The Six Figure Portfolio Coaching Program The Perfect Income Stock - PowerPoint PPT Presentation

The Six Figure Portfolio Coaching Program The Perfect Income Stock 1

•Welcome •Hosts: Dave Durham and Emily Norris •Six Figure Portfolio Coaching Web Site •Calendar of Sessions •Each Session is recorded and posted •Customer Care: support@tradersreserve.com or 866-258-3008 2

Live Trading Tomorrow Tuesday, August 21st at 12:00 PM Eastern 3

Overview • Income Goals and Stocks • Stocks and Trades • Trades and Positions 4

Whoops! 5

Nothing happens before the trend and the company 6

Overview • Trends • Companies • Stocks • Chains 7

Trends 8

A trend is in the real world , not the stock market 9

As always, best in class stocks are potential trades in an addition to those identified through trends 10

One Mega Trend iWorld The company providing the most choices for consumers or businesses wins The company providing the most customized products and services for consumers and businesses wins 11

Current Trends • The New American Consumer • The Digital Cocoon • Sushi, Not Cashmere • Frack Baby Frack • Personalized Medicine 12

New American Consumer • Millennials + Boomers 170MM plus • Frugal. not cheap • Digital • Experience, not stuff • Value includes brand, customer service 13

Digital Cocoon • The home • The desk • The living room • The wallet • Family and friends 14

Sushi, Not Cashmere • Incremental $ = experience, not stuff • Food • Personal services • Travel • What next? 15

Frack Baby Frack • All about shale • The US fracker is the swing producer in the world • A new trading range for oil prices • High quality oil • More natural gas than can be used 16

Personalized Medicine • A great many speculative stocks • Diagnostics is the place to start • A handful of treatments • Long term future of Biopharma • Surprisingly, generics too! 17

What companies are the best performers, now and going forward, inside a trend? 18

They are growing fasters than competitors - market share, revenues profits, margins, ????? or 19

They clearly define the future of that market 20

Among the best companies, what defines the best stocks ? 21

The Best Stocks Are… • Undervalued compared to the market (forward P/E) • Undervalued compared to their market segment or competitors (forward P/E) • Growing faster than sector and/or market • Charts show identifiable long term trading ranges 22

There are exceptions based on the metrics that move the stock on Wall Street Today that metric is revenue/subscriber growth 23

We are pursuing a cash and income generation strategy A great stock may not fit if it cannot throw off cash and income 24

Remember, to be in my bullpen, and maybe yours…. 25

A call or put sold Monday morning. neo strike distant from the share price, must expire worthless at the end each week and generate a 0.5% in cash when sold, 25% a year, independent of the appreciation of the underlying shares 26

You can miss opportunities in stocks that rise faster than the market if they are excluded due to your target rates of return in cash from the sale of options 27

The option chains are critical….and this may mean you need to segment your portfolio by rates of return and potential appreciation 28

We will cover this segmentation in the session on portfolio construction 29

A Walk Through 30

Before that, remember… 31

Your Goals Goals drive everything 32

Just One Silo One silo for income in many forms 33

The Trend —The New American CALLS Consumer and its offspring….. the Digital Cocoon SPREADS 34

Digital Cocoon • The home • The desk • The living room • The wallet • Family and friends 35

Payment Processing • American Express • Paypal (PYPL) (AXP) • CapitalOne (COF) • Square (SQ) • Discover Financial • Verifone (PAY) Services (DFS) • Visa (V) • Mastercard (MA) 36

Why SQ • Two pronged demand - traditional retailers, new gig economy and small business users, the underserved • Complete solution - hardware,software, payment processing interface, add on apps, add on services • New foray into restaurants, including food ordering • SQ capturing end user data 37

Why SQ 38

Why SQ • Serving the underserved • Restaurants • Gig economy • Non-checking, non-credit card users • Bitcoin 39

Why SQ Stock • 48% Year over Year revenue growth • Adjusted (non-GAAP) earnings of $.13 • Forward P/E north of 70 • Street measuring revenue, transaction growth 40

SQ Stock Liquidity is important 41

SQ Chart • Excellent chart • Has the stock risen too quickly? 42

SQ Puts 43

Rate of Return • 11:49 Monday AM • 73.50 put selling for $1.25 • Absolute return = 1.7% • Annualized return (worthless at expiration) = 124% 44

SQ Calls 45

Rate of Return • 11:49 Monday AM • 74.00 call selling for $1.25 • Absolute return = 1.7% • Annualized return (worthless at expiration) = 124% 46

Digital Cocoon • The home • The desk • The living room • The wallet • Family and friends 47

The Living Room • Alphabet (GOOG) • Facebook (FB) • Amazon (AMZN) • Netflix (NFLX) • Apple (AAPL) • Spotify (SPOT) • Disney (DIS) • Twitter (TWTR) 48

Why NFLX • Market dominator, ubiquitous brand • Amazon Prime not a real competitor • International expansion still underway • Compelling lead in content development 49

Why NFLX 50

Why NFLX • Selling agains the cost of cable/subscription services • NFLX wins on content • NFLX wins on cost • NFLX wins on convenience 51

Why NFLX Stock • Large downdraft confirms Wall Street’s focus - subscriber growth • Stock falls from $425 to $325 • Now in a defined trading range • Can you ignore the P/E? We cannot 52

NFLX Stock Liquidity not an issue 53

NFLX (ugly) Chart • Ugly chart • Has the stock fallen too sharply? 54

NFLX (trading range) Chart • Will the trading range hold? • What if it does not? 55

Before the Chains… • Is NFLX a stock you can trade? • It is high risk, is there something I can trade? • One of my tactics is the silly put 56

NFLX Puts 57

Rate of Return • 2:30 Monday PM • 300.00 put selling for $2.83 • Absolute return = .94% • Annualized return (worthless at expiration) = 11% 58

Not a Stock to Trade 59

How do I Find Stocks I Can Trade? 60

Finding Stocks •Your existing portfolio •My recommendations •Your current sources •The real world •Start with what you know, see, can come to understand 61

Simple Filters •P/E against the S+P 500 •P/E against its sector •Revenue growth against S+P, sector •Profit growth against S+P, sector •Profit margin growth against S+P, sector •Implied volatility/moving average bands around earnings dates •And, of course, 0.5% a week 62

Create a Bullpen •Identify, then select 15-30 companies •Diversify across traditional sectors •Segment = cash or appreciation or both •Specify key dates, i.e. earnings •Track performance whether you trade a stock or not 63

Some Sources •Your broker’s resources •Yahoo Finance •CBOE - download list of weeklies •Options Industry Council •Links coming out of SeekingAlpha •Industry newsletters 64

Open Positions •Devon Energy (DVN) 8/24 43.50 put •Square (SQ) 8/24 75 call •TripAdvisor (TRIP) 8/24 54 call •Valero (VLO) 8/24 116 put •Yelp (YELP) (8/24) 48 call 65

Tomorrow’s Trades •Do we do more “consumer” stocks? •Synchrony Financial (SYF) - private label credit cards - an oversight? 66

Tomorrow’s Trades •Diversification? •Gilead Sciences (GILD) 8/31 72.00 put •Marriott (MAR) 8/31 ITM 125.00 put 67

Wrapping Up • Time for Q&A • Recording available tomorrow at 9:00 AM • Reminder, see you next tomorrow at 12:00 for Live Trading •Email additional questions to 6figport@gmail.com 68