בס״ד

False Gods Railroaded! Trinity Tumbles! (TRN)

Posted on March 31, 2022

The Lord G-d of the Universe is not happy.

Our sages tell us that what happens on earth is a reflection of what’s occurring on High, and the acrimony and rancor here, below, is clearly picking up steam.

It’s the considered opinion of the A Jew and His Money team that this will NOT let up in the short term.  Rather, we’re likely headed toward an abysmal and enduring conflict that won’t cease until His judgment is rendered in another seven years.

There will be neither diplomacy nor restraint in the clash that ensues.

All weapons of war will be deployed – and nothing will remain of them when the war terminates.  Thus spake our sages and prophets.

And their word is to be trusted.

It follows therefore that a stock portfolio will not do anyone any good.

Money that can be made in these last days is best put toward tools and hardware required to wrest a living from the good earth.

All else is vanity.

And futile.

————————————–

Make your winnings, good Jews and Noahides, while ye may.

And prepare for the coming great and glorious day of the Lord.

.כשיהיה ה’ אחד ושמו אחד

And so it is, that our next great idea comes, ironically, via a company whose name is about as misleading as an episode of 60 Minutes.

Trinity Industries Inc. (NYSE:TRN) manufactures and leases freight and tank railcars to choo-choo companies across the land.

And their stock price has climbed like a hypersonic locomotive over the last month, catching our eye – and ear – with its chugga-chugga motion that appears now to have ceased.

Have a look at some fundamentals –

  1. P/E (for this industrial maker of rail carriages!) is a steamy 85.25,
  2. Dividend Yield is 2.65 (no problem there), though
  3. Price to Book is 3.24.
  4. At the same time… the company carries way too much debt – Debt/Equity is 5.02!
  5. Moreover, she’s LOST 19.40% per year in EPS over the last five years, and
  6. LOST 13.30% per year in top line Sales over the last five years.

And what’s more: insiders unloaded 96.15% of their stake in the firm over the last six months.  That amounted to $176 million, of which a full $108 million was offloaded in just the last thirty days!

Hmm…

Are you getting the full picture here?

Analysts are also lowering their EPS and sales expectations for the coming quarter.

Now take a look at the chart –

Technically speaking, we see –

  1. RSI close to, but not quite overbought (in green).  At the same time, the indicator is declining.
  2. MACD is also rolling over, and we expect the stock to begin retreating in more serious fashion as the cross occurs in the days ahead.
  3. Price jumped 30% after a terrible earnings miss, i.e., FOR NO REASON WHATSOEVER!
  4. And has now formed a rising wedge (in red).  This is a bearish formation, and the breakdown is already underway (in purple).
  5. The complete lack of volume (in black) speaks to a dearth of direction and commitment amongst traders at present.  Call it a ‘coyote moment’.

Before they re-enter as sellers, we’re crafting the following installment to exploit the decline.

A Jew and His Gold recommends you consider selling the TRN May 20th 32/37 CALL spread* for a credit of $2.30 (3.30/1.00) and buying the TRN May 20th 35 PUT for $2.35.  Total debit on the trade is five cents.

[*Sell the 32 CALL and buy the 37 CALL.]

Rationale: again – miniscule cost, and big reward potential.  Max gain (if the company goes bankrupt) is $35.00.

Max loss is $5.05 (difference between the CALL strikes plus the initial debit).

The long PUT is already $0.29 in-the-money.

Breakeven hits at $33.45.

Ein Od Milvado, friends.

Many happy returns!

Matt McAbby

 

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