Looking for 2 more stocks I'm liking GOLD, ALK, AAPL, BBBY, CAKE, CHK, F, GILD, M & SKT among our usual suspects.
With ALK, keep in mind they just bought Virgin for $2.6Bn, who were about half their size and now the combined entity is at $7Bn at $56 and of course they are absorbing transition costs yet they still pulled very nice numbers post-merger (late 2016) and they are just coming out of it now after a 6% beat in Q4 (they beat every Q last year). Last year they put up $4.46 in EPS and this year should be $6 so $56 is too cheap – even for an airline.
| Year End 31st Dec | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019E | 2020E | CAGR / Avg | |
| $m | 5,156 | 5,368 | 5,598 | 5,925 | 7,894 | 8,264 | 8,715 | 9,264 | +9.9% | |
| $m | 838 | 962 | 1,298 | 1,306 | 1,208 | 643 | -5.2% | |||
| $m | 508 | 605 | 848 | 797 | 960 | 437 | 789.3 | 876.5 | -3.0% | |
| $ | 3.58 | 4.42 | 6.55 | 6.41 | 5.84 | 3.52 | -0.3% | |||
| $ | 3.58 | 4.29 | 6.71 | 6.98 | 6.42 | 5.07 | 6.31 | 7.07 | +7.2% | |
| % | +62.7 | +19.7 | +56.6 | +3.9 | -8.0 | -21.1 | +24.6 | +12.0 | ||
| x | 10.9 | 8.74 | 7.80 | |||||||
| x | 0.44 | 0.73 | 0.74 | |||||||
| Profitability | ||||||||||
As a new trade for ALK, I'd go with:
- Sell 5 ALK 2021 $55 puts for $8 ($4,000)
- Buy 10 ALK 2021 $50 calls for $11.80 ($11,800)
- Sell 10 ALK 2021 $65 calls for $5.40 ($5,400)
That's net $2,400 on the $15,000 spread so $12,600 (525%) upside potential at $65 and we're starting out $6,000 in the money.
