6 Awesome Stocks That Generate Income
October 16th, 2020
It was a stellar week to be an Options Income Blueprint member, as we closed out six winning trades. Traders who sold just one contract of each of those positions could have booked $342 in cash.
Here’s a quick rundown:
Some of the names on the list are Options Income Blueprint favorites that we have traded many times in the past. Others are new to our trading roster.
Today, I’m going to do a quick run-through of each to tell you what I like about them.
The company has done the seemingly impossible — create a shoe that is so uncool it’s actually cool.
The company has gone through some growing pains over the years since its lightweight foam clog debuted in 2002. In 2018, Crocs mysteriously became “fashionable” again, and that popularity has not yet waned. This has been helped in part by collaborations with celebrities like Post Malone and Justin Bieber.
The super comfortable and easy-to-clean shoes are also a favorite among health care workers. Earlier this year, the company donated thousands of shoes a day to frontline health care workers fighting the coronavirus.
Analysts have in recent weeks been revising their estimates for the company’s earnings higher for the coming quarter and the full year.
This was our first trade on Crox in the Options Income Blueprint program, but I expect there will be more to come.
Advanced Micro Devices (AMD)
Advanced Micro Devices has done the improbable. A few years ago, the semiconductor maker was teetering on the edge of bankruptcy. Today, shares are up more than 4,000% and the company is neck in neck with its decades-long rival and granddaddy of the chip sector, Intel (INTC).
Shares advanced substantially this summer following an earnings and revenue beat. The results were due in large part to a 45% year-over-year sales increase in AMD’s flagship computing and graphics division, as well as solid sales in its other divisions.
The stock also got a boost from news in July that Intel would be delaying by six months the release of its next-generation 7-nanometer chips. The next-generation chip set market is highly competitive, and Advanced Micro Devices already has a 7nm chip. This means Intel is going to lose market share to its smaller rival.
Analysts expect the coronavirus pandemic will help underpin AMD’s graphics processing unit sales. GPUs are used in things such as mobile phones, personal computers, workstations and game consoles.
I think that’s just the start of it. We are in the midst of a development “supercycle.” As transistors — the building blocks of integrated circuits — shrink, you can fit more of them on a chip. This, in turn, means better performance for your devices. As more powerful chips become available, it spurs the development of new-and-improved devices. This creates demand for new, smaller, faster chips, and round and round we go.
AMD is prime income-generating material. We have traded the stock four times so far in 2020 with Options Income Blueprint members earning a potential $272 in income.
Herman Miller (MLHR)
Herman Miller manufactures office furniture and equipment and home furnishings. It sells its products for use in corporate offices, conference areas, transportation terminals, healthcare facilities and educational settings, as well as for use in home offices.
The dip in demand from businesses due to the shift to remote work has been partially offset by demand in the retail segment as people looked to furnish their home offices. And management has noted a pickup in corporate orders in August and September.
Shares shot up last month after Herman Miller reported better-than-expected fiscal first-quarter results and the reinstatement of the company’s dividend. Quarterly revenue fell less than 7% year over year, and earnings per share of $1.24 came in well ahead of analysts’ consensus estimate of $0.26.
This was our first time trading this stock for income, but I anticipate MLHR will give us more opportunities.
JPMorgan Chase (JPM)
The financial sector has been one of the poorest-performing sectors of 2020. In fact, only the beleaguered energy sector has done worse.
To be sure, banks have faced some serious headwinds this year amid the coronavirus pandemic and resulting economic fallout. These include record low interest rates putting pressure on margins, high loan loss provisions and credit losses.
Yet, JPMorgan Chase just posted third-quarter results that beat on the top and bottom lines.
Helped by better-than-expected trading results, the bank generated quarterly revenue of $29.9 billion, about $1.5 billion above analyst expectations. JPM reported a profit of $9.44 billion, or $2.92 per share, which was well above the $2.23 per share consensus estimate.
Management noted an increase in investment banking fees and a decrease in loan-loss provisions.
JPMorgan CEO James Dimon has expressed concern about a double-dip recession if Congress and the Trump administration can’t get their act together and pass an additional round of fiscal stimulus.
This would obviously be bad news for JPM — and the rest of the country — but, for now, there’s plenty of income to be made on the stock. So far this year, we’ve traded it three times, booking a potential $155 in cash.
Corning makes specialty glass, ceramics and related materials used in mobile phones, LCD TVs, notebook computers and flat panel desktop monitors — all products that are in high demand. You might have heard of its Gorilla Glass product, which is an ultra-thin, ultra-durable glass sheet used for display devices such as mobile phones, tablets and notebook PCs.
The company also specializes in technologies, including advanced optics, primarily for industrial and scientific applications. The need for efficient data transfer and networking systems on mobile devices should help drive growth in Corning’s fiber optic solutions business.
What’s more, Corning has entered the race to produce billions of medical-grade vials to hold a coronavirus vaccine. Anticipating a shortage of cold-resistant glass vials to handle a frozen vaccine, the company secured a $204 million contract from the federal government to increase its production of these vials. It plans to make hundreds of millions of pharmaceutical-grade glass vials next year.
The focus on medical glass has caught the attention of analysts and investors, yet the stock remains undervalued. Corning expects to grow sales at a compound annual rate of 6%-8% and increase annual earnings per share 12%-15% through 2023.
We’ve traded GLW a whopping nine times so far this year. Eight of those positions were winners while one was a breakeven trade. Members who sold just one contract of each could have earned $356 in income.
Chewy is both a pandemic stock and a pure growth play. If you own pets, you’re likely familiar with this online retailer of pet food and other supplies.
I was a big fan of Chewy even before the pandemic accelerated the shift away from physical stores to digital shopping. That’s because the company is well-positioned to take advantage of another obvious trend: how much Americans love their pets.
Research shows pet market sales have been steadily increasing. Americans spent an estimated $75.38 billion on their pets last year, according to research complied by APPA. That’s up nearly 4% from 2018 and more than double spending levels in 2005.
Market research publisher Packaged Facts estimates that online sales accounted for 20% of total pet product sales in 2019, with average online spending per shopper totaling $744. The firm predicts the percentage of pet product sales that take place online will steadily increase over the next few years, hitting 23% in 2023 — and that estimate was made prior to the coronavirus pandemic.
Chewy was growing active customers and revenue at a double-digit clip before anyone besides epidemiologists and biology students had heard the term “coronavirus.” I expect the global health crisis to accelerate this growth, as pet ownership and the sale of pet-related products are booming.
CHWY has been on an absolute tear in 2020, and we have traded it successfully seven times this year, earnings a potential $636 in income.