valid THROUGH 11/30 but I'm getting an error message this morning so I'm sorry if some of you are having trouble accessing (Edge lets you bypass the issue, Chrome does not).  I hope everyone had a great Thanksgiving.  We've already pulled back a lot of our trades for the holidays as we expect a dip between now and January and we've had a great year so why risk it?  It is making it hard for met to find a good Trade of the Year, though – and I have the pressure of having to announce it next week on Money Talk (Weds, 7 pm).  

Black Friday at the Arden Fair Mall in Sacramento.As you can see from the image above and this one here, Black Friday was a bust for in-store Retailers but a boom for on-line though I very much doubt it's possible that on-line sales made up for retail as on-line has been only 10% of all sales so, of in-store was down 20%, on-line would have to be up 200% to make up for it and that's just not at all likely.

Today is, of course, Cyber Monday but that's kind of out the window too with everyone working at home all the time.  Hope springs eternal in the Retail Sector but, as we predicted, Christmas is officially cancelled as Dr. Fauci said yesterday that "restrictions and travel advisories will be necessary for the Christmas holiday season."

In fact, Cyber Monday sales are only projected to grow 15-35% this year and that will never be enough to cover the drop in Retail and the indexes are reflecting that this morning with a bit of weakness that is not surprisign any of our Members, who had a nice relaxing weekend with their CASH!!!  Up 35% would push Cyber Monday sales to $12.7Bn, out of $6,000,000,000,0000 in Retail Spending, that's 0.2% 

Real-time shopping data from both RetailNext and Sensormatic Solutions showed in-store traffic plunged by roughly 50% compared to last year's Black Friday.  In-store traffic on Black Friday was already on the decline. Per Sensormatic Solutions, foot traffic fell over 6% in 2019 from the prior year. In 2018, in-store shopping fell by 1.7% compared to 2017.

It's going to be a busy data week with Chicago PMI and the Dallas Fed this morning.  Powell speaks to Congress tomorrow and Wednesday buffered by 8 other Fed speeches this week and tomorrow we have PMI, ISM and Construction Spending followed on Wednesday with Vehicle Sales, ADP and the Beige Book.  Thursday we have PMI & ISM and Friday it's the Non-Farm Payroll Report along with Factory Orders. 

After that, we can all lock ourselves down until New Year but then, unless a miracle happens, President Biden will probably lock us down again in Q1.  What on Earth is there to be bullish about?

Of course the virus will be cured but that only gets us back to a NORMAL economy and this market is priced for Super-Normal, at least.  If a guy who runs a 4-minute mile gets sick and is barely kept alive – when he gets better you don't predict he'll leap off the hospital bed and run a 3-minute mile, do you?  Well, that's how they are pricing this market – as if we're going to fully recover in 30 days and fly into 2021 at a mile a minute.  

It it a bird, is it a plane?  No, it's bullshit….

 


Do you know someone who would benefit from this information? We can send your friend a strictly confidential, one-time email telling them about this information. Your privacy and your friend's privacy is your business... no spam! Click here and tell a friend!



Comments (reverse order)


    You must be logged in to make a comment.
    You can sign up for a membership or log in

    Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

    Click here to see some testimonials from our members!


  1. Phil / Solar - 

    Solar Industry Update….   Top companies in the Solar space based on my analysis are as follows.  The Financially most stable companies are ENPH, SEDG, FSLR…  These are followed SPWR and RUN – note I focused my analysis on businesses that should be able to gain from the global market ( Solar – home / Business / Commercial ).   Nominal growth for industry at 15% out to 2025 and beyond.  Catalyst supported by China Carbon Neutral Targets – CO2 peak by 2030 and neutral by 2060, US current target to reach 28% reduction ( 2005 levels) by 2025 – which should become more aggressive once Biden steps in. CA ( 40% reduction ( of 1990 levels) by 2030, also all new homes must have solar system installed starting in 2020…. Currently 6.6% do.  In EU ( based on 1990 levels) 40% domestic reduction in CO2 by 2030.


  2. Phil / SEDG – Would like your thoughts on this analysis and price targets….  thanks.

    SEDG has the most technology / IP behind it with over 179 patents awarded an over 60 pending. These provide it with limited / narrow moat They have low debt and good cash flow which should allow the to continue to invest in technology.  They are moving forward more into the install space through deals w/ installers to grow revenue, as well as market directly to end customers.   

     

    ROCE at AT 18% ISH for the last 3 years, and as it expand more into installation and partnerships this should stay above 16 to 17 going forward.   

    GM at 34 to 36 %

    Operating Mgn at 16 to 18 %,

    Net MGN at 12 to 15%

    Current and Quick Ratio at 4.5 and 1.7 with no Long Term Debt.  

     

    My projections below:

     

    Revenue From ’20 to ’23 1.5B , 1.9B, 2.2B, (2.6B to  2.8B)

    EPS From ’20 to ’23 …. 4 , 5.2, 6.5 , 8.5

    Multiple at 25 to 30 

    Price target of 240 to 290 target in 2023 appx  




  3. Good Morning.





  4. Moderna Covid vaccine has 94% efficacy, final results confirm



  5. Good morning!  

    I hope everyone had a nice holiday weekend.  

    SEDG/Batman – They are very nice but they were $36 last year and now $280.  That's like me saying we should look into this Amazon thing, I think on-line retail will be big. 

     

    As I said:   2020/11/15 at 10:25 am

    Power Management has big profits because no one has bothered in the space yet  and I'm a long-term investor – I don't buy things that are going to be hot for a while but that doesn't mean you can't – so there's nothing wrong with ENPH or SEDG if you are playing them for the short run but, at 90 and 66x earnings – I don't consider them a long-term investment until they correct and give us a better entry.

    I think SEDG is better as it's 1/3 cheaper and they will jockey back and forth with ENPH over market share and such but I like their GOOGL partnership, which focuses on EV charging, which makes sense to me as a major growth segment with 200M cars in the US that will go solar over the next 20 years (there's only 100M homes).

    Submitted on 2017/03/27 at 5:52 am

    SEDG/Pstas – They had such a good pop on earnings and then it faded away as oil got cheaper so that's what it's all about.  You may as well just go long oil for a short-term bet but, long-term, these guys are worth a toss.  You can sell 2019 $10 puts for about $2 and that's free money and then you can speculate a bit with the $12 ($5)/17 ($2.50) bull call spread at $2.50 for a net 0.50 per $5 entry.  

    Submitted on 2017/05/10 at 11:34 am

    SEDG/Albo – They look good, nice sales growth and actual profits.  Too bad that's poison in this market.  We made a big profit in PSW Investments last Q and now I have to find some way to lose money or our IPO will tank!  Meanwhile, SEDG is a good niche player but I'm not sure how big the niche is, so I'd play them to be flat.  Looks like you can sell 2019 $17 puts for $4 so that's a nice net $13 entry.  I'd start there and see how next Q looks before getting more aggressive. 

    Submitted on 2019/10/28 at 1:31 pm

    SEDG/Music – Nice entry.  Now the question is, simply, what's it worth now, so let's say $42/34 on the spread is net $8 and you are deep in the money so a very strong chance, say 85-90% that you'll get the full $10, which is 25% more in a year with a high degree of certainty.  The question is, do you have anything BETTER than that to do with your money for the next year?

    Let's say you flip to SPWR and pick up the 2021 $7 ($3.85)/10 ($2.50) bull call spread for $1.35.  That makes $1.65 at $10 so, if you had 10 of the SEDG spreads at $8,000, you could cash those and buy 20 of the SPWR 2021 $7/10 bull call spreads for $1.35 ($2,700) and stand to make $3,300 if all goes well and you have $5,300 in your pocket for other things.

    So, the payoff is clearly better and the capital risk is clearly lower but then you have to decide how CONFIDENT you are in SPWR making $10 vs SEDG holding $70?  I like SPWR and have been waiting to call a bottom and this is just an example but that's how you need to think about these trades if you are getting out early.  Rule of thumb is:  If you have a bird in the hand – don't trade it unless there's at least 2 in the bush!  

    Submitted on 2020/08/05 at 12:11 pm

    SEDG/Wing – Well I'm not one for following TMF but, SEDG is a 50% grower that's actually dropping $150M to the bottom line (maybe not this year) so they are a good play on this space but $206 is over $10Bn so you're paying 60x on revenues that will be off so maybe 100x so I would not chase it – I'd just watch it and catch them when/if they disappoint the MoMo crowd – like they did in March and dropped 50% in 30 days.. 

    That's when I like to buy a stock – BEFORE it jumps up 10x.  I just don't find them as interesting once they are priced at 100x because they become faddish.  


  6. Hi Phil,

    I have got GILD Jan22Call 62.5/72.5 for 8.21/4.65 or 3.56, currently 5.67/2.82 or 2.85 

    should i roll it lower to 57.5 for 2 if possible?

    Thx!


  7. Phil / CHL. I've read there is a push for US listed Chinese companies to allow more auditing or face delisting. We know the Chinese government will push back. What's your view of the risk?  I'm building a position in CHL but taking a pause for now


  8. Hi Phil

    Also have WORK Jan22Call 20/40 for 16.65/8.04 or 8.61 currently 22.6/6.85 or 15.75

    Since this CRM takeover should I do something? Thx

    Sources tell CNBC's David Faber that Salesforce's (NYSE:CRM)acquisition of Slack (NYSE:WORK) is expected to be announced tomorrow after the bell, which is when Salesforce will report earnings results.

    The source says the deal will be half cash, half stock and value Slack at a premium to its current price.

     


  9. Phil / FSLR … Can you please  take a look at this see if my analysis makes sense?

     Has the most concrete financials of any company in the solar panel development and stall and management space ( with competitors such as SPWR, RUN, GMAX.)  They have long term debt of 400M which is extremely low in the industry with most having 2Bn to 5B+ of debt.  In addition it took a major write down over the last 1+ year to cancel it’s planned move to gen 5 and move directly to Gen 6 which it felt provide it a greater technical capability, and well and lower costs.   

     

    ROCE at AT 5% ISH for the last 3 years, and as it expand more into installation and partnerships this should stay above 10 to 12 going forward.   

    GM at 18 to 26%

    Operating Mgn at 12 to 15 %,

    Net MGN at 11 to 15%

    Current and Quick Ratio at 3.8 and 2.4  with 400M Long Term Debt.  Has 1.56B Cash on hand or $15 / Sh of cash on hand

     

    My projections below:

     

    Revenue From ’20 to ’23 3.0B , 3.7B, 4.2B, 5B

    EPS From ’20 to ’23 …. 4 , 4.8, 5.6 , (6.0 to 6.5)

     

    Multiple at 17 to 21 

    Price target of 100 to 136 target in 2023  

     

    Risks – Change in tariff strategy that is currently taxing panels out of China, renewal of current solar tax incentives in US and to a lesser extent EU.   


  10. Over the next 4 years, what about TAN – Largest solar ETF with options to 2023


  11. SEDG  June $300 calls traded for over $1M

    FSLR  600 Jan2022  $105 calls bought for $15+


  12. stockbern,

    FLSR why would you buy a leap calls OTM with a delta of .52, as it would be more understandable buying a call ITM more with a delta of .70, especially you want to start a poor man's trade????


  13. yodi, of course not a trade for me, but I was highlighting a large trade someone just did this morning ($900,000) because FSLR was mentioned in chat today. 


  14. stockbern well you got me for a moment. Must be a bit of a gamble. 


  15. Hi Yodi,

    Do you regularly sell puts/calls against your large positions such as dividend positions?  Specifically positions you have built up over time and don't really want to add/remove to the position?  I'm curious as I'd like to sell against my higher yield positions like T but would hate to have them taken from me for a low premium short call.


  16. Really my question is open to anyone else too.  You see a lot of SA articles espousing increasing their yield selling options but they never talk much about getting called away.  Curious to hear what folks on the board think.


  17. GILD/Youri – 2022 is a long time.  The $72.50 calls at $2.82 are a bit much so I'd hate to buy them back so I'd roll the 2022 $62.50 calls ($5.45) to the 2023 $55 calls at $11 and sell the 2023 $70 calls for $5.75 so you have a net 0.20 credit on the roll and then you are in a $15 spread at a $7.50 lower strike.  You can then put a stop on 1/2 the short calls at $4 to stay out of trouble.  

    CHL/Jeddah – I don't think the largest company in China is going to have a problem passing a US audit.  Maybe that will be a huge advantage as other Chinese companies do get delisted and ETFs are forced to buy more CHL to make up for what's missing?  You're speculating about the effect of a rule that is speculative itself yet making decision based on all that extrapolation with no evidence.  That's why CHL is such a good deal now.

    WORK/Youri – Well it's a good deal for you and you're at $15.75 out of a possible $20 so you can just wait for the deal to finalize and you should get called away over $40 for the full $20, so why mess around unless you think it won't go through, in which case $15.75 in the hand is worth $20 in the bush….

    FSLR/Batman – This is another one we've certainly discussed.  Remember my issue is the tellurium they use in their process, which limits their growth and means their multiple is ridiculous.  You counter by saying they are coming out with new cells that don't require it but will they be as good?   Income for the first 3Qs of this year is about $280M and last Q4 they lost $60M but let's say they make $155Bn like they did in Q3 so $435Bn and they are priced at $10Bn – that's not terrible but not cheap.  

    It's up to you, you can make a case for them but, once again – there are ones l like better.  

    TAN/JMD, Stock – We had this whole discussion a week or so ago  

    Called away/Jeddah – It's not a bug, it's a feature.  You get called away so you get the premium you sold early and then you just buy the stock again and sell more premium.


  18. jeddah62 selling against positions. There are many different respects to consider. Especially T, I do hold myself in stock and BCS's. T is a high paying div stock, as well on the low side of the scale. After March 2020, many stocks still have not recovered to a position before March. Due to the high div you will not find great premiums for this stock. I like to see at least 1% premium in high paying div. stocks. Regret it is hard to find with T. Selling short term calls on stocks where you still below your original purchase price is always a bit more risky. In general selling a call OTM and you find at the end you are deep ITM with the call you do have two choices get assigned or roll. Remember the value of the stock has always more appreciated than the call option, by rolling up and out to a higher strike price, I find the cost of rolling is mostly lower than the improvement of the stock. 
    Selling puts is for me only prudent when the stock is on the low side of it's scale and if you want to sincerely wish to buy the stock at the net price. A more secure way of working with puts is sell verticals, where your loss is limited and the margin is very much lower.


  19. Thanks Phil.  The "sold early" is what always gets me.  I've learned to be more patient .. like waiting to sell against INTC.  Do you typically only sell when high in a channel or just dogged pursuit of the monthly premium.  I recall an article years ago on your board .. the guy sold monthly regardless of price.


  20. Phil / SEDG FSLR – We did have the the discussion last week…. based on your feedback I went back and took a deeper dive into the ones you mentioned…..  and came up with these now as something we should look at .   These are companies that are in and industry that have lots of tail winds behind them – Large ( responsible) governments behind effort to impact the green problem, Government subsidies and mandates around the world to implement the product / solutions, lots of money going into relatively small market cap companies…..   Additionaly, there are many companies in this space with crappy balance sheets and marginal management no moat whatsoever….. We have to be in this space and the sooner we re in the better.  I've got FSLR (75 to 85) , SEDG (200) and ENPH ( 90 to 100) on my watch list and I think you should as well for the benefit of the other folks here…..  


  21. Thanks Yodi.  Good guidance, especially on rolling.


  22. TCON – all, time to sell calls against the position or take some profits off the table.  I am fully covering with the Dec 10Cs.  One can always get back in, but that run has been pretty nice!  


  23. Selling/Jeddah – I don't want to say "typically" as it depends on a lot of things.  Yes the channel more so my expectation for the stock over the next few months – the channel just alerts you when it should be time to sell or buy.  On the whole though, you need to remember it is your JOB to sell premium.  As much premium as you can so there has to be a very good reason NOT to sell premium at any given time.  

    Oh, and of course, I'm talking about when pursuing that strategy – like the Butterfly Portfolio.   In the LTP, we're more into picking stocks but, when there is a good opportunity to sell premium – we jump on it.  With INTC, for example, I think $45 is stupidly cheap and the calls don't pay enough ($1.15 for Jan $50s) for me to want to give up the chance of gaining at INTC goes back to $55, where I'd be happy to sell some calls.  $45 is/was just too cheap for me to sell calls against.

    A little spurt into the close but Russell down big today (-1.5%).

    Party Is Still Going Party On GIF - PartyIsStillGoing PartyOn  ThePartyHasntEnded - Discover & Share GIFs


  24. Thanks as always Phil


  25. Meet the clean supermajors. They have the clout and financial might of the energy behemoths that plumbed the world over for oil and gas before them. But instead of digging mines and drilling wells, they’re leading the race to electrify the global economy.

    These four companies—Enel, Iberdrola, NextEra Energy and Orsted—prioritized the building or buying of clean-power plants when those assets were still considered alternative and expensive. Now they’re on the cusp of a breakthrough. Ever-cheaper solar panels and wind turbines are beginning to dominate new power installations, threatening the growth of natural gas on our power grids and upending energy markets.

    More on renewable energy – I was looking at NextEra also included in article.

    https://www.bloomberg.com/graphics/2020-renewable-energy-supermajors/?cmpid=BBD113020_BIZ&utm_medium=email&utm_source=newsletter&utm_term=201130&utm_campaign=bloombergdaily&sref=6nxHgiEt