The Three Best Cheap Stock Options To Trade This Week
Welcome back from the long weekend! I hope you had a restful holiday break.
No one would blame you if you took a few days off from looking at financial industry news - it can be kind of a chore even on normal days.
But even if you didn't, I'll bet that the options picks I have for you today didn't show up on your radar. The reason for that is because these companies aren't "sexy" in news cycle terms, and they aren't making headlines. Nevertheless, I think they offer some great opportunities for speculative trading.
Let's hit the ground running...
Bet On This Sports Data Firm For Big Wins
Genius Sports Ltd. (NYSE: GENI) develops and sells tech and services to the sports, sports betting, and sports media industries. It has commercial relationships with more than 400 sports leagues and federations, 300+ sportsbook brands, and 100+ marketing customers.
Last Tuesday, the company reported third-quarter results that included a record-high revenue of $69.1 million - an increase of 70% over last year's gains.
It also announced strategic partnerships with a full range of sportsbooks to provide them with its complete offering of NFL-related products. Over 97% of the U.S. market is now using NFL data exclusively through GENI.
But they missed one key benchmark: earnings.
It lost $0.37 per share, much worse than the estimates of $0.12, and investors reacted. Share values dropped 25.29% that day, leaving the stock nearly 60% cheaper than its most recent peak back in May.
Now GENI may not have long-term fundamentals right now, but considering all the agreements in play with major sports leagues and organizers and the recent 25% haircut, I think GENI looks like a good short-term rebound opportunity.
Let's buy GENI Dec. 17, 2021 $12.50 calls (GENI211217C00012500) for $0.50 or less.
There's no need to get too greedy here. Plan on exiting the position for a 50% profit or if shares of GENI trade down to $8.75.
The Upstart Tech Company Giving Uncle Sam A Big Boost
I'm also watching XL Fleet Corp. (NYSE: XL), a Boston-based company with an electric vehicle fleet solution that's caught the attention of the Department of Defense.
With its tech, the fuel economy of any vehicle will rise 25% to 50%, on top of emissions reduction, which has earned the company a contract from the Defense Innovation Unit and the U.S. Army's Project Manager Transportation Systems. The goal is to prototype fuel-saving tech for military vehicles.
That news sent shares up 37.5% last Tuesday only to pull back by market close. Right now, the stock should be up less than 10%.
Now, as much as I like XL's products and the military deal, it's never a good thing to give back so much in a single session. Shares might drift even lower before the stock finds its footing and starts trading higher again.
I'd also like to note that this stock has been a target of the short-squeeze Reddit crowd before, and it will likely be squeezed again. The stock traded as high as $35 last December during the height of the EV craze. With the defense contract announcement, I think we could see that action again, so...
If shares of XL trade down to $4.60 before Dec. 10, 2021, let's buy the XL Feb. 18, 2022 $5/$6 call spread for $0.40 or less. Plan on exiting the XL Feb. 18, 2022 $5/$6 call spread for a 100% profit or if shares of XL trade down to $4.
This Tree Isn't A Dollar Anymore
Finally, I'm watching Dollar Tree Inc. (Nasdaq: DLTR), the discount retailer known for selling items at $1. On Tuesday, the company announced it would be raising prices to $1.25 starting in January. The company says it can no longer afford to stick to the $1 rule for some of its products, thus the price hike.
I've long been on the record as saying that inflation is far more than "transitory," as the Fed would have you believe, and now we're seeing it play out in the discount retail sector.
The market liked the price hike, and shares were up nearly 10% in Tuesday's session.
I also like the price hike because it will immediately improve the company's margins, but a 10% jump in a single session is a bit too much. I'd like to see the stock come back down a little before establishing a trade.
If shares of DLTR close below $138 by Dec. 10, 2021, I like buying the DLTR Feb. 18, 2022 $140/$145 call spread for $2.25 or less. Plan on exiting the DLTR Feb. 18, 2022 $140/$145 call spread for a 100% profit or if shares of DLTR trade down to $128.
Disclosure: None.