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The Early Bird Catches… The Monkey Pox! (ACI, SAIA, IBP)

Posted on June 15, 2022

We’re coming at you early this week, to take advantage of some excellent pricing.

A Grocery Store, friends, is the vehicle Hashem has chosen today to transport us to financial freedom.

But before we get to the trade, we have two to close.

Sharpen your pencils and sit up straight.

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First up is our SAIA trade, whose details can be found HERE.

In brief, we’re holding three short June 17th 200 CALLs and a credit of $15.50.

The CALLs sell for $2.65 each, and we say buy them back.

Get it done and you walk with $7.55 NET on an initial expenditure of $28.90.

And that’s a gain of 26%.

Seven Hundred Fifty Five Bucks!

Next is our IBP trade that sees us holding two short June 17th 90 CALLs and a credit of $9.91.

The CALLs can be repurchased for $2.90 each, and we say it’s time.

Execute and you pocket $4.11 NET on nothing laid out (trade was opened with a credit of $0.20).

Adjusted for minimal commissions gives you a 2773% profit.

And that makes it all worthwhile…

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And now to Albertson’s (NYSE:ACI), the aforementioned Idahoan grocery that beat on revenues and earnings two months back – but still lost better than 20% in the weeks that followed.

What’s more amazing is that directly following that decline we saw an incomprehensible rise of better than 20% on the stock.

The shares are manic.

And everyone’s trying to figure who holds the upper hand – bulls or bears.

But our charts below make it abundantly clear.

In a moment.

First, the fundamentals.

  • ACI trades with a P/E of 11.10 and a forward P/E of 9.78, meaning analysts are gun-shy about expanding the current, miniscule multiple for the year to come.
  • Dividend Yield is 1.70%,
  • Price to Book is oversize at 4.52,
  • Debt to Equity is much too large at 2.63.
  • As to earnings, analyst consensus sees growth of just 2.41% for the coming year, and
  • For the next five years, anemic growth of just 0.06% (!) per annum, on average.

In other words, the stock ain’t goin’ nowhere.

And why is that…?

Retail-generated research shows people making fewer trips to the mall, but larger grocery purchases, on average, per shop.

You can bet they’re cutting out the non-essentials, too.

And all a result of price inflation, including gas costs, which are now starting to bite.

As the chart below shows –

That said, the G-d Of Israel will have His way.

Many happy returns!

Matt McAbby

 

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