Three Trades Closing for Profits Today, and A Missile-Maker on the Launch Pad (AJRD, KSS, DOW, IP)

According to the company’s literature, Aerojet Rocketdyne Holdings, Inc. (NYSE:AJRD) “designs, develops, manufactures, and sells…  liquid and solid rocket propulsion systems, air-breathing hypersonic engines, and electric power and propulsion systems…” the better to kill people.

And it’s a decent business, we suppose.  Not like organic farming, maybe, but whatever blows your whistle…

AJRD is now offering a missile of a trade, with lots of indwelling leverage.

But first, we have three initiatives that need closing.

BIG PROFITS FOR JEWS AND NOAHIDES!

We start with our KSS trade, opened on the 20^th of October in a dispatch called Minor Move – Yields Major Profit.  There, we urged you to sell the KSS November 18^th 30/27.50 PUT spread for $1.19 and buy the KSS November 18^th 27.50/30 CALL spread for $1.35.  Total debit was $0.16.

And today…

The PUT spread can be bought back for $0.65 (0.88/0.23) and the CALL spread offloaded for $1.75 (3.95/2.20).

Get it done and you kiss this one sloppy for a gain of $1.10 on just $0.16 spent.

And that’s 587%.

Anyone take on multiples here?

Never… We’ll never do it…

Sorry, Jack.

Our DOW venture arrived in your inbox on October 12^th.  The missive was entitled Follow the Bouncing Ethylene Rubber Monomer and it recommended you sell the DOW January 20^th 47.50/45 PUT spread for $1.25 and buy the DOW January 20^th 45/47.50 CALL spread for the same $1.25.  Net zero premium was the result.

Today, the PUT spread can be repurchased for $0.50 (1.22/0.72) and the CALL spread relinquished for $1.90 (8.50/6.60), leaving you a tidy NET profit of $1.40 on nothing expended.

Adjusted for minimal commissions gives you a take of 933%.

Moving On!

Last up is our IP endeavor from October 6^th.  Disposable Paper Products Make Their Lewd Return! was the communiqué’s handle, and it suggested you sell the IP January 20^th 35/32.50 PUT spread for $1.25 and buy the IP January 20^th 32.50/35 CALL spread for $1.30.  Total debit was $0.05.

Today, the PUT spread can be closed for a debit of $0.85 (1.40/0.55), while the CALL spread can be sold for $1.55 (4.40/2.85).

Execute, and you pocket $0.70 on just a nickel outlay.

And that’s 1400%.

Good work to Mendy at The Options Wheelhouse for taking on a large dose of this one.

Now back to AJRD…

Bottom line for the stock is she fell victim to the most recent madness of crowds, lost her moorings and headed for the ether.

What was five years ago a precision-tuned, value proposition has today become a loose cannon with blunderbuss accuracy and little aim in owning.

Fundamentals

There’s no question the company is fundamentally challenged, even in this blood-soaked world of war.

Consider—

• P/E is 43.08, and analysts see that being severed in half (nearly) twelve months from now.  Their projections of a Forward P/E of 24.41 means earnings will have to double by next November to maintain the current price, or price itself will be halved to get to the new P/E.  We know on whose projectile we’re betting.
• Dividend Yield is NADA.
• Price to Book is a nuclear 7.50 (!), and…
• Latest Quarterly earnings (two weeks back) were 67.40% LESS than the prior quarter’s numbers.  Not the kind of action you’d like to see as the Ukraine/Russia conflict moves into its second inglorious phase.

Now take a look at the chart—

Our best hunch is that this will unfold quickly, and we’ll close in short order.

Re-entry for space junk is often speedier and more destructive than even NASA imagines.

G-d deliver us continued winnings!

With kind regards,

Hugh L. O’Haynew

Follow @HughLOHaynew