OIH/EMike – We have them in the Butterfly Portfolio, I like how they are pretty predictable in their channel. Now bottoming so I like them long:
As a new trade, I'd go with:
- Sell 5 OIH 2020 $23 puts for $2.10 ($1,050)
- Buy 10 OIH 2020 $22 calls for $4.25 ($4,250)
- Sell 10 OIH 2020 $27 calls for $2 ($2,000)
That's net $1,200 on the $5,000 spread and, when they move up in the channel again, you can sell 3 Oct $26 calls for $1 (the price of the $24s, so a $2 move up) which are now 0.27. That's $300 and if you pick that up every other month for 16 months, that's $2,400 while you wait – nothing to sneeze at! Just the straight trade has an upside potential of $3,800 (316%) but I'd sell the calls for another 200% upside potential.
Let's add that to the OOP as it's a good thing to work on!
DLTR/Soma – Oddly unloved considering they have good top and bottom-line growth. 56,000 employees is a problem as they are generally minimum wage so say they have to pay them $5 more per hour x 56,000 x 40 x 52 = $116.5M or 10% of the profits – that's the fear but so what?
| Year End 03rd Feb | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | TTM | 2019E | 2020E | CAGR / Avg | |
| $m | 7,395 | 7,840 | 8,602 | 15,498 | 20,719 | 22,246 | 22,757 | 22,884 | 24,116 | +24.6% | |
| $m | 920.1 | 970.3 | 1,040 | 1,050 | 1,705 | 1,999 | 2,011 | +16.8% | |||
| $m | 619.3 | 596.7 | 599.2 | 282.4 | 896.2 | 1,714 | 1,714 | 1,313 | 1,462 | +22.6% | |
| $ | 2.68 | 2.72 | 2.89 | 1.26 | 3.78 | 4.85 | 4.84 | +12.5% | |||
| $ | 2.69 | 2.72 | 2.99 | 1.38 | 3.80 | 4.92 | 4.73 | 5.52 | 6.11 | +12.9% | |
| % | +33.2 | +1.5 | +9.6 | -53.8 | +175.4 | +29.5 | +16.7 | +12.2 | +10.8 | ||
| x | 16.4 | 17.0 | 14.6 | 13.2 | |||||||
| x | 1.34 | 1.40 | 1.35 | 1.24 | |||||||
| Profitability | |||||||||||
At $19Bn, the company isn't overly cheap but it's a nice, steady stock and should do well in a downturn. Certainly I like selling 10 DLTR 2020 $70 puts for $5.75 ($5,750) to add them to the LTP as that's nice cash for another 20% discount to the current price.
