Posted on July 21, 2022
Today’s breakfast treat is brought to you by Weetabix, the phony, extruded-grain packaged edible with a deceptively high sugar content from POST Holdings Inc. (NYSE:POST).
POST stock has had an extraordinary run, but the world is changing.
And foodstuffs of every variety are facing an unpredictable future.
And that means sooner or later, a pullback in the company’s shares is inevitable.
Our learned conviction is that time is now.
Check out the fundamentals –
But it’s in the technical realm where we see the greatest evidence of a coming downside break.
Have a look –
Technically, we’re looking at –
POST will announce earnings on August 5th, after which we expect a slide – if not before.
And we’re playing it like this –
A Jew and His Gold recommends you consider selling the POST September 16th 80/85 CALL spread* for a credit of $2.20 (6.50/4.30) and buying the POST September 16th 85/80 PUT spread for $2.70 (4.70/2.00). Total debit is $0.50.
Rationale: max gain on the trade is $4.50 NET on an outlay of $0.50. That’s a potential winning of 900%.
Max loss is $5.50 (difference between the CALL strikes plus the initial debit).
We see a potential quick turnaround on this one.
With the broad market advancing strongly in in the last five sessions, POST shares have been oddly flat.
We believe that’s an ominous sign.
But the G-d of Israel will decide.
Many happy returns!