The Stock Market is tanking today due to Donald Trump’s trade war with China, so I broke out my shopping list. Albemarle is the dominant lithium producer on the planet today – but the stock has been trading lower since they announced earnings last week:
The stock is the cheapest on my board, trading at a huge discount to their Morningstar Fair Value of $130.00 per share.
Here is the trade:
- Sold: Five (5) June 21, 2019 Puts
- Strike Price: $65.00
- *Premium Collected: $650.00
If I am forced to buy the 500 shares, my entry price will be approx. $63.70 per share – almost a 51% discount to Albemarle’s Fair Value of $130.00 per share – providing a comfortable Margin of Safety. Albemarle pays a 2.02 % dividend – a little light for my portfolio, but the long term upside is massive – global battery factories will need unimaginable amounts of lithium materials to satisfy demand for electric passenger vehicles, heavy-duty trucks, and buses over the next 20 years.
*Excludes transaction costs.
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