Rite Aid Corporation (NYSE:RAD) Option Calls Provides 128% Potential Profit!
by Ian Harvey
January 14, 2018
PATIENCE IS A VIRTUE!
GETTING OUT WHILST THE GOING IS GOOD!
GREED CAN BE THE UNDOING OF A GOOD PROFIT!
Rite Aid Corporation (NYSE:RAD)
Here is an update of Rite Aid Corporations’ winning options call trade after reporting earnings. This options trade was recommended, to “Cut-To-The-Chase” Members of Stock Options Made Easy, on Thursday, December 28, 2017 -- in the article ““Cut-to-the-Chase” Recommendations - Week Beginning Monday, December 25, 2017”; which produced excellent potential profits of 128% within a couple of weeks of executing the trade – which was longer than normally!
Rite Aid Corporation (NYSE:RAD), a retail drugstore chain, is expected to report earnings on Wednesday, January 03, after the market closes. The report will be for the fiscal Quarter ending Nov 2017. Based on analysts' forecasts, the consensus EPS forecast for the quarter is $-0.02. The reported EPS for the same quarter last year was $0.02.
Wall Street brokerages expect that Rite Aid Co will post $7.74 billion in sales for the current quarter. Rite Aid posted sales of $8.09 billion in the same quarter last year.
Analysts expect that Rite Aid will report full-year sales of $7.74 billion for the current fiscal year, with estimates ranging from $29.65 billion to $30.96 billion. For the next year, analysts anticipate that the company will post sales of $21.64 billion per share, with estimates ranging from $20.96 billion to $22.32 billion.
This year has been a rocky ride for Rite Aid Corporation, with the RAD stock price down 75% in 2017. At the beginning of the year, there was hope that Walgreens Boots Alliance Inc. (NASDAQ:WBA) would pull off the deal to buy Rite Aid. Even in June, there was reason to believe that WBA and RAD would prevail over the Justice Department.
But then the deal fell through. Walgreens quickly worked out another agreement with Rite Aid and regulators gave their stamp of approval in September.
And now, Rite Aid is starting to claw its’ way out of its’ hole.
Rite Aid is quietly staging a relative comeback. The stock's close Friday above $2 is the first time that's happened this month. Shares of Rite Aid have soared 46% since bottoming out in early November.
** OPTION TRADE: Buy the RAD FEB 16 2018 2.000 CALL at approximately $0.25.
Rite Aid Corp on Wednesday, January 03, 2018, posted a jump in quarterly profit, as the drugstore operator benefited from its ongoing sale of 1,932 U.S. stores to larger rival Walgreens Boots Alliance Inc.
Rite Aid's net income rose to $81.03 million, or 8 cents per share, in the third quarter ended Dec. 2, from $15.01 million, or 1 cent per share, a year earlier.
Total revenue fell to $5.35 billion from $5.67 billion.
Clearly, the company’s third-quarter
fiscal 2018 results suggest that it is still struggling with operations, and a
full turnaround is still a long way away.
A look at the recently reported
third-quarter fiscal 2018 results shows that Rite Aid is grappling with the top
line. Though the company’s break-even bottom-line results surpassed the Consensus
Estimate in third-quarter fiscal 2018, sales lagged for the second straight
quarter. Notably, Rite Aid has delivered negative sales surprise in four of the
trailing six quarters.
Further, sales for the fiscal
third-quarter dropped 5.6% year over year. This marked the company’s third
straight quarter of year-over-year sales decline.
The company has a heavy debt burden,
which will only be partly addressed by the proceeds from the sale of stores to
Walgreens. Further, the company is lagging on the margins front and has to
significantly save on drug costs to stay in competition.
At the time of the recommendation the stock was trading at $2.02.
And by the time of reporting earnings the stock price was at $2.14 – and fell to as low as $1.99 by Monday, the beginning of last week.
From there, RAD as been able to climb as high as $2.55 – marking the time to exit this options trade at $0.57 on Friday.
So, for those traders who managed to execute this trade recommended by Stock Options Made Easy; a nice tidy potential profit of 128% within a few trading days.
ACTION TO TAKE…….
"YOU NEED TO BE IN IT TO WIN IT!"
The usual norm for trades following earnings reports is to either to provide excellent results quickly; or if it is disastrous – then it becomes a decision to exit or hold!
In the case of RAD, the result was quite murky and took some time before the stock price began to wind up.
It is often the case, trying to decide if it is worth continuing to hold the trade or exit on excellent profits. It is nearly always prudent to exit a trade before an unknown incident occurs that could rattle a sound profit, and this is a fine example of such a situation.
As you would have by now realized, many of our trades are based on earnings predictions. This is not to say all trades recommended to members follow this pattern, but during earnings season this strategy has been very profitable.
Our approach is to predict whether a company will beat or miss estimates, whether the stock will appreciate or depreciate as a result and what strategies investors and traders can use. This type of prediction is based on thorough investigation and fundamentally based research, and the results have been very exceptional.Our proven track record says it all!!
Members of Stock Options Made Easy are provided with an extensive reason as to which direction a stock will move after earnings, followed up by a recommended options trade.
What To Do Now…….
If you interested in being part of this profitable action just click here……