Today, The Panic-Proof Portfolio (Stockchase Research) and Chris Thom - CIM, DMS, FCSI commented about whether CLF-N, GM-N, SU-T, NVDA-Q, MEG-T, TRP-T, SHOP-T, BAM-N, PLTR-Q, NKE-N, CVE-T, TD-T, META-Q, ENB-T, UBER-N, QSR-T, BRK.B-N, JNJ-N, DVN-N, PSLV-T, PHYS-T, RIO-N are stocks to buy or sell.
He likes Canadian energy where such companies make good energy, valuations are attractive and are coming back after being overlooked for US energy. Many are returning capital to shareholders as they control spending. Overall, are strong financially. Also, he likes the car-makers who also make a lot of money, have good PEs and are buying back shares. He likes Ford, but is neutral the Canadian auto-parts-makers.
It enjoys little competition. If you sold the February $62 calls (now $64.60), so if you do nothing between now and Friday, you will get called away. So, you can roll that option: buy back the call that you're short, then sell a new call further into the future to replace it. So, pay $2.65, then roll it out to May, sell the $62 again, and collect $3.15.
Covered calls make tons of sense when the market is sideways or moving up a bit, but underperform in a raging bull market like last year. Owning blue chip names and selling some calls. If you're not that overall bullish, set premiums for a short time and a lower price. You give up some upside, but capture more of the premium. Also, if you do this several times a year, then your gains add up.
Trades under 12x PE and are buying back lots of shares. Likes it. Options: sell the April $25 call and get 20 cents, not a big premium, but leaving lots upside to get closer to the upper-$20s. But he is not selling calls on CVE, because he expects the share price to recover. But at $27-28, he will sell at $30s. For new money, he will sell $20-22 puts.
Options add or remove risk, depending on whether you forecast the current direction of a stock. Also, they can create a lot of leverage. You buy a call when you are bullish a stock; you have the right, no obligation, to buy a stock at a certain price by a certain date. A put is the opposite. A cash-covered put means you will sell a put--give somebody the right to sell you a stock at a certain price below the current price by a certain date; the cash part means you actually have the money, and aren't using leverage.
As a leader of metal resources production, we reiterate RIO as a TOP PICK. Management is optimistic that a commitment to aluminum smelter development in Australia is supportive for the company's plans. We like that cash reserves are growing, while debt is retired. It trades at 9x earnings, under 2x book and supports a 20% ROE. The robust dividend is backed by a payout ratio of 70% of cash flow. We recommend trailing up the stop (from $49) to $58 at this time, looking to achieve $82 -- upside potential of 32%. Yield 6.2%
(Analysts’ price target is $81.93)