Wednesday, September 13, 2017

IRMA and a Briggs & Stratton Update

Alfred is watching his BGG (Briggs and Stratton) trade carefully.  Although I am an IRMA refugee I helped him out with this trade.  He decided to take an October 20, 2017 $22.50 call on his BGG shares.

He will get the quarterly dividend of $.14 as BGG goes ex-dividend tomorrow September 14, 2017.  He will pocket the call premium of $.40.

BGG short term trade to take advantage of hurricane season:

Let's see how he does.

M* MoneyMadam
Disclosure No Position

Monday, September 4, 2017

BGG for A Hurricane Play - Generators

Alfred Ferol and I chatted recently.  Long time readers know of his contributions to this blog.  Alfred is a conservative investor with a bit of a trader's mentality.  He thinks Hurricane Harvey (and perhaps IRMA) will cause an increased need for generators.

I do not totally share his assessment as I think in preparation for a storm, people buy generators.  He has less faith in the masses being well prepared.   And, he suggests, no one predicted West Houston would be as affected as it is and therefore, these people are going to need generators.

Alfred wants a play that is a short term gain.  His idea of short term is about 6 months.  His conservative self likes to get a dividend while he waits for earnings to increase enough that the stock price also goes up.   In addition, he might have a chance to sell a covered call during those 6 months; juicing his income and total return even more. 

The covered call opportunity, of course, will only materialized if he is right and the need for generators translates into increased sales and earnings.  When the market sees growth potential, they use calls to get in cheap and benefit from price momentum.

Briggs & Stratton Corporation LogoI suggested he add to Home Depot (HD.)  HD will be the final seller of all items needed for hurricane recovery.   Since, he already owns HD, he will benefit from that move but he wants to invest in a stock that builds the generators.  We looked at several and decided on Briggs and Stratton.

Everything you ever wanted to know about generators is available with this link to the Briggs and Stratton site:

Briggs and Stratton symbol BGG, is selling at $20.92.   BGG's price is just about in the middle of the 52 week high of $25.92 and low of $17.90.  At $20.92 BGG's price has corrected just over 19%.

BGG annual earnings are $1.30 with an annual dividend of $.56 for a yield of 2.67%.  Dividend payout ratio is 43.1%.   Dividend growth over the past 4 years has averaged 5.56% and their D/E ratio is a very respectable .553.    P/E ratio (price earnings ratio) at 16.09 is unremarkable. 

All of this data is presented in the table below.

BGG sounds like a good stock.  For me, I don't like the negative slide of revenues -4% over the past 4 years.  This could improve if Alfred is right and demand for generators is strong and Home Depot sells a lot of them.

I will not be adding BGG to the 2017 portfolio but I will track his trade for you and report back when he closes it out.  Stay tuned.

M* MoneyMadam

Disclosure:  No position in BGG, long HD

Friday, September 1, 2017

HCI - Insurer

Poorest performer so far in my M* 2017 Dividend Machine Portfolio is HCI.  More than a 10% correction since I added it April 3, 2017. 

With a low P/E ratio (Price to earnings ratio = 10.6 ), a low dividend payout ratio = 38.35%, and D/E ratio of .98, I am going to add to my position. 

M* MoneyMadam 

Disclosure:  Long HCI

Wednesday, August 23, 2017

Rolling a few expired calls: NVDA, SWKS


Rolling Calls Update SWKS and ARCH

I continue to work the call rollovers today.  I still needed to fill the second Skyworks (SWKS) call.  Today I took a November 17, 2017 expiration with a strike price of $115 and received $1.65 premium.  Their next ex-dividend has not yet been announced.  If they follow their typical dividend history, the next ex-dividend date should be about 11/15/2017 meaning I should also get the quarterly dividend of $.32.

The table below presents the data on this lot of SWKS.

Next I was able to sell a call on Arch Coal, symbol ARCH.   I own ARCH because of a bond default that resulted in my receiving shares and some cash for the bond.   My basis is about $90.   Trying to make lemonade out of lemons, I am working the calls to try to get back some of my money.  This is the second call I have been able to sell on ARCH.  I will receive the dividend of $.35 per share as it went ex-dividend on 8/29/2017, however, should my shares be called away before or on the call expiration date of 10/20/2017, I will not receive the next dividend.

See the table below.

I still am not happy with the call premiums I find for Apple (AAPL) so I will continue to be patient and look for the best opportunity.

Thanks for reading M* MoneyMadam
Disclosure:  Long SWKS, NVDA, AAPL, ARCH all except AAPL with calls

Original Post 8/23/2017

Four of my calls expired last week and I have been looking for new opportunities for making money by selling more calls on those stocks.

Yesterday I sold a call on Skyworks, SWKS, and today I sold a call on Nvidia, NVDA.

I like to extend the expiration dates to after the next ex-dividend date and I like to ladder the strike price.  For instance, I have an October $190 working on NVDA so if I extend the expiration to November I want more than $190 and the next strike price available is $195.   NVDA's ex-dividend date is September 17, 2017 so I should receive the dividend as well as the call premium by selecting a November expiration.  NVDA's dividend is very small but I want it anyway.

For Skyworks, I had a $105 expire and I wanted to replace that with a $110.   I also had a $115 expire and hoped to find something better than or equal to $115  in November but have not yet found a call to my liking.   Skyworks next ex-dividend date should be about Nov. 4, 2017 so if my stock is called away on expiration of the October $110 call, I will not get that next dividend on this lot.  I don't love that but I am still long on the other lot of SWKS and will look for a call with an expiration date after Nov. 4. 

The table below summarizes my progress to date.  I find no calls on ARCH and the AAPL calls that I like are not yet paying enough.

M* MoneyMadam
Long:  SWKS, NVDA, with calls and ARCH and AAPL