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.
In a report published Friday, Buckingham Research analyst Richard Safran initiated coverage of KLX Inc (NASDAQ: KLXI) with a Buy rating and a price target of $51.
KLX spun off from B/E Aerospace Inc (NASDAQ: BEAV) (rated Neutral, PT of $56) in 2014. Analyst Richard Safran believes there is “significant upside potential” in view of the “overdone oil/gas fears.”
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In the report Buckingham Research noted that the bullish view on KLX was driven by:
- A belief that nonrecurring spin-off/acquisition-related headwinds were “weighing on base business earnings/FCF expectations”
- The company exhibits a solid cash flow base, anchored in commercial aerospace growth
- There is high M&A appetite in oil/gas amidst “an opportunistic secular backdrop”
- Current ASG segment market multiples implies a negative $12-$13 per share value for the ESG segment, which appears to be based on “overblown oil/gas fears”
Although there is unlikely to be significant M&A in 2015, Safran believes that strong ASG cash flows and below target net leverage could drive M&A next year. Aggregate aftermarket sales growth is estimated at 10-15 percent y/y in 2015, up from about 9 percent in 2014. While this year could be rough for KLX, this already appears to be reflected in the Street estimates.
Safran estimated upside/downside returns at 65 percent / -27 percent based on his best/worst case price targets of $72/$32.
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.