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.
Shares of Dr Pepper Snapple Group Inc. (NYSE: DPS) do not adequately reflect “the role of Allied Brands as the primary driver of growth and margins going forward,” Credit Suisse’s Laurent Grandet said in a report. He initiated coverage of the company with an Outperform rating and a price target of $108.
Dr Pepper Snapple’s shares are currently trading “at the lowest PE in our coverage group,” analyst Grandet stated, adding that Allied Brands could contribute significantly to “an already consistent financial algorithm.”
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Allied Brands
The Allied Brands portfolio includes ten key entrepreneurial brands not owned by Dr Pepper Snapple. Grandet mentioned that these brands provide the company with:
- Exposure to new, fast growing segments
- A first-hand opportunity to invest in future brands platforms and entrepreneurs
- Growth, since collectively these brands represented ~50 percent of total company growth in the prior couple of quarters
- Margin expansion of ~400bps, since they offset the fixed costs of the declining core
Consistently Solid FCF
The analyst estimated that Dr Pepper generates around $1 billion of EBITDA, accounting for more than 80 percent of company operating profit, and about 70 percent of the total FCF, which could reach almost $900 million in 2016.
“The company has delivered a 3-year annualized TSR of 30% and we expect it will return 100% of free cash flow over the next 3 years through dividends (currently 2% yield) and share repurchases,” Grandet commented.
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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.