I think FL (Foot Locker) is worth a toss before we miss all the Retailers. At $28, they are at $3Bn and if they are making $400M – that's a p/e of 8 and we have wriggle room:
| Year End 1st Feb | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021E | 2022E | CAGR / Avg |
|---|---|---|---|---|---|---|---|---|---|
|
$m
|
7,151 | 7,412 | 7,766 | 7,782 | 7,939 | 8,005 | 7,517 | 7,906 | 2.28% |
|
$m
|
814 | 841 | 1,006 | 571 | 699 | 649 | -4.43% | ||
|
$m
|
520 | 541 | 664 | 284 | 541 | 491 | 413 | 472 | -1.14% |
|
$
|
3.56 | 3.84 | 4.91 | 2.99 | 4.42 | 4.52 | 4.88% | ||
|
$
|
3.59 | 4.32 | 4.94 | 4.09 | 4.62 | 4.96 | 3.74 | 4.59 | 6.67% |
|
%
|
+24.6 | +20.5 | +14.3 | -17.3 | +12.9 | +7.34 | -24.5 | +22.6 | |
|
x
|
5.45 | 7.21 | 5.88 | ||||||
|
|
0.319 | 0.536 | |||||||
For the LTP:
- Sell 10 FL 2022 $25 puts for $7.50 ($7,500)
- Buy 30 FL 2022 $25 calls for $9.40 ($28,200)
- Sell 30 FL 2022 $37.50 calls for $5.40 ($16,200)
That's net $4,500 on the $37,500 spread so that's 733% upside potential in 18 months if FL can get back to $37.50. Ordinary margin on the $25 puts is just $1,539 so it's a very efficient play as well.
