Shipping stocks have almost universally gained over the past two years. Many of the sectors stocks, Alexander and Baldwin (ALEX), Knightsbridge Tanker (VLCCF) and TBS International (TBSI) to name three, are up over 30% since the beginning of the year.
Banking Industry Investments – Covered Calls
Another industry we’ll consider which has a tendency to hold up well during an economic malady is the banking industry. The idea of banks performing well during tough economic times seems counterintuitive, but the reason banks are non-cyclical is due to lower interest rates. Generally, the Federal Reserve lowers interest rates during periods of economic slowness in order to stimulate activity and help prop up the economy. And banks generally do very well in an environment of low interest rates, as their costs for borrowing money are significantly less.
Investing in Tobacco – Covered Calls
Continuing to evaluate industries with a tendency to hold up well during tough economic times, today we will consider the players in the tobacco industry. Even when the economy isn’t doing so hot, the tobacco industry generally continues to perform well, as tobacco smokers tend to continue to indulge in the product.
Investor’s Business Daily’s Top 100 Stocks – Possibilities Using Covered Calls
Investor’s Business Daily announces its top 100 stock picks each week using a proprietary formula. The PowerOptions weblog thought it might be interesting to take a look at the covered call possibilities.
Investing in Utilities – Covered Calls
Utilities are another sector considered to be less prone to an economic virus. When the economy is feeling ill, people still use electricity, water, gas, etc. Some utilities with a heavy emphasis on supplying industrial customers could be negatively impacted during tough economic times, but utilities supplying its wares to the general population are generally inoculated from catching an economic malady.
Healthcare Investing – Covered Calls
With the economy’s recent anemic performance, we will continue a consideration of industries tending to hold up well during an economic slowdown. Even when the economy is not doing very well consumers continue to go to the doctor, so healthcare is an industry that continues to perform ok in an economic malaise.
Analysts Expect Weak Retail Sales – A Bearish Look at the Retail Sector
There is news from London this morning of US retailers’ stock futures taking a downturn in anticipation of lower than expected earnings. Many retailers will release their first quarter earnings today and experts are saying the results could be tepid because of a colder than normal April.
Investing in Food – Covered Calls
With the economy chugging along in first gear, maybe its time to consider covered calls for consumer staples, for example companies involved in the food industry. Everybody eats, even when the U.S. economy is not performing well. But, maybe instead of USDA prime, we eat more hamburger or even chicken. Even when the economy isn’t doing so hot, companies involved in the food industry generally continue to perform ok.
ALCOA (AA) to make $73.25 bid for Rival Alcan (AL) – Aluminum Covered Calls
Alcoa (AA) and Alcan (AL) shares surged amid news of Alcoa’s planned takeover bid. Alcoa’s stock is up 5.2% this morning to a 52-week high of $37.50 while Alcan’s stock raced up 34% to $81.77.
Ocean Shipping Covered Calls Returns +2.2% in April of 2007
In article “U.S. Trade Deficit – Ocean Shipping – Covered Calls” we analyzed the shipping industry in light of world trade and the U.S trade deficit. We decided the shipping industry was looking bullish and a covered calls stock options strategy might be a fruitful investment. Three of the four positions we selected were fully profitable and the average return of the positions was +2.2%. Interestingly, the GMR position paid out a huge $15 dividend during the holding period. The lone loser was TOPT with a loss of -2.1% on the position, but the loss for the covered calls position for TOPT was not nearly as large as a straight long position which would have resulted in a loss of -4.1%.