Posted on July 1, 2021
We’re going back now, friends – WAY BACK – to our old friends at Generac Holdings Inc. (NYSE:GNRC), a company that, for some reason, people consider a TECH stock.
Generac sells generators, large and small, for every type of customer.
And they’re headquartered in Wisconsin.
Good old Wisconsin, where folks are wholesome and honest.
For those who are paying attention, we’ve already made two huge swipes with GNRC, once back in November of last year for a stupendously quick 575%.
And a second just two weeks ago for a gain of 196%.
In other words, this guy is a money-printing machine, and the G-d of Abraham, Isaac and Jacob has apparently willed it to be so.
At least until now.
That’s the question we’re intending to answer.
And if we have to dig through reruns of high school television dramas from the 1970’s then that’s exactly what we’ll do.
Now to the fundamentals.
Now, the company is making money, that’s for certain.
But does it justify today’s stock price?
We’d say no.
And the charts would concur.
Here’s the daily –
Technically, we have –
Now to the weekly, where we see –
The weekly chart presents –
All of which leads us to propose the following –
A Jew and His Gold recommends you consider selling the GNRC August 20th 420/430 CALL spread* for a credit of $3.10 (22.20/19.10) and buying the GNRC 390/370 PUT spread** for $6.30 (13.30/7.00). Total debit on the trade is $3.20.
Rationale: the trade pays handsomely for a win – maximum profit is $16.80 on just $3.20 laid out.
At the same time, our maximum win arrives after a correction of exactly 10% from the current price of $415.15 – not a long way down.
Breakeven is situated at $386.80.
Maximum loss is $13.20 (difference between CALL strikes plus initial debit), and takes effect only if GNRC sails to new highs above 430.
The G-d of Israel will decide.
Many happy returns,