Hello investors! Today I sold a put on CASY 0.00%↑ after a large price drop following their earnings:
CASY 0.00%↑ is a new name that I have not talked about on this channel, but they have been on my watchlist for a while. CASY 0.00%↑ is in the general store category that operates convenience stores and gas stations in the midwest and other rural places. The P/E was in the 40’s before the post-earnings drop and is coming down nicely; however, their earnings and revenue beat estimates.
The reason for the drop is mainly because inside same-store sales increased only 3.2% versus 4.3% a year ago. In addition, their fuel same-store gallons sold were down 0.3% compared to prior year. This is all to say that management kept guidance unchanged for the year.
Moreover, they are running ahead of schedule, as per their investor presentation, on the integration of their acquisition of Fikes who owned the CEFCO convenience store chain. This acquisition adds 148 stores in Texas, 40 in Alabama and Florida, and 10 in Mississippi which really expands their position in the nation.
With analyst estimates in the $800’s, growing revenue and earnings, and the growth in number of stores, I was able to write a put on this with a short expiration date at a strike of $600 getting about $1150 of premium. My plan is to keep the cash safe for now just in case I need it. If the price does head below $600 and I get assigned, I will start selling covered calls on the position which should more than cover the monthly margin.
After the drop, this seems like a good risk/reward play at least for the next 20-30 days.
As always, this is not financial advice, so please do your own due diligence before investing your own money.