Rocky’s Weekly Stock Picks
Our image this week is flashy and eye-catching, appealing and sexy. It is, however, totally irrelevant when it comes to our weekly picks. Largely in part because our picks are not flashy and sexy. We’re not looking for risk, nor are we settling for low returns. Let’s proceed.
FATBP - These preferred shares are paying a reliable 8.25%, or $0.72/month on every hundred dollars invested. Right now the market price is $23 and change. These are perpetual and cumulative. Juicy. The call price is set to $27.50, decreasing annually until it reaches $25. Legit.
We were already buying more before we read the various recent news headlines about large purchases and acquisitions. Normally we don’t care about the news, because frankly it doesn’t much affect institutional investors. However, given the current climate in the foodservice industry, this just serves to solidify our perception of FAT Brands.
BBIG -$7.82 a share, which we feel is an appropriate price. However, we do not recommend to buy and hold this company. What we do recommend is writing ITM calls for a 10% return.
Or, at the money for 2 weeks from now for 18%. In fact, that might be its own sort of hedge. Even if the price moves against us, the extra time value that burns off will make it easier to exit our position at a net profit.
SDC - $6.57, the Smile Direct Club. Hilarious. Another weekly options trader, we can go deep in the money and come out with an 8.7% gain. That’s $7.20 a month, or $345.60 a year, on a $1000 investment. Or use a LEAP and cut that cost basis down.
If we go out to October 1st expiry, as with BBIG, we get up to 16% return at the money. Six in one, half a dozen in the other. We’re not particularly interested in owning shares of this company long-term, but we are confident that the price won’t go much below $6 anytime soon, but could definitely fluctuate up towards $9/$10.
NAK - The price is at $.495 as of market close on Friday. We also anticipate continued upward momentum in the coming weeks. Cash in on those ATM put sells. We either make 10% for the month of October, or we get shares for $0.40. Either way, this is definitely our go-to for a long-term investment on a budget.’
While it is true that share price doesn’t make it a good value, especially given the number of shares outstanding and the years it’ll take to see significant price increases - it’s still satisfying to be able to get 5-10% with only $50.
WKHS - For a buy and hold that will see short-term gains? Right here. $8.50 a share. Options trade weekly. We would be very surprised to see this stock go below $7.50 and expect to see it back in double digits by February.
