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Thursday, March 28, 2024

Top Trades for Tue, 15 Jun 2021 13:39 – FRO

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Top Trades for Tue, 15 Jun 2021 13:39 – FRO
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FRO is perpetually between $5 and $10 and $8.65 is $1.75Bn in market cap and this should be a good year for them with shipping rates rising.  In a good year, they can make $200M+ but what I really like about them is great options to sell and an 0.50 (seemingly annual) dividend:  

Year End 31st Dec 2015 2016 2017 2018 2019 2020 TTM 2021E 2022E CAGR / Avg
Total Revenue
$m

459 754 646 742 957 1,221 1,003 502 748 21.6%
Operating Profit
$m

277 170 -196 82.7 240 508 324     12.9%
Net Profit
$m

155 117 -265 -8.88 140 413 276 82.9 293 21.7%
EPS Reported
$

2.38 0.745 -1.56 -0.052 0.781 2.09 1.40     -2.58%
EPS Normalised
$

1.56 1.20 -0.509 -0.091 0.762 1.99 1.33 0.216 1.44 4.99%
EPS Growth
%

-76.3 -23.0       +161 +7.13 -89.1 +564  
PE Ratio
x

          4.39 6.54 40.4 6.08  
PEG
 

              0.072 0.160  
 

In the Dividend Portfolio, let's:

  • Buy 2,000 shares of FRO for $8.65 ($17,300) 
  • Sell 20 FRO 2023 $10 calls for $1.50 ($3,000) 
  • Sell 20 FRO 2023 $7 puts for $1.40 ($2,800)

That's net $11,500 or $5.75/share and, if assigned 2,000 more at $7, our average would be $6.375, which is where we wish we'd caught them.  So that's our worst case and best case is we get called away at $10 with $20,000 plus maybe $1 in dividends is $2,000 more for a net profit of $10,500 (91%) in 18 months.  Not bad for a conservative play!