בס״ד

This Four Cent Investment Could Bag You 17,400% – Before Pesach! (KR)

Posted on March 9, 2022

Don’t miss your chance, fellow Jews and Noahides.

This one’s Jim Dandy.

And it’s coming at you a day early because there’s no time to lose.

Can you find four cents to throw at it?

If you like the trade, you can take on multiples – and make an even greater fortune.

Consider the numbers, of course… they’re all presented below.

Weigh it up well.

And then pray to the Al-mighty living G-d of Israel that He guide you to the bank without tripping and spilling your riches along the way.

It’s Kroger Co. (NYSE:KR) that we’re after today, and the trade is SPECULATIVE.

Why?

Because it’s a 40 day affair – give or take – and we generally prefer trades with a longer time horizon.

That said, the numbers are so appetizing, who could pass up grabbing a buggy and loading up?

Bid Fails; Stock Retreats Fast.

We’ve made money several times playing KR before: HERE and HERE for example, for wins of 1053% and 2013%.

The first took three weeks, the second, ten.

But today’s action is of a different color altogether, as it’s based on the near hysterical buying we witnessed in the stock over the last ten days.

Yesterday, apparently, the market took notice of that patently ludicrous and manic action, and began selling.

Today, we believe it will continue.

And how.

Fundamentals are like this –

  • KR trades with a P/E of 37.19 (it’s a bleedin’ grocery store, lads!),
  • Has a Dividend Yield of 1.51%,
  • A P/B of 4.34,
  • Carries too much debt – Debt/Equity is 1.44, and
  • Just this past Monday (three days ago), insiders dumped almost $8 million in shares as the stock registered an all-time high.

Coincidences abound…

This is the daily chart for the last six months –

And this is what it tells us –

  1. To begin, RSI entered the overbought realm just as the stock registered its all-time high (in green).  It has since tailed off as insiders (and others) began taking profits.
  2. MACD readings are off the chart – literally.  The divergence between moving averages has never been greater (we went back through nearly 40 years of data).  This is a sure sign of speculative frenzy.
  3. Price itself was up 44% in just seven trading sessions (in red),
  4. Leaving a large gap to be filled between 49 and 52 (in blue).  That was the result of the company’s latest earnings release, which, on the one hand, beat analyst estimates, though they were still a full 20.70% less than last quarter’s numbers.  Everything depends upon where you focus, I guess…
  5. The price vector for KR (in purple) would tolerate a share price of between 48 and 50, in our estimation.  And it’s toward that level that we now see the stock heading.

Pony up, fellow Jews!

This one’s ripe.

A Jew and His Gold recommends you consider selling the KR April 14th 55/60 CALL spread* for a credit of $1.93 (3.35/1.42) and buying the KR April 14th 55/48 PUT spread** for $1.97 (2.69/0.72).  Total debit on the affair is $0.04.

[*Sell the 55 CALL and buy the 60 CALL.  **Buy the 55 PUT and sell the 48 PUT.]

Rationale: you can’t help but fall in love with the potential profit here: $6.96 on just $0.04 spent, or 17,400%.

Max loss on the trade is $5.04 (difference between the CALL strikes plus the initial debit).

Breakeven arrives at $54.96, just $0.75 (or 1.3%) below the current price.

We see a potential quick hit here, so you may not want to wait until we close.  If the money’s on the table, grab it.

And may Hashem shine His holy countenance upon you.

Many happy returns!

Matt McAbby

 

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