Investors,
Welcome to the AlphaMemo, a newsletter offering the top posts, data, and information gathered from around the Internet as well as our thought provoking trade ideas.
Throughout the month I screen for stocks and look for trade ideas in one of the following categories:
Growth stocks meeting my technical analysis to enter a favorable risk-reward position (shares).
Single names to generate income by selling cash-secured-puts.
Similar to above, but with stable ETFs containing a healthy mix of growth/dividend companies.
The goal is to use a portion of my portfolio to swing trade or build positions in high-conviction growth names and the other portion to generate re-investable or disposable income by selling options on lower beta (lower risk) ETFs and single stocks.
These tickers were scanned using the following formula:
Large Cap Stocks ($10b+ Market Cap)
Offers Dividend
EPS Growth last 5 years is positive
EPS QoQ is positive
Let’s be real, we aren’t here to gamble our life savings away, an annualized return of 20% would more than suffice while taking control of your portfolio. Let’s look at the 5 stocks I’ve selected from today’s scan.
Disclosure: No current position in any names mentioned, but will potentially look at opening positions in the next 72 hours.
Keep in mind when I sell options I do so with the intention of selling 4-6 weeks out (days to Expiration or DTE), and at-the-money (ATM). Or usually the first strike in the money. Why? These are stocks with low beta, offer a good dividend, and also wouldn’t mind holding if assigned the shares.
#1: Bank of Montreal - BMO
Looking at BMO that has showed recent strength since December. We are still relatively close to 12-month low, which gives me confidence in this name.
Current share price: $97
Div Yield: 4%
Cash Secured Put
17 Feb, 2023 Expiration
$95 Strike PUT sold
$1.50 premium or $150 for 1.6% return in 4 weeks.
18.9% return annualized.