GNC/Japar - Long, slow turnaround for them (if it works). I think $3 is a good price ($250M) with $2.5Bn in sales and $19.5M (0.44/share) made in the past two quarters. There's really no logic to this price - it's just going to take the markets a long while to accept that.
SPWR/StJ - The Trump Administration is still waging a stealth war against solar and other renewables, despite their falling out with the Kochs but I don't see how it affects the long-term trend towards solar on a global scale. They may have a rough patch on trade issues but, in the long run - it's the future.
I like the long-term play at this price though we already have them in our portfolios. As a new trade I'd go for:
- Sell 10 SPWR 2020 $7 puts for $2.25 ($2,250)
- Buy 20 SPWR 2020 $5 calls for $2.65 ($5,300)
- Sell 20 SPWR 2020 $10 calls for $1.15 ($2,300)
So that's net $650 on the $10,000 spread that stars off $4,000 in the money - not bad! Upside potential is $9,350 (1,558%) if solar power manages to survive the Trump era.
