Have some follow-up stuff for that value stock that the stock screener identified as one that may be poised for a turnaround?
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Originally Posted by TrustySam
Exploring Value Investing
So next, was hoping to maybe try buying some value stocks, of companies who have been struggling the last while, who appear to have possibly managed to turn things around? Guess stocks of such companies may sometimes have more room to grow because the price of the stocks may have become quite cheap?
Have been looking for ways to try and find potential value stocks, and found a stock screener over at Zacks.com that helped me find some.
And up popped this recommendation, for MDCO ...
With the following analyst estimates:
Maybe in addition to having the chance to possibly earn 100% gains, picking up a couple of shares of this stock may be a chance for me to work on improving my tendency to do the opposite of buying low and selling high?
One thing am not so sure about - have so far only bought stocks of companies who are already turning a profit, so have avoided companies like Tesla (TSLA). Not sure if it would be better to try to find a value stock that's already turning a profit, or maybe it doesn't matter?
Here's this company's earnings for last year:
Guess maybe tomorrow, can try to find out more about why analysts feel the company may be poised for a turnaround this year, and see if that helps?
Quote:
Originally Posted by TrustySam
The stock from my stock screener's down 6% today - not sure if should be buying the dip, or what? lol
There were a couple of articles listed on the stock's yahoo page that talked a bit more about why the company may do better this year than they did last year - and one of them was especially great, because was wondering if it mattered if the company wasn't turning a profit, and they talked about that in the article.
https://finance.yahoo.com/news/medic...144712327.html
They were saying that if a company isn't turning a profit, then it's important for them to have enough cash to be able to cover their costs - and they feel that MDCO should be able to do that?
Guess they sold off a division that they weren't able to manage profitably, and the deal they made will still earn them royalties on any of the medications that get sold? So they were able to pocket some money from the sale, and now they'll be making money instead of losing money from that division - and they're operations will be streamlined to focus on developing a new cholesterol drug they hope to have ready for FDA approval by the end of this year?
Have been buying those short-term options, and then selling them before they expire. They also have longer-term options, where the holder can buy shares for a set price at the agreed-upon time - maybe that might be a neat way to give value investing a try ... buy buying an option to buy shares instead?
One option to buy 100 shares for $25 in a year's time would only cost $500 - and then here's some other ways an option would be different from buying 100 shares for $25 right now ...
The analysts are predicting that the share price could rise to as high as $49.50 by next year - but guess right now, the market only feels the company is worth $25.37? MDCA was down another 3% today at one point, before rebounding a little - so it feels like there's more risk involved in investing $2,500 in this company, than in something else like Amazon?
One nice thing about the option only costing $500 is that there'd still be $2k free to invest in something that feels safer, like Amazon?
Guess one not so nice thing about the option is that will need for the price of MDCO to go higher than $30 just to break even - and if the price of MDCO in a year's time is $24.99, will lose the entire $500?
Also, the only person willing to sell a $5 option (for 100 shares) actually wants $5.80 for it - guess $80 isn't so much of a difference in $, but was reading in a book that paying more for an option than 1/25 of the strike price of $25 is a super fish move? Guess the higher price will make it that much harder to turn a profit, if the company isn't able to meet analyst expectations?
Does $580 seems like a good enough deal?
Would people rather be the person selling the $580 option, given that MDCO is a bit of a train-wreck?
Last edited by TrustySam; 01-18-2018 at 12:30 AM.