Last week, I asked you to look into an American company sporting a single-digit ticker symbol: F.
I’m sure regular readers of this column thought I was out of my damned mind…
“Doesn’t he know this space is reserved for stocks that going to run? Biotech start ups looking to cure cancer… junior miners digging up Aztec gold… Icelandic frackers sitting on explosive gas veins? What the hell do we want with ‘F’?!?!”
Try this on for size: A week or so ago, “F” was trading for $13.75. Then Japan was slammed by the great hat trick disaster: a 9.0 earthquake, massive tsunamis, and multiple nuke meltdowns. Last I looked, “F” shares were trading up to $15.09, a gain of some 10% in a few days.
But I didn’t just ask you to buy shares
I told you that select call options stood to gain as much as 291%.
The option I was specifying is pretty vanilla as these things go, with an “in-the-money”13 strike price and June expiration.
Last week it was available for $149. This week it was trading for $220 for a quick gain of 48%.
Now I am going to ask you yet again to think about buying F calls, because there are strong indications that the underlying shares’ gains are about to quadruple. This spike ought to push the call options I mentioned up to $651 for another gain of some 190%.
Does that get the attention of all you small-cap-biotech-mining-stock-freaks?
If you want to know what it takes for a massive American blue chip stock to run like a mad-ass, triple-digit small cap — and how are you supposed to know when that’s about to happen? — then keep reading.
If technical arguments like that irritate you, and you really just want to know the name of that F option, then feel free to skim down to the bottom of this article. Eventually, you’ll be back…
But for now, enjoy. This one’s on me.
Deep Background
If I were writing up the usual briefing, I might start with the company’s history and business model. But it’s Ford, people. Henry F. started it up back in 1903, and went on to invent mass production, yadda yadda.
What you really need to know now is that Ford crumbled years before its competitors this last go-round — remember exploding Ford Explorers on melting Firestone tires and all that? — and that this is a good thing.
When the rest of the U.S. auto industry hit the fan in 2008, Ford had already fired its loser managers, repaired its reputation, sold off irrelevant divisions, and paid out for a strong development pipeline of well-engineered fuel efficient models.
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Unlike their competitors, Ford has not gone bankrupt, stiffing its stock and bond holders. It has NOT been sold off in pieces to the Germans and Italians. And it is not currently suffering through endless safety recalls and lawsuits.
In 2010, Ford outsold Toyota — and now threatens to overtake GM for the top spot in the automotive food chain.
Memetically, Ford has been crushing its rivals, as demonstrated by this chart (click on charts to enlarge) showing Ford’s dominance of Google searches for the past year.
Of particular interest is Ford’s crushing 8.25/1 win over the reborn GM.
This memetic dominance has clearly translated into share price dominance, with Ford shares posting 35% gains over the past 12 months while Toyota broke even at best and GM’s long-awaited IPO languished in negative territory.
The Current Situation
All of this action predates the Japanese triple crisis (earthquake-tsunami-nuclear meltdown), which has seen production shut down due to lack of electric power, dockside inventory destroyed, and export shipping curtailed…
And what few Japanese cars are reaching U.S. dealers are getting jacked pricewise.
The Japanese catalyst comes at a perfect technical moment: F shares had already set a bottom at the lowest edge of the rising price channel and the 200-day moving average.
Now buyers have a news/value excuse to match their preexisting technical predilection.
The same technical chart provides us with a high probability price target at the 50% Fibonacci Retracement marker at $20.00 some six to eight weeks out.
Tactics
As mentioned earlier, you could simply buy shares of F looking for a 34% gain by midsummer. But I know that many of the cowboys who read this column are looking for more bang for your buck…
So the speculators among you might want to check out Ford June 13 Calls (F1118F13). As I sit to write, they are available for $2.21 with a posted delta of 0.8556.
Once again, a 34% rise for F ought to push these calls to $6.51 for a gain of 190.49%.
And that ought to be enough money to satisfy even the greediest among you.
If you want to hear more about memetics and viral investing — or technical stuff like Fibonacci ratios and the like (or less, for that matter) — feel free to contact me at ALass@me.com.
I will warn you right now that if no one stops me, I will have more of the same for you next week — including another blue chip stock that looks like it is about to eat a bullet, and the option you might buy to leverage its death into triple-digit gains.
Sincerely yours,
Adam Lass
Editor, Wealth Daily
