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.
- Avondale Partners recently initiated coverage of machinery stocks.
- The firm gave Deere & Company (NYSE: DE), Joy Global Inc. (NYSE: JOY) and Titan International Inc (NYSE: TWI) Outperform ratings.
- For Crane Co. (NYSE: CR), the experts issued a Market Perform rating, alleging the company is “not out of the storm yet.”
Let’s take a look at Avondale’s view of these four companies:
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Joy Global
On top of a Market Outperform rating, the analysts issued a 6-12 month price target of $36 for Joy Global. They note that, this quarter the shares have hit the firm’s key “Liquidation”, “Capitulation” and “Valuation” criteria. This has led them to take an incrementally positive stance on the name.
At current levels, they see the shares as “a call option on an eventual cyclical recovery in global mining CapEx trends,” and thus, recommend investors (especially long-term ones), to start building a position in the company.
Deere & Co.
For Deere, Avondale fixed a $90 price target. The report assures that, two years into the agricultural industry downturn, sentiment toward the company has become substantially more bearish. Given this situation, the experts believe this is a good time to “adopt a glass half-full view on the name.”
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“With rapid declines in equipment sales and OE production, we are likely to be entering FY16 at industry volume levels not seen since the early 2000’s.” As a result, the analysts see any substantial production cuts beyond 2016 as highly improbable and anticipate fiscal 2016 will mark a trough for the company’s earnings.
Titan International
For Titan, the target price stands at $16. The analysts believe that investors are mostly overlooking the internal transformation that the new management is driving – and macro headwinds do not help with its visibility.
Moreover, the note argues, the macro challenges mentioned above seem to be priced in the stock, which now trades at roughly 0.7 times the company’s tangible book value. On the other hand, the internal transformation “holds significant upside potential once the cyclical headwinds abate and the ongoing company makeover begins to fully translate into tangible results,” the report assures.
Crane Co.
Finally, for Crane Co., Avondale issued a Market Perform rating and a 6-12 month price target of $55. The analysts point out that the company’s a portfolio comprises high-quality businesses. Furthermore, its robust and effective management team “has been quick in responding to deteriorating market conditions in its energy-exposed end-markets in late 2014-early 2015.”
With the stock down roughly 30 percent from its recent highs, the analysts think “the concerns around potentially further deterioration in CR’s energy businesses are mostly priced in. That being said, a lack of visibility around recovery at Fluid and likely high consensus estimates for 2016” are keeping Avondale from being more constructive on the company.
Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.
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.