27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.
The industrial machinery business has been booming, but it may finally be time for investors to start being more selective.
The Analyst
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Bank of America analyst Ross Giraldi updated his ratings for industrial machinery stocks:
- Downgraded Caterpillar Inc. (NYSE:CAT) from Buy to Neutral and lowered price target from $172 to $156.
- Downgraded Cummins Inc. (NYSE:CMI) from Buy to Neutral and lowered price target from $188 to $154.
- Upgraded Deere & Company (NYSE:DE) from Neutral to Buy and lowered price target from $172 to $159.
- Reiterated Buy rating for United Rentals, Inc. (NYSE:URI) and lowered price target from $230 to $186.
- Reiterated Buy rating for Illinois Tool Works Inc. (NYSE:ITW) and lowered price target from $185 to $165.
The Thesis
Giraldi lowered his price targets across the board and said Bank of America is seeing growing signs the industrial machinery market may be topping. So far in 2018, the stocks have not been responding well to positive fundamental news, even though Giraldi said equipment demand remains robust.
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“Our concern is more in 2H18-2019 where upgrades may be tougher to come by as growth rates start to moderate (CAT’s dealer sales no longer accelerating, Komatsu flagging slowing revenue growth in mining services),” he wrote.
Despite the downward target revisions, Giraldi said rising corn prices provide downside protection for Deere, especially after the stock has underperformed significantly in the past two months.
Price Action
Here’s a look at how the stocks mentioned were trading on Thursday afternoon:
- Illinois Tool Works was down 0.1 percent.
- United Rentals was down 0.8 percent.
- Deere was down 0.8 percent.
- Cummins was down 3.0 percent.
- Caterpillar was down 2.3 percent.
Related Links:
Morgan Stanley Overweight On WABCO, Deere, Caterpillar, United Rentals Among Machinery Stocks
The Goldman Pair Trade In Machinery: PACCAR Upgraded, Terex Downgraded
27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.