Stock is at $45.
I like it because of increasing revenue and net income every year. It would be a good stock to acquire.
The dividends are increasing.
The recent earnings miss, and 13% drop in stock price is what makes this trade a little risky. Despite the 4-5 prior little movement in the stock price, the recent stock price drop could continue to happen if a global or internal issue is occurring within the company that hasn’t been addressed.
Best way to check about what is going on is Seeking Alpha. Type the stock ticker and read the analysis. Sometimes there’s not much information and you can google “Sept 16, 2015 CLC earnings”.
Thanks to Khurram Rao for the amazing article and charts:
http://seekingalpha.com/article/3708706-clarcor-what-does-a-disappointing-q3-mean-for-investors
Based on this, you want to understand what is causing the weakened outlet and the disappointing quarter.
Ok, so this company is in the Oil and Gas Industry and they provide filters. Since people will be producing and selling less oil and gas since there’s too many suppliers and less demand, it’s possible this company can continue to down trend in revenue and net income growth.
We don’t quite understand why recently the company lost significant revenue and net income.
So this is a company to be cautious about.
The company looks to have increasing net sales.
I’m trying to sell puts at $35 and collect $0.35 which is very safe.
Selling puts at $40 to collect $0.50 which yields a little over 1% sounds like a good deal but from $45 to $40, is only a 11% safety margin which could definitely happen. If you do this trade, I feel like you are only 85% okay. 15% of the time you will be forced to buy the stock, and the stock is not on an uptrend so you wouldn’t be able to bail yourself out. Plus you won’t be able to sell any covered calls to wait it out.
I will be very safe, and pass on this one. I only like to trade and sell puts on stocks where I feel I have a 95% win rate.
Thoughts?
Result: Despite stock missing earnings, the stock went up about 5%. I would of profited at $35, and at $40 as well.