Today’s 30 year bond auction just flashed a warning. The Treasury had to offer 5.62% to sell the bonds, and demand still came in lighter.
Blake Young says borrowing costs are heading higher from here. Yields now sit at levels last seen in 2001 and 2002.
Blake isn’t waiting for the squeeze. He screened 3,000 stocks for companies that don’t need to borrow and found 44 that qualify.
Tonight’s video breaks down the auctions and his top setups from that list:
The 30 year yield jumped from 5.31% to 5.62% while the bid to cover slipped from 2.6 to roughly 2.5. Blake reads that as a steepening yield curve and higher long term borrowing costs.
Blake’s screen requires positive fixed charge coverage, growing free cash flow year over year, and long term debt to capital between 0% and 40%. He considers anything above 60% overleveraged.
First Solar (FSLR) fell from 320 to 177 and has held there for two weeks. Blake sells the 30 delta put for a 4.2% return, with the stock needing to drop roughly $12.20 before he loses a penny.
Newmont (NEM) and Wheaton Precious Metals (WPM) both gapped down and closed up near support. Blake sells puts near 30 delta on each for 2.5% to 2.6% returns on risk.
Walmart (WMT) broke its downtrend with its highest close since earnings. Blake buys the 107 call and sells the 113 call for close to $3, a trade built to pay even if the stock stalls.
Earnings season is starting, so Blake flags the reports coming on several of these names. The video covers each one, plus his Abbott Labs (ABT) setup.
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