The bulls are back this week…
Although we don’t expect the current round of volatility to end just yet, we agree that there are a lot of compelling opportunities in high-flyers that are just reaching support again.
We recommend taking advantage of this short-term momentum by opening a trade in Logitech (NASDAQ:LOGI).
LOGI is one of our favorites because it is fundamentally undervalued.
Unlike some of the so-called “pandemic stocks,” LOGI is positioned to sustain its gains from the long-term work/learn at home trend.
The stock took a hit over the last two weeks as the market sold off, but we expect support in the $120-$121 range to hold.
We like this position because the market is paying too much attention to slowing growth (compared to 2020 pandemic numbers) and is not appropriately pricing in rising margins.
LOGI’s management expects sales this year to be roughly the same as last year, which is saying a lot considering the inflated demand created by the COVID-19 crisis.
However, what should keep the stock rising this year is its ability to generate cash on increased efficiency.
We expect investors to keep focusing on cash-generating stocks like this, which should send prices back up to the highs near $140 per share before earnings in late July.
To take advantage of this, we recommend you sell to open a new put write on LOGI.
We prefer a mid-July expiration, as it will give us some solid option income and provide plenty of time for the trade to play out.
And we’re setting our strike price at the support level that was formed by the prior highs in February, as we expect this level to hold through expiration.
On the date of publication, John Jagerson & Wade Hansen did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
John Jagerson & Wade Hansen are just two guys with a passion for helping investors gain confidence — and make bigger profits with options. In just 15 months, John & Wade achieved an amazing feat: 100 straight winners — making money on every single trade. If that sounds like a good strategy, go here to find out how they did it.