Monday, January 22, 2007

Will Garmin’s GPSs locate a pile of cash?

I just can’t seem to leave the margin alone. It wasn’t but a couple of days ago that some of my CROX got called away and put my margin balance almost to zero. Now tonight I’m right back at it. Garmin (GRMN) bounced around this morning and I “had” to pick up some shares at $49.

Some of my thinking: Earnings are due out February 14th. S&P has a 5 star Strong Buy on the shares and a 12 mo. price target of $61. Back in December GRMN was at $55. The shares are now in the $50 range, that’s about a 10% correction. The February 50 calls are being priced at a nice premium. Garmin has cool toys! All of these ideas and a few others were racing around my head this morning at the same time my available margin was blowing trumpets like Churchill Downs calling me back to the action. I pulled the trigger at $49 and promptly watched it fall below $49. Ain’t that what happens to everyone?

The decision I need to make…soon is whether to sell February covered calls? I could probably get around $2.00 for the February 50s. Take the $2.00 add the $1.00 for the strike price difference, divide that by $49.00 and I end up with around 6% for a month holding time. Not bad and kind of conservative. Or I can wait it out till earnings are reported. If the numbers are good then we race back to $50 (maybe) or above $50 (double maybe with a cherry on top) and I make 10% plus in a month.

Tonight I just don’t know which way I want to hop. If you have a take on Garmin or an opinion on which way I should go then drop me an e-mail or post a comment. Thanks.

That’s it for today. Here’s to being ready to pull the trigger and to keeping an eye on your EveryDay Money.


Grant said...

Good analysis on Garmin. Can't wait to see what earnings has to offer the market.

I think Garmin is a long term hold, and some say that it's very predictable in its seasonality.


Tag_Ends said...

I think you are right about GRMN being a long term holding. I'm just not sure how long I want to hold it in this account. I have been thinking about putting some in my ROTH and seeing how it does way down the road. Thanks for dropping by.