Rocky’s Weekly Stock Picks

Happy Holidays and welcome to an early edition of Rocky’s Weekly Stock Picks. It’s Christmas 2021, and most of the world cares, which includes the Market. That’s fine, we sort of need a break anyway. After licking our wounds from some positions that did not go as we prefer, we saw that our portfolio is still coming out ahead.

We often make suggestions that are….opposite of what others would consider good, and our criteria can be quite creative. Or sometimes very uncreative, as the case may be. The point is, YOU need to make sure that YOU are going to be satisfied with the outcome of your position.

Don’t think you can handle early assignment? Won’t be satisfied with a mere 10% annual return? Need more excitement than buying fractional shares of blue chips? Only you can determine what’s right for you.

That said, if you followed our recommendations over the past year with unwavering faith, you’re quite pleased right now with your current holdings. If you’re like us, however, you Pick One [Got Greedy/Got Impatient/Got Convinced of Your Own Unmatchable Insight/Got High], then you’re hopefully still sitting pretty and not too worried about short-term capital gains and unqualified dividends.

Going forward….actually, that’s enough narrative for now. Our picks this week are as follows;

1. TWO - Ex-div on Tuesday, $6.06 share price, 11.4% annualized return. We’ve been meaning to capture this for a while now. This isn’t just another capital investment firm - it’s an investment firm with a really great name. Two Harbors Investment Corp. That’s even better than the 11%.
   
   Dividends are paid quarterly. PSEC also ex-divs on the 28th, something like $8.47 a share and 8.6%, but it pays monthly. We split our budget between the two. There isn’t a specifically great reason to do so, other than it keeps us at a solid “satisfied with trade” at the end of the day. Fun fact - PSEC offers a preferred stock (cumulative/perpetual), at a 5%+ annual return.
   
   TWO has several preferred series, at least that are listed on Nasdaq.com. We did not look at any of them more closely than the dropdown list in the search bar.
   

2. FCEL - We are fans of hydrogen energy, and this company has managed to return from being nearly worthless. That said, we’re going to do an ITM covered call for, likely, a 4% return. We flirted with ATM, but aren’t trying to hold the shares (though we’re not going to be upset if we do).
   
   At $6.46 a share, we’ll be looking at our options for LEAPs.
   

3. WKHS / ET - If we didn’t already hold WKHS, we’d be adding to our Energy Transfer. Back to Workhorse, we stopped buying after the price went under $7 for too long. After hitting $5 it’s starting to come back up, and we’re going to average down your cost basis a little bit.
   
   Energy Transfer is generally a great fallback for any investing situation (weekly options + quarterly dividend) in which you’ve committed to spending a certain amount, but your initial idea became a no-go. Or, in this case, you lack the shares we’ve been writing calls on for a year.
   
   IF you’re dead set on getting down on this stock (options trade weekly), may we suggest starting a cash secured put?
   

4. NXTD - Nxt-ID. $3.95 a share. They do stuff like biometrics, security, privacy, access control…all the buzzwords that indicate they’re doing the “Big Brother” thing. Poorly. This is affirmed when you see that their operations extend into the “Internet of Things” arena.
   
   So why are we giving our money to an evil corporate beast working towards the total control and enslavement of humanity? Because 30% that’s why. An ATM $4 call for Jan 21 also gives us enough time to close the trade early, which we will likely do. 15% in 2 weeks is just as good as 30% in 4, right?
   
   Also, this corporation is like the wanna-be bad guy. Not really effective, but kind of cute for their effort. I just don’t see a scenario in which they’re going to make a fingerprint scanner that’s appreciably better than Samsung or Google (whichever one opens my phone), but by golly they’re going to make one. Bless their little hearts.
   

5. NAK - $0.35/share. This mining company is a house favorite. Now, before you think we’ve had too much eggnog too quickly, just hear us out.
   
   First and foremost, we want lots of this. For personal. And since there’s so many shares at so low a price, we need many lots. Beyond this, NAK is optionable, trading monthly. Until we get $0.50+ share price, we’re just selling puts.
   
   There isn’t really a super good reason to be selling puts, since there’s no cost difference at the current share price. We’re using it mostly as a type of mental gymnastics, to limit and stagger our purchases. This is very long-term play, we can afford to be slow and steady.