“Armchair Trader Series” Recommendations
- Week Beginning -
Monday, February 12, 2018

by Ian Harvey

IMPORTANT NOTE: This is a recommendation and individual members can use their own discretion as to when to enter or exit!

You may also wish to read Stock Options Made Easy Trading Philosophy


Option Trade - Deere & Company (NYSE:DE) Calls

Thursday, February 15, 2018

** OPTION TRADE: Buy the DE MARCH 16 2018 165.000 CALL at approximately $5.00. Place a pre-determined sell at $10.00.

Also include a protective stop loss of $2.00.

Deere & Company (NYSE:DE), engaged in equipment operations, will report its first-quarter results tomorrow, February 16. The company will report its quarterly numbers before the market open, with the consensus calling for earnings of $1.13 per share, and revenues of $6.40 billion. These results would represent year-over-year growth of 85.3% and 36.3%, respectively. During the same period last year the company earned $0.61 per share.

DE dropped with the market over the last week, but overall analysts remain upbeat on the stock, as the underlying fundamentals of the economy remain on solid ground.

The housing market continues to perform well, and an increase in federal spending on infrastructure also creates a favorable environment for the company. Commodities have been good in recent months, which are always a positive for companies like Deere.

DE has a P/E of 23, which signifies it has less downside risk than a majority of stocks that trade with a much higher valuation.

DE has delivered consistent earnings beats over the last eight quarters, with revenues falling short of the consensus just once during the same time period. Expect another good set of quarterly numbers, and the stock to slowly make back some of its recent losses.

Deere expects a strong demand to continue going forward, specifically in the regions outside the United States and Canada. For 4Q17, it expects equipment operations sales to rise 24.0%. It now expects fiscal 2017 revenues from equipment operations to rise 10.0% against the previous guidance of 9.0%.

Also, DE expects the Construction & Forestry segment to continue its robust growth and rise 15.0% in fiscal 2017. The segment will be driven by the worldwide economic growth rate led by construction investments, which are expected to rise 3.0% in the United States.

DE recovered from the global sell-off and was trading 9.1% above its 100-day moving average price of $145.80, indicating an upward trend in the stock. DE’s 14-day relative strength index of 45 indicates that the stock is neither overbought nor oversold.

Deere & Company has a one year low of $106.72 and a one year high of $171.96. The firm has a market cap of $52,600.00, a price-to-earnings ratio of 24.56, a price-to-earnings-growth ratio of 2.38 and a beta of 0.75. The company has a debt-to-equity ratio of 2.71, a quick ratio of 1.95 and a current ratio of 2.12.

Influencing Factors

After Deere’s 4Q17 earnings on November 22, 2017, DE has risen 9.6% as of February 12, 2018. The strong performance helped the stock to keep its momentum up.

Deere’s strong performance was mainly driven by the company’s positive outlook. Deere expects its equipment sales to rise 22% in fiscal 2018. The growth has primarily been driven by the completion of the acquisition of Wirtgen Group on December 1, 2017. Deere expects its net income to be at $2.6 billion for fiscal 2018.

The Wirtgen acquisition is anticipated to drive Deere's results as well. In December 2017, Deere acquired this road-construction equipment maker for $4.6 billion. The buyout will help expand its North America-centric construction business globally and catapult it to the position of an industry leader in the road construction space. Moreover, Wirtgen is expected to add about 6% to Deere's sales for the fiscal first quarter.

Deere projects total equipment sales to increase about 38% year over year in the fiscal first quarter. The forecast includes a positive foreign-currency translation impact of about 3%. The Consensus Estimate for the first-quarter fiscal sales is pegged at $6.4 billion, reflecting year-over-year growth of 36%. The outlook reflects Deere's solid order book based on industry activities and positive trend in retail sales.

The Consensus Estimates indicate that net sales of Deere's Agriculture and Turf equipment segment will reach $4.41 billion in the fiscal first quarter, rising around 22.5% year over year. The Consensus Estimate for Construction & Forestry equipment sales is pegged at $1.78 billion for the to-be-reported quarter, reflecting year-over-year growth of 31.8%. The estimate for the Financial Services segment's sales is $800 million, reflecting year-over-year growth of 15%.

Improved operational performance due to disciplined cost management, and continued investment in innovative technology and solutions will drive the company's performance.

Analysts and Hedge Funds Opinions

Stifel Nicolaus reiterated their buy rating on shares of Deere & Company (NYSE:DE) in a research report report published on Wednesday, January 17th, MarketBeat.com reports. They currently have a $184.00 price objective on the industrial products company’s stock, up from their previous price objective of $161.00.

Also, Vetr upgraded shares of Deere & Company from a buy rating to a strong-buy rating in a research note published on Monday, February 5th. They currently have $177.25 price target on the industrial products company’s stock.

Also, several other equities analysts have recently commented on the company…..

  • Barclays (BCS) has raised Deere’s target price to $176.00, which implies a potential return of 10.5% based on its closing price of $159.21 as of February 12, 2018.
  • RBC (RY) rated Deere as “outperform” with a target price of $190, which implies a potential return of 19.3% based on its closing price of $159.21 as of February 12, 2018.
  • Credit Suisse (CS) has provided Deere with a target price of $198, which implies a potential return of 24.4% over the closing price as of February 12, 2018.
  • Wells Fargo & Co reissued an “outperform” rating and set a $200.00 price objective (up from $170.00) on shares of Deere & Company in a report on Wednesday, January 10th.

The number of analysts tracking Deere has been on the rise over the past four months. Currently, of the 24 analysts tracking Deere, 50% of the analysts have recommended the stock as a “buy,” 46% of the analysts have recommended the stock as a “hold,” while 4% of the analysts have recommended the stock as a “sell.”

The analyst consensus indicates that Deere’s target price is at $171.60. Since November, analysts’ consensus on Deere has moved up from $131.50 to the current consensus of $171.60, indicating a bullish opinion among analysts.

Institutional investors that have recently made a change to their positions in the stock….

  • Capital International Investors grew its holdings in shares of Deere & Company by 35.4% during the third quarter. Capital International Investors now owns 8,807,474 shares of the industrial products company’s stock worth $1,106,131,000 after buying an additional 2,300,531 shares in the last quarter.
  • Bank of New York Mellon Corp grew its holdings in shares of Deere & Company by 21.2% in the third quarter. Bank of New York Mellon Corp now owns 3,621,764 shares of the industrial products company’s stock valued at $454,857,000 after purchasing an additional 634,001 shares during the period.
  • Capital World Investors grew its holdings in shares of Deere & Company by 8.3% in the second quarter. Capital World Investors now owns 3,250,000 shares of the industrial products company’s stock valued at $401,668,000 after purchasing an additional 250,000 shares during the period.
  • Janus Henderson Group PLC lifted its position in Deere & Company by 128.2% in the third quarter. Janus Henderson Group PLC now owns 2,587,339 shares of the industrial products company’s stock valued at $324,942,000 after buying an additional 1,453,754 shares during the last quarter.

Harvey’s Options Volatility Indicator

Summary

DE has delivered consistent earnings beats over the last eight quarters, with revenues falling short of the consensus just once during the same time period. Expect another good set of quarterly numbers, and the stock to slowly make back some of its recent losses.

Therefore, based on the facts above, and Harvey’s Options Volatility Indicator, the following option trade is recommended…..

** OPTION TRADE: Buy the DE MARCH 16 2018 165.000 CALL at approximately $5.00. Place a pre-determined sell at $10.00.

Also include a protective stop loss of $2.00.



Option Trade - Waste Management, Inc. (NYSE:WM) Calls

Wednesday, February 14, 2018

** OPTION TRADE: Buy the WM MARCH 16 2018 82.500 CALL at approximately $1.50. Place a pre-determined sell at $3.00.

Also include a protective stop loss of $0.60.

There are many industries typically known for causing pollution and environmental problems, but Waste Management, Inc. (NYSE:WM) has strong green bona fides. And while its environmental efforts reduce pollution and carbon emissions, it also boosts profits and gives strong competitive advantages.

Waste Management, Inc., a provider of waste management environmental services, is scheduled to report fourth-quarter 2017 results before the opening bell tomorrow, February 15. Last quarter, adjusted earnings beat the Consensus Estimate by 2 cents.

It has also reported better-than-expected revenues in the trailing six quarters. The Consensus Estimate for Waste Management's fourth-quarter revenues is pegged at $3,565 million, slightly higher than reported revenues of $3,460 million in the prior-year quarter. Also, analysts expect Waste Management to post earnings of $0.83 per share for the quarter.

Waste Management is the largest provider of recycling facilities, transfer stations, landfills, recycling facilities, and processing plants in the United States. Waste Management is a solid company because it has a diversified business model serving residential, commercial and industrial customers.

Waste Management is best-known for big green garbage trucks and operating landfills. But it also does more to reduce the environmental impact of all that trash than just about any company on Earth. This includes operating over 140 facilities that separate and process recyclables like steel, aluminum, and glass, and also organics like yard and food waste that it uses to fuel energy.

According to the company's 2017 sustainability report, its recycling segment recovered sufficient raw materials to make 10.7 million tons of paper, metal, plastic, and glass, and saved 62.5 billion gallons of water. The timber resources alone were enough to produce 2 trillion sheets of paper. In sum, its massive recycling efforst kept 37.5 million cubic yards of materials out of its landfills in 2016.

Waste Management has reduced its carbon footprint by using biomethane from its landfills to fuel part of its truck fleet.

Waste Management is also one of the biggest U.S. producers of biomethane -- natural gas that, in this case, it created by the normal decay of the materials in its landfills.

The company produced $856 million in operating cash flows in its most-recent quarter , up 13% from last year and its most ever in a single quarter. And it's likely that cash flows will continue to trend upwards.

Waste Management, Inc. has a 12-month low of $69.55 and a 12-month high of $89.73. The company has a debt-to-equity ratio of 1.60, a current ratio of 0.71 and a quick ratio of 0.68. The stock has a market capitalization of $34,980.00, a price-to-earnings ratio of 25.91, a PEG ratio of 2.25 and a beta of 0.70.

Influencing Factors

WM is the waste company most exposed to recycling and stands to benefit from the 70% of C&D waste redirected towards recycling activities. WM operates 95 MRF operations that handle C&D waste. Additionally, many of WM’s recycling activities require little-to-no additional capital to handle extra demand. Practically speaking, this will enhance shareholders' overall return as capital can be invested in other ventures.

Shares of Waste Management are undervalued by about 20%.

Waste Management is executing well its initiatives to refocus on the core business activities and instil price and cost discipline to achieve better margins. The company aims to focus on improving customer retention by providing better service and higher value solutions.

Since its acquisition of Deffenbaugh Disposal in 2015, the company has extended its geographical footprint and emerged with a stronger financial profile. Waste Management has also acquired Keep It Clean, a local disposal firm, during the quarter. The company's steady stream of accretive acquisitions is likely to drive earnings.

Also, the company's successful cost-reduction initiatives have helped it in accomplishing remarkable gross margin expansion and EBITDA growth over the quarters. It is undertaking several steps to further boost its margins, which are likely to be reflected in the to-be-reported quarter.

As well, Waste Management announced that its board has initiated a stock buyback plan on Thursday, December 14th that permits the company to repurchase $1.25 billion in outstanding shares. This repurchase authorization permits the business services provider to reacquire shares of its stock through open market purchases. Shares repurchase plans are often a sign that the company’s board of directors believes its stock is undervalued.

Analysts and Hedge Funds Opinions

Macquarie upgraded Waste Management from a “neutral” rating to an “outperform” rating in a research report on Wednesday, January 3rd.

Also, several other equities analysts have recently commented on the company…..

  • Zacks Investment Research upgraded Waste Management from a “hold” rating to a “buy” rating and set a $96.00 target price on the stock in a research report on Tuesday, December 26th.
  • Stifel Nicolaus upgraded Waste Management from a “hold” rating to a “buy” rating and lifted their target price for the stock from $80.00 to $95.00 in a research report on Monday, December 11th.
  • KeyCorp lifted their target price on Waste Management from $80.00 to $84.00 and gave the stock an “overweight” rating in a research report on Friday, October 13th.

Two equities research analysts have rated the stock with a hold rating and eight have given a buy rating to the company. The company has an average rating of “Buy” and a consensus target price of $86.78.

Institutional investors that have recently made a change to their positions in the stock….

  • Wells Fargo & Company MN lifted its stake in Waste Management by 1.4% in the 3rd quarter. Wells Fargo & Company MN now owns 7,277,527 shares of the business services provider’s stock valued at $569,612,000 after buying an additional 103,234 shares in the last quarter.
  • Janus Henderson Group PLC lifted its stake in Waste Management by 8.5% in the 3rd quarter. Janus Henderson Group PLC now owns 4,684,275 shares of the business services provider’s stock valued at $366,641,000 after buying an additional 366,450 shares in the last quarter.
  • Voya Investment Management LLC lifted its stake in Waste Management by 0.8% in the 2nd quarter. Voya Investment Management LLC now owns 2,789,574 shares of the business services provider’s stock valued at $204,615,000 after buying an additional 23,505 shares in the last quarter.
  • Swiss National Bank lifted its stake in Waste Management by 1.2% in the 3rd quarter. Swiss National Bank now owns 2,438,703 shares of the business services provider’s stock valued at $190,877,000 after buying an additional 28,700 shares in the last quarter.

Harvey’s Options Volatility Indicator

Summary

Shares of Waste Management have fallen along with the rest of the market and are now at an attractive level. Regardless of whether the recent decline marks the top in the market or peak economic growth of the cycle, there will always be garbage and thus there's a place for garbage companies within a portfolio. The steep sell-off has created this opportunity to pick up a cheap options trade.

Given the sell-off and combined with the upcoming dividend increase, share buybacks, improved profitability from tax reform, and an overall strong economy, Waste Management is an options buy!

Therefore, based on the facts above, and Harvey’s Options Volatility Indicator, the following option trade is recommended…..

** OPTION TRADE: Buy the WM MARCH 16 2018 82.500 CALL at approximately $1.50. Place a pre-determined sell at $3.00.

Also include a protective stop loss of $0.60.



Option Trade - Marriott International Inc. (NASDAQ:MAR) Calls

Tuesday, February 13, 2018

** OPTION TRADE: Buy the MAR MARCH 16 2018 140.000 CALL at approximately $4.00. Place a pre-determined sell at $8.00.

Also include a protective stop loss of $1.60.

Marriott International, Inc. (NASDAQ:MAR) reports fourth-quarter 2017 results tomorrow, Wednesday, February 14, after the market closes. Marriott International is the world's largest hotel company with brands like Ritz-Carlton, Renaissance Hotels and Fairfield Inn & Suites, among many others.

For the quarter, expect the company to post an encouraging performance on both counts driven mainly by significant RevPAR (revenue per available room) growth. In fact, the company is witnessing increased RevPAR in most markets around the world over the last few quarters. The consensus mark for adjusted EPS stands at $1, reflecting an increase of 17.6% from the year-ago actual figure.

Earnings estimates for 2017 hadn't moved in the past 2 months, but are up 2.7% from three months earlier. But 2018 is a different story. The Consensus Estimate expects earnings for this calendar year to jump more than 21% to $5.16 from the previous year's $4.24. The estimates have climbed 7.7% in just the past month.

Notably, over the past year, Marriott stock has rallied 56%, significantly outperforming the industry’s 35.1% growth.

The Consensus Estimate for Marriott's revenues in the to-be-reported quarter is pegged at $5.6 billion. This, when compared with the year-ago actual figure, reflects growth of 3.1%. It is believed that this anticipated growth will mainly be driven by decent RevPAR growth across both domestic as well as international markets owing to increased scale and distribution post Starwood purchase and strong leisure demand. In the last reported quarter, worldwide, system-wide RevPAR rose 2.1%.

Marriott International Inc. has a 1 year low of $85.63 and a 1 year high of $149.21. The stock has a market capitalization of $49,690.00, a P/E ratio of 37.04, a PEG ratio of 2.21 and a beta of 1.35. The company has a debt-to-equity ratio of 1.83, a current ratio of 0.52 and a quick ratio of 0.52.

Influencing Factors

Increasing business and leisure travel on the back of improving economic indicators and positive employment numbers, along with strong transient demand is likely to boost performance in the quarter. Rising North American business and large international exposure bode well for the company.

Expect higher RevPAR, solid cost controls and synergies from Starwood acquisition to contribute significantly to margin improvement, which in turn will boost EPS. In the last reported quarter, MAR had adjusted earnings of $1.10 per share; an increase of 26.4% year over year.

The hotels and motels industry has gained more than 50% in the past year, leaving it a space in the top 28% of the Industry Rank; but MAR has jumped nearly 75% in that time!

The biggest news for Marriot in the past couple of years was its acquisition of Starwood Hotels and Resorts Worldwide, which was a huge hotelier in its own right. The merger was finalized in September 2016, giving MAR even more brands such as Westin, Sheraton and W, among many others. It intends to keep Starwood's expansion rate at the same level, which means those brands aren't going anywhere.

Analysts and Hedge Funds Opinions

Zacks Investment Research upgraded shares of Marriott International from a hold rating to a buy rating in a research note published on Friday, January 19th. They currently have $158.00 target price on the stock.

According to Zacks, “Marriott is currently benefiting from Starwood acquisition, rising North-American business, sizeable international exposure and an attractive brand-position. Marriot’s shares have outpaced the industry in the past year. The company also saw upward revisions for 2018 earnings over the last 60 days. Notably, with the acquisition of Starwood, Marriott became the world's largest hotel company. In fact, this buyout is likely to result in a bigger brand with increased scale and a robust development pipeline in the long run. Yet, lingering political uncertainties in key international markets and currency headwinds might continue to limit revenue growth. Moreover, integration risks linked to Starwood purchase is an added concern. Even so, its investments in technology for hotel bookings are anticipated to improve guest experience.”

Also, several other equities analysts have recently commented on the company…..

  • Royal Bank of Canada lifted their price objective on Marriott International to $159.00 and gave the company an “outperform” rating in a research note on Monday, January 29th.
  • Stifel Nicolaus reaffirmed a “hold” rating and set a $132.00 price target on shares of Marriott International in a research report on Tuesday, January 9th.
  • BidaskClub raised Marriott International from a “buy” rating to a “strong-buy” rating in a report on Thursday, December 21st.
  • Finally, Morgan Stanley reissued a “buy” rating on shares of Marriott International in a report on Friday, December 8th.

One research analyst has rated the stock with a sell rating, nine have given a hold rating, ten have assigned a buy rating and one has given a strong buy rating to the company. The stock currently has a consensus rating of “Buy” and an average price target of $117.21.

Institutional investors that have recently made a change to their positions in the stock….

  • Sandy Spring Bank grew its stake in Marriott International Inc. by 17.1% during the 4th quarter. The institutional investor owned 29,186 shares of the company’s stock after purchasing an additional 4,264 shares during the period. Sandy Spring Bank’s holdings in Marriott International were worth $3,962,000 at the end of the most recent quarter.
  • Rockefeller Financial Services Inc. raised its holdings in shares of Marriott International Inc. by 2,222.2% in the 4th quarter. The firm owned 41,800 shares of the company’s stock after buying an additional 40,000 shares during the period. Rockefeller Financial Services Inc.’s holdings in Marriott International were worth $5,674,000 at the end of the most recent reporting period.

Harvey’s Options Volatility Indicator

Summary

In comparison with its competitors, Marriott's market price is well within reason, trading near the low end of P/E readings within a small group of leading names in the hotel industry.

Marriott's superlative brands, healthy operating metrics, rich cash flow, and enormous room development pipeline, as well as being fairly priced against its longtime competitor group, makes this options trade look feasible.

Therefore, based on the facts above, and Harvey’s Options Volatility Indicator, the following option trade is recommended…..

** OPTION TRADE: Buy the MAR MARCH 16 2018 140.000 CALL at approximately $4.00. Place a pre-determined sell at $8.00.

Also include a protective stop loss of $1.60.



Option Trade - PepsiCo, Inc. (NASDAQ:PEP) Calls

Monday, February 12, 2018

** OPTION TRADE: Buy the PEP APRIL 20 2018 115.000 CALL at approximately $2.10. Place a pre-determined sell at $4.20.

Also include a protective stop loss of $0.85.

PepsiCo, Inc. (NASDAQ:PEP), a global food and beverage company, will report earnings tomorrow, Tuesday, February 13, 2018, before the market opens. The consensus earnings estimate is $1.30 per share on revenue of $19.44 billion, and the Earnings Whisper number is $1.33 per share. Consensus estimates are for year-over-year earnings growth of 8.33% with revenue decreasing by 0.38%.

According to Zacks, analysts expect that PepsiCo will report full-year earnings of $5.22 per share for the current fiscal year, with EPS estimates ranging from $5.20 to $5.23. For the next year, analysts expect that the firm will post earnings of $5.70 per share, with EPS estimates ranging from $5.55 to $5.87.

In Q3 revenue came in at $16.2 billion, missing consensus estimates of $16.3 billion. But the 1.3% year-over-year increase marked the fourth straight quarter of improving sales following eight straight quarters of declines. The company is adjusting to consumers’ need for healthier beverage choices with low salt, low sugar, and more natural ingredients.

Overall earnings estimates have been revised higher since the company's last earnings release.

Expect to see snacks and pockets of strength in emerging markets help push PepsiCo's fiscal 4Q17 earnings higher YOY.

Traditionally pricey for a handful of good reasons, the recent pullback has made PEP look cheaper than usual. As of February 6, PepsiCo stock has declined 5.3% since the beginning of 2018. PepsiCo stock declined 3.5% on February 5—the same day that the S&P 500 Index declined 4.1%. The decline in the stock market reflected investors’ concern about rising interest rates.

PepsiCo has a market cap of $172,510.00, a P/E ratio of 24.83, a price-to-earnings-growth ratio of 3.07 and a beta of 0.68. The company has a current ratio of 1.35, a quick ratio of 1.21 and a debt-to-equity ratio of 2.32. PepsiCo has a 1-year low of $102.44 and a 1-year high of $120.68.

Influencing Factors

PepsiCo reported revenue growth of 1.3% in fiscal 3Q17—the fourth straight quarter with an improved top line following eight quarters of lower revenue. PepsiCo’s revenue growth in fiscal 3Q17 was lower compared to the 2.0% rise in its fiscal 2Q17 revenue. However, PepsiCo’s revenue improved compared to the 1.9% decline in its fiscal 3Q16 revenue.

PepsiCo expects its productivity program to help expand its adjusted operating margin in fiscal 2017. PepsiCo is on track to deliver $1 billion in annual savings under its five-year productivity program from 2015 to 2019. The company’s productivity initiatives include optimizing its global manufacturing footprint, re-engineering go-to-market systems in developed markets, expanding shared services, and streamlining organization structures.

As of February 6, PepsiCo was trading at a 12-month forward PE (price-to-earnings) multiple of 20.5x. The company’s forward valuation multiple has risen 2.3% since the announcement of its fiscal 3Q17 results in October 2017. PepsiCo surpassed analysts’ earnings estimates for fiscal 3Q17 and raised its adjusted EPS (earnings per share) guidance for fiscal 2017.

Analysts expect PepsiCo’s revenue to rise ~1.0% to $63.4 billion in fiscal 2017. Excluding one-time items, the company’s adjusted EPS is expected to rise 7.6% to $5.22 in fiscal 2017.

For fiscal 2018, analysts expect PepsiCo’s revenue and adjusted EPS to rise 3.4% and 8.6%, respectively. Top-line growth and margin improvement will likely drive PepsiCo’s earnings growth.

PepsiCo also boosts its EPS through share repurchases, which bring down the average share count. The company’s planned share repurchase activity for fiscal 2017 was ~$2.0 billion.

Analysts and Hedge Funds Opinions

On January 29, SunTrust Robinson initiated coverage on PepsiCo stock with a “hold” recommendation and a target price of $125.00.

Also, several other equities analysts have recently commented on the company…..

  • On January 4, Wells Fargo raised its target price for PepsiCo stock to $115 from $110.
  • On January 8, Susquehanna increased its target price to $137 from $132.
  • On the same day, Cowen and Company raised its target price to $133 from $128.
  • On February 1, Credit Suisse raised its target price to $124 from $122.

As of February 6, 2018, PepsiCo stock was rated as a “buy” by 13 out of 24 (or 54%) analysts covering the stock. Eleven analysts had a “hold” rating for the stock, while none of the analysts rated it as a “sell.”

Also, the average 12-month target price for PepsiCo stock was $125.49. The target price indicates an upside potential of 10.5%—compared to the closing stock price of $113.56 on February 6.

Institutional investors that have recently made a change to their positions in the stock….

  • Rockland Trust Co. lifted its position in shares of Pepsico by 2.7% during the fourth quarter. Rockland Trust Co. now owns 145,893 shares of the company’s stock worth $17,495,000 after purchasing an additional 3,876 shares during the last quarter.
  • LGT Capital Partners LTD. lifted its position in shares of Pepsico by 2.2% during the fourth quarter. LGT Capital Partners LTD. now owns 177,753 shares of the company’s stock worth $21,316,000 after purchasing an additional 3,780 shares during the last quarter.
  • First American Trust FSB lifted its position in shares of Pepsico by 12.3% during the fourth quarter. First American Trust FSB now owns 70,784 shares of the company’s stock worth $8,489,000 after purchasing an additional 7,766 shares during the last quarter. Windward Capital Management Co.
  • CA lifted its position in shares of Pepsico by 2.7% during the fourth quarter. Windward Capital Management Co. CA now owns 129,819 shares of the company’s stock worth $15,568,000 after purchasing an additional 3,471 shares during the last quarter.

Harvey’s Options Volatility Indicator

Summary

PepsiCo is a leading snack food and beverage company with an extensive presence in over 200 countries. Aside from its wide geographical presence, the company’s strengths also include a strong brand name, a massive product portfolio, and an impressive distribution network. PepsiCo owns several popular global brands, including $22 billion brands like Pepsi, Lays, and Quaker. Each of the global brands generates over $1 billion in estimated annual retail sales.

Changing consumer tastes is pushing PepsiCo to become more innovative with its beverage offerings with low or no-sugar versions and expand in healthier categories like bottled water and ready-to-drink tea. PepsiCo is also focusing on introducing better choices in its snack food business with low salt variants and a higher usage of natural ingredients.

Therefore, based on the facts above, and Harvey’s Options Volatility Indicator, the following option trade is recommended…..

** OPTION TRADE: Buy the PEP APRIL 20 2018 115.000 CALL at approximately $2.10. Place a pre-determined sell at $4.20.

Also include a protective stop loss of $0.85.







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