Posted on June 14, 2021
We’re going straight for the jugular today, with a downside bet on the folks who coat, paint and spill filmy glazes all over your car, XPEL, Inc. (NASDAQ:XPEL).
There’s not a lot you need to know about these jalopy-stainers.
First up, the fundamentals are anything but convincing, even for a ‘growth’ stock – whatever that might mean in this environment (a security that rises in value too fast to be explained otherwise).
The stock climbed 1156% since striking its Batflu bottom last March, with an outsize portion of the gain coming in just the last month, following a finger-licking earnings report.
The company beat expectations handily, scoring $0.25 on analyst projections of just $0.18.
But it’s more in the technical realm that we now see cause for worry.
Below is the daily chart for the last six months.
Pay particular attention to RSI and MACD indicators at the bottom, both of which are now pointing to a rally that’s run out of steam –
Here’s the weekly –
Technically, the weekly shows –
And it’s to that level, ultimately, that we expect XPEL to be expurgated.
So we’re trading her thus –
A Jew and His Money recommends you consider selling the XPEL October 15th 80/85 CALL spread* for a credit of $2.00 (16.80/14.80) and using the funds to purchase the XPEL October 15th 85/70 PUT spread** for a debit of $6.10 (9.60/3.50). Total debit on the trade is $4.10.
Rationale: with the expectation that XPEL is about to turn lower, the trade affords us both time and cost advantages.
Specifically, four months and just $4.10 expended for a maximum potential profit of $10.90.
Maximum potential loss on the trade is $9.10 (difference between the CALL strikes plus the initial debit).
Breakeven arrives at $80.45.
Turn to Hashem – He and only He can save you!
With kind regards,
Hugh L. O’Haynew