Not Losing = Winning
By Paul Price of Market Shadows
It can be hard to pick stocks that predictably go up. Identifying shares which simply won’t go down significantly is a much easier proposition.
Close-out retailer Big Lots (BIG) has a decent balance sheet and good long-term numbers. EPS grew dramatically over the past decade even though they have stalled since the start of the Great Recession.
Estimates have already come down. The shares have declined by about 20%, from a 2013 peak of $39.22. BIG trades near multi-year support. The stock ventured no lower than $26.70 – $28.90 during the entire period since year-end 2009.
Lows rarely persisted for long. Each of the four previous major sell-offs was followed by a rebound to $39 – $45. Big Lots might be primed for a pop after December 31, 2013, simply from the end of tax selling, in a year when few stocks showed losses.
Market Shadows sold two contracts of the BIG Jan. 2016, $30 strike price puts today at a price of $4.50 per share. Break-even, at just $25.50, is beneath any price at which BIG has actually changed hands during the last four years.
The company’s CEO thought it was a good buy at $35.94 as recently as September 12, 2013.
View all Market Shadows’ open and closed option trades by clicking here .
