The Money Tree

Safely Generating Income in Retirement

Posts Tagged ‘INFY’

Dividend Superstars – Potential Trades

Posted by mounddweller on January 28, 2012

Fellow Traders,

As you know I recently announced a new strategy centered around strong, large-cap, “dividend superstar” companies.  Today I want to begin a series of posts which highlight stocks from the dividend superstar list which currently appear to have trade potential.

I will be selecting stocks using Ron Groenke’s VISIONS software.  Specifically, I will be looking for stocks which VISIONS has rated “Take Action” (TA).  This week the VISIONS scan of my dividend superstars list returned three possibilities, Best Buy (BBY), Infosys (INFY), and Tiffany (TIF).

Let’s first look at BBY.   Regular readers will remember I just recently successfully closed out a position in BBY.  You can read about it here: https://troysmoneytree.wordpress.com/2012/01/24/update-bby/

Friday, BBY closed at $25.44.  It has recovered from its 52-wk low of $21.79 which it hit back in October 2011.  It last reported earnings in December so it won’t report again until late March.  The trade which most appeals to me for BBY right now is the FEB $24 covered call.  The premium is $1.66.  Thus, the ROIC if assigned at expiration is 0.86%.  If unassigned the ROIC is 6.53%.

Next let’s look at Infosys (INFY).  INFY closed Friday at $54.31.  INFY has a 52-wk low of $46.12 which it hit back in September 2011.  Like BBY it has already announced quarterly earnings so we don’t have to worry about that.  For INFY, the best trade in my my opinion is the FEB $52.50 put.  It has a premium of $0.60.  This gives a ROIC of 1.14% with 3 weeks to expiration and down-side protection of 4.43%.

Last, but not least is Tiffany (TIF).  On Friday TIF closed at $63.49.  TIF has a 52-wk low of $54.58 which occurred in March 2011.  Like BBY and INFY, TIF has already announced quarterly earnings.  For TIF I like the FEB $60 put which is at $0.61 bid.  This gives a ROIC of just over 1.00% and DSP of 6.5%.

A final not before I close; there was a fourth stock which VISIONS rated TA.  It is CHRW.  However, I eliminated it from further consideration because it reports quarterly earnings on Tuesday, January 31.

If any of these selections interest you please conduct your own due-diligence.

Regards,

Troy

 

 

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Deep OTM NP Strategy – July Week 1

Posted by mounddweller on July 10, 2011

Fellow Traders,

Below is our list of possible selections for the Deep OTM NP Strategy this last week prior to July expiration.

Two stocks on our list caught my eye.  First, was the Indian IT outsourcing company, Infosys (INFY).  The $60 strike price is below recent support levels and offers over 11% of DSP.  However, two things keep me from recommending this as a possible trade.  One, the company will report earnings on Tuesday, July 12.  Two, the $60 strike price is above the $52-wk low of $56.73.  If the economy were on solid footing I might be willing to take a chance with INFY.  But with things as they are right now, I don’t think it’s worth the risk.

The second possible trade that caught my eye was RBCN.  RBCN sports solid fundaments with over $3.80 in cash and no debt.  It also trades at less than 9x current earnings and 7x future earnings.  The $15 strike is below the 52-wk low of $15.51.  However, with only one week to expiration the premium on the $15 is only $0.10.  Thus, I would have to be willing to pony up $15K in capital to get a minimum of $100 in premium (before commissions).  I’m not willing to do that on a small-cap ($390M) like RBCN.  If RBCN shows up on our screen next week for AUG expirations I may give it a more serious look.

Regards,

Troy

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