Today’s Trade Could Earn You 3267% – and Has No Dermatological Side Effects (WSC)

It’s a company almost no one’s heard of…

In perhaps the least sexy business on the planet…

Whose product is… get this –

Well… not THAT kind of space, exactly.

Rather, WillScot Mobile Mini Holdings Corp. (NASDAQ:WSC) leases portable work spaces, containers and other storage-unit-what-nots to schools, businesses, construction companies and governments in need of quick, deliverable ‘space’ solutions.

Got That?

They’re not in the Elon Musk interstellar-travel space.

They’re also not on our buy list.

Why?

Well, we believe WSC has finished its bully dance – for the time being – and we also believe we can sop up a 3267% return via a delicately-administered, risk-defined options strategy that guarantees to leave you neither blind nor epidermally scarred.

That’s right.

It’s safe and effective.

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Fundamentals on the stock are overdone, as far as we’re concerned.

This is not Pfizer-like criminality, nor Tesla hype.

It’s manufacturing and good, old-fashioned selling.

So when we see numbers like these, we gotta grin and shake our heads.

To wit –

• P/E is a lofty 34.28, though analysts see that contracting to just 23.38 a year from now. All things being equal, that would entail either a contraction in price by A THIRD, or a doubling of earnings in the next twelve months.  Take your pick…
• The stock offers no Yield,
• Has a Price/ Book ratio of 5.06 (way too generous),
• Trades at 759.74x cash (!), and…
• Debt/Equity is out of kilter at 1.71.
• Finally, insiders dumped $25 million in stock over the last six months (10.56% of their stake), of which $20 million was offloaded in just the last two weeks.

You gettin’ the picture?

Now the chart –

Technically, we have a bearish setup whose details are as follows –

1. First, RSI spent nearly two weeks overbought in early August (circled, in red).
2. Directly thereafter, RSI began a nose-dive, going sub-waterline just yesterday (green box).
3. MACD crossed lower nine sessions back, and looks poised to confirm RSI’s bearish action with a dive below its own waterline in the next two weeks.
4. Price-wise, a bearish rising wedge pattern (in red) was completed the very moment RSI was shrieking ‘overbought’!
5. Price is now testing the short-term moving average at $40.50 (black star).  That means we either get a bounce here, or the MA rolls lower, effectively capping the stock price at $40.50.
6. Below that, we’ve a gap to fill at $39.50 (in blue), and…
7. Stronger support at the rising MAs in the 36/37 range (in purple).

All of which points to the immediate DOWNFALL OF OUR ENEMIES!

And a trade that looks like this…

A Jew and His Gold recommends you consider selling the WSC October 21^st 40/45 CALL spread* for a credit of $1.60 (2.30/0.70) and buying the WSC October 21^st 40/35 PUT spread** for $1.55 (2.10/0.55).  Total credit on the trade is a nickel.

[*Sell the 40 CALL and buy the 45 CALL.  **Buy the 40 PUT and sell the 35 PUT.]

Rationale: great return on investment here – a possible $5.05 on nothing laid out.  Adjusted for minimal commissions gives you a return of 3267%.

If you can swing it – you burly he-man, you – you may want to consider taking on multiple units.

Max loss is $4.95 (difference between the CALL strikes less the initial credit).

And the G-d of Israel will avenge His people.

Many happy returns!

Matt McAbby

Follow @HughLOHaynew