What Did You Buy Today?

[crimsonghost747]

(02-15-2019, 12:35 PM)NilesMike Wrote:

(02-15-2019, 10:56 AM)Otter Wrote:

(02-15-2019, 10:37 AM)NilesMike Wrote: Don't like BUD at all, their business trajectory is down. STZ is a much better buy IMO. Since BUD sold Corona/Modello to STZ it has gone from $105ish to 70ish , while STZ has gone from $80ish to 180ish

(02-15-2019, 10:11 AM)Otter Wrote: Added to BUD and T this morning.

Both appear roughly fairly valued to me. BUD is trading right at its historical average P/E, with a yield (even after the divvy cut and foreign tax) about 50 basis points higher than STZ (although STZ's recent history of raises is impressive). I also view BUD as a bet on Dollar vs. emerging market currencies reverting back to the historical mean at some point in the near future. Although it pains me to invest in them as a homebrewer, BUD is one of the 800lb gorillas in the beer space, and I think they will continue to execute well in that challenging space long-term. 

STZ is trading a bit under its 10-year average P/E of 21, but in the same ballpark as BUD. I think the current discount for STZ is the market trying to digest the impact of them making a huge bet on cannabis by spending $4B (a sizable percentage of their market cap) for Canopy. I don't know that you will see the same meteoric divvy growth going forward for STZ, at least for the next couple years. 

Frankly, I like both. I have had STZ on my watch-list for a while. Would also love to own BF.B if it ever drops to a P/E in the low 20s (one can hope). Selling booze is profitable.

I have STZ P/E at 11??

Their own estimates:

Reported EPS for 2019: 12.95 - 13.05
comparable basis EPS: 9.20 - 9.30

You can't really trust the P/E number from most of the websites right now due to the one time tax stuff that has been going on lately.

[Otter]

(02-15-2019, 12:35 PM)NilesMike Wrote:

(02-15-2019, 10:56 AM)Otter Wrote:

(02-15-2019, 10:37 AM)NilesMike Wrote: Don't like BUD at all, their business trajectory is down. STZ is a much better buy IMO. Since BUD sold Corona/Modello to STZ it has gone from $105ish to 70ish , while STZ has gone from $80ish to 180ish

(02-15-2019, 10:11 AM)Otter Wrote: Added to BUD and T this morning.

Both appear roughly fairly valued to me. BUD is trading right at its historical average P/E, with a yield (even after the divvy cut and foreign tax) about 50 basis points higher than STZ (although STZ's recent history of raises is impressive). I also view BUD as a bet on Dollar vs. emerging market currencies reverting back to the historical mean at some point in the near future. Although it pains me to invest in them as a homebrewer, BUD is one of the 800lb gorillas in the beer space, and I think they will continue to execute well in that challenging space long-term. 

STZ is trading a bit under its 10-year average P/E of 21, but in the same ballpark as BUD. I think the current discount for STZ is the market trying to digest the impact of them making a huge bet on cannabis by spending $4B (a sizable percentage of their market cap) for Canopy. I don't know that you will see the same meteoric divvy growth going forward for STZ, at least for the next couple years. 

Frankly, I like both. I have had STZ on my watch-list for a while. Would also love to own BF.B if it ever drops to a P/E in the low 20s (one can hope). Selling booze is profitable.

I have STZ P/E at 11??

FAST Graphs uses a Blended P/E approach (not TTM), and takes their data from S&P Capital IQ. They are showing 18.7

Ameritrade's GAAP TTM number is 13.84

[Otter]

FAST Graphs' explanation of their blended approach, FWIW:

[fenders53]

It all comes down to your confidence in the future E growth, or lack thereof.

[crimsonghost747]

(02-15-2019, 12:44 PM)fenders53 Wrote: What do you think of this move? ....

Sold a JUN put strike 16 for 1.15.  That's about 20% annualized.  Today I am real good with being assigned NWL at a sub $15/SH basis.  Dividend would be very good.

Sold a SEP put strike 17 for 2.10.  That's more than two years of NWL Div in my pocket today so I am feeling good with the risk reward on this one.  It's OK to disagree, but I'll move the premiums to my ultra short bond fund now. 

I'm not familiar with the company itself so can't comment on that part. But if you are pocketing around 20% annualized then as long as you do not get assigned it works wonders. And if you do get assigned then it all depends on what the real price is then. :p

Personally I can't use put options to enter positions, it's a decent idea and seems to be working well for you but I simply don't have the capital to buy 100 shares at a time. I would be careful though when you sell them that far into the future, that is a lot of time where something bad can happen.

I consider what I do to be trading. I never sell calls against my own positions, I buy the 100 shares and sell a call. And keep selling until one expires in the money. Or just sell a put but these are rare because I'm not a fan of the risk of it getting assigned. My trades are usually less than a week, I think the longest I've done so far is two or 3 weeks. I admit that this is a pretty risky strategy and it has backfired several times but overall the returns have been good. It's all about entering into the position at the right price and then finding a good middle ground when it comes to premium vs price appreciation.

[Otter]

(02-15-2019, 01:07 PM)fenders53 Wrote: It all comes down to your confidence in the future E growth, or lack thereof.

Beyond the next quarter's estimates, I don't put a lot of faith in what's forecasted on the right side of the graph. Also prefer GAAP numbers for past performance, but recent tax law changes and special situations (like M&A) don't always allow those to paint an accurate picture of what is actually going on.

[fenders53]

(02-15-2019, 01:09 PM)crimsonghost747 Wrote:

(02-15-2019, 12:44 PM)fenders53 Wrote: What do you think of this move? ....

Sold a JUN put strike 16 for 1.15.  That's about 20% annualized.  Today I am real good with being assigned NWL at a sub $15/SH basis.  Dividend would be very good.

Sold a SEP put strike 17 for 2.10.  That's more than two years of NWL Div in my pocket today so I am feeling good with the risk reward on this one.  It's OK to disagree, but I'll move the premiums to my ultra short bond fund now. 

I'm not familiar with the company itself so can't comment on that part. But if you are pocketing around 20% annualized then as long as you do not get assigned it works wonders. And if you do get assigned then it all depends on what the real price is then. :p

Personally I can't use put options to enter positions, it's a decent idea and seems to be working well for you but I simply don't have the capital to buy 100 shares at a time. I would be careful though when you sell them that far into the future, that is a lot of time where something bad can happen.

I consider what I do to be trading. I never sell calls against my own positions, I buy the 100 shares and sell a call. And keep selling until one expires in the money. Or just sell a put but these are rare because I'm not a fan of the risk of it getting assigned. My trades are usually less than a week, I think the longest I've done so far is two or 3 weeks. I admit that this is a pretty risky strategy and it has backfired several times but overall the returns have been good. It's all about entering into the position at the right price and then finding a good middle ground when it comes to premium vs price appreciation.

I only do this with companies on my shopping list for positions I currently believe to be good longterm holds.  If you sell a BUD put you are trying to enter at a lower price while getting some income.  If I sell a BUD put I am gambling, because if assigned I will be looking for a near term escape route that might result in a loss.  I try to make these situations very infrequent.

[NilesMike]

(02-15-2019, 01:09 PM)crimsonghost747 Wrote:

(02-15-2019, 12:44 PM)fenders53 Wrote: What do you think of this move? ....

Sold a JUN put strike 16 for 1.15.  That's about 20% annualized.  Today I am real good with being assigned NWL at a sub $15/SH basis.  Dividend would be very good.

Sold a SEP put strike 17 for 2.10.  That's more than two years of NWL Div in my pocket today so I am feeling good with the risk reward on this one.  It's OK to disagree, but I'll move the premiums to my ultra short bond fund now. 

I
But if you are pocketing around 20% annualized then as long as you do not get assigned it works wonders. And if you do get assigned then it all depends on what the real price is then. :p

Selling a put to buy a stock is always less risky than just buying the stock. If it expires ITM you bought the stock for strike price minus the premium you collected. Now you own the stock cheaper. XYZ stock today=$45.00, sell a 44 put for .62. Your breakeven is 43.38. Yes, you may get assigned at $42.00. Still better than if you purchased XYZ for 45.00

If the put expires OTM, you keep the premium and do it again.

[fenders53]

Right, but you do need the free capital in your account, or a margin account and authorization to trade naked options. Something I would never recommend as it ends bad at some point when the market turns on you. For younger traders with lower capital, the cover call still provides some opportunity to trade with a conservation strategy. That's what I did for a lot of years. I know crimsonghost already does this from time to time.

[EricL]

Sold EXR and opened positions in UNH, NVDA, and FDX in one account.

Trimmed IBM and TGT and liquidated PII and SKT to buy HD and AVGO in my dividend growth account.

[NilesMike]

(02-15-2019, 01:55 PM)fenders53 Wrote: Right, but you do need the free capital in your account, or a margin account and authorization to trade naked options. Something I would never recommend as it ends bad at some point when the market turns on you. For younger traders with lower capital, the cover call still provides some opportunity to trade with a conservation strategy. That's what I did for a lot of years. I know crimsonghost already does this from time to time.

Sentence 2 does not compute unless one is undercapitalized for the trades they are making.

[fenders53]

(02-15-2019, 04:57 PM)NilesMike Wrote:

(02-15-2019, 01:55 PM)fenders53 Wrote: Right, but you do need the free capital in your account, or a margin account and authorization to trade naked options.  Something I would never recommend as it ends bad at some point when the market turns on you.  For younger traders with lower capital, the cover call still provides some opportunity to trade with a conservation strategy.  That's what I did for a lot of years.  I know crimsonghost already does this from time to time.

Sentence 2 does not compute unless one is undercapitalized for the trades they are making.

Undercapitalized is what we are referring to.  Some of the guys here are only ten years along in this journey.  They already have  a diversified port of DGI stocks which is why they are on them of this website.  Many of them have assets in their company 401K if they are smart.  (which I believe they are)  Lets say Crimsonghost  wants to enter a position in AAPL and HD.  Do that our way and you need $35K to back a couple trades.  That might cause him to be under diversified if he liquidates assets to fund that.  I was potentially committed to buy 2000 shares of stock this month and it's only the 15th.  And I was still assured of a decent cash position and diversification.  90% of the contracts expired worthless today, or were closed for a near 100% profit within days of selling them because the market just goes up this year.   But the point is that requires significant cash like assets.  I couldn't have done this just a few years ago with my assets tied up in my 401K.  

I do wish a few of them would try it with a $40 stock when they can.  About the third time your put expires while trying to buy the same 100 shares it becomes apparent how many years it would take to get that income from a quarterly dividend.  I just counted 28 failed attempts to buy utilities since OCT.  It starts again next week when I sell a half dozen new ute contracts.  I have been assigned occasionally but never a ute.