BJ Services (BJS) has received a 9 of 10 rating from MSN’s stock rater algorithm and Jim Cramer in last Friday’s lightning round excitedly told viewers, “Holy cow is this business on fire…” Insider trading provides a positive sign as well, a company director, William White, purchased nearly $140,000 of stock on January 30th. Cramer did pull back a little on BJS saying he preferred Transocean (RIG) to BJ Services.
Audio Podcast:
An audio podcast of this article is available at: poweropt.com/podcasts/2007_02_19_BJS.mp3
BJ Services Company, on January 25th,reported net income of $207 million for its first fiscal quarter ending December 2006. That equates to $0.70 per share. The quarter’s earnings per share increased 46% compared to $0.48 per share in the first quarter of fiscal 2006.
Analysts are continuing their rosy outlook predicting $0.73 a share in the current quarter and $2.82 for the current fiscal year. This compares to $0.70 a share last quarter and $2.75 a share last year.
The company has 57% less debt to equity ratio than the industry average, and BJ Services currently has a P/E of 9.80 in an industry where the average is nearly 19.
BJ Services is a provider of pressure pumping and oilfield services for the petroleum industry. The Company’s operations include four principal segments: U.S. and Mexico Pressure Pumping Services, International Pressure Pumping Services, Canadian Pressure Pumping Services and Oilfield Services Group. During the previous fiscal year ending at the end of September 2006, the Company generated approximately 85% of its revenue from pressure pumping services and 15% from the oilfield services group.
Competitors:
Competitors for BJS include: Baker Hughes Inc. (BHI), Halliburton Co. (HAL), Schlumberger Limited (SLB), Complete Production Services Inc. (CPX), Infinity Inc. (IFNY), and RPC Inc. (RES).
Potential Trades:
All of the following option trades have 26 days until expiration. BJ Services is currently trading at $26.95. These trades were discovered using the powerful suite of option search tools found at PowerOptions.
| Covered Call – BJ Services Co. (BJS) $ 26.95 (26) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| OPTION | Strike Info |
Opt Bid |
% Dnsd. Prot. |
% If Unch. |
% If Asgnd |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| BJSCY | 07 MAR 27.50 | $0.60 | 2.20% | 2.30% | 4.40% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Bull-Call Debit Spread — BJ Services Co. (BJS) $ 26.95 (26) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sell Opt |
Strike Info |
Bid Price |
Buy Option |
Strike Info |
Ask Price |
% Return |
Break Even |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| BJSCY | 07 MAR $27.50 | $0.60 | BJSCX | 07 MAR $22.50 | $4.60 | 25.00% | $26.50 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The covered call trade, an out of the money covered call, offers 2.2% downside protection and a potential profit of 2.3% if the stock remains unchanged. If the stock rises above the $27.50 strike price ($0.55 or 2.0%) the potential profit becomes 4.4%. The net cost of this trade, per 100 options, is $2,635.00.
The second trade is a bull call debit spread. This trade offers 25.00% potential profit if the stock rises above $27.50 ($0.55 or 2.0%). If the stock decreases below the break-even price of $26.50 ($0.45 or 1.67%), the investment begins to lose money. If the stock price goes below the lower strike price of $22.50 ($4.45 or 16.51%), the entire investment is lost. The net cost of this trade, per 100 options, is $400.00.
For more information about how to identify and research great option trades, visit the PowerOptions website. There you will find the data you need to make quick, clear, and informed decisions. You can trade knowing you have found the best investment. Also, PowerOptions will allow you, with a few quick clicks, to quickly and accurately compare trades. PowerOptions‘ premium customer support is second to none in the industry. They can be easily contacted when you need them at their toll-free number to answer customer questions. Call them now toll free at 877-992-7971.
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[tags]William White, U.S., Mexico, Canadian, BHI, Baker Hughes Inc., BJS, BJ Services Co., CPX, Complete Production Services Inc., HAL, Halliburton Co., IFNY, Infinity Inc., RES, RPC Inc., RIG, Transocean Offshore Inc., SLB, Schlumberger Ltd., covered call investment strategy, investment strategy, iron condor, poweroptions, stock option trading, stock options[/tags]