4 Stocks for Income Hogs

Michael Shulman

I’m an income hog.

I admit there’s nothing I like better than putting cash into my account, week after week by selling low risk options.

For the last 8 years, I’ve been helping fellow income hogs like you do exactly that . . .

. . . put extra cash into your account, week after week, every week.

My Options Income Blueprint Members are averaging OVER $800 per month in total income from my “Income Hog Options” Trade Recommendations — that’s $800 each and every month!

One of the keys is uncovering the BEST companies with the BEST options positions.

Here are 4 BEST stocks for income hogs like you and me.

 

An Cash Generating Retailer in an Amazon Dominated World

We’ve traded Target (NYSE: TGT) successfully four times so far this year — most recently earlier this month when we booked a 1.4% return in three days, or 173% on an annualized basis.

The company’s story has only improved since that trade.

While a number of retailers have delivered disappointing results recently, Target blew through analysts’ earnings and sales estimates.

It also delivered better-than-expected same-store sales growth of 4.5% versus an estimated 3.6%. And management upped its full-year profit forecast.

High points included the performance of new, smaller footprint stores, a 3.4% rise in comparable sales and a 34% jump in digital sales. The company is on track with its business model to leverage the in-store shopping experience with easy-to-use online purchasing.

Management also announced a new initiative — its Good & Gather grocery brand rollout, which it expects to be a multibillion-dollar brand by the end of next year.

Well-managed big-box stores have survived being “Amazoned” and are now pushing back. Clearly Target is leading the way.

 

Collecting Income From Your Local Healthcare Provider

CVS Health (NYSE: CVS) is bouncing back from a slow start in 2019, due to a weak Q1 earnings report, fears of Amazon (AMZN) entering the prescription drug business and regulatory hurdles facing its Aetna acquisition.

But I remain bullish on the stock. In addition to the company’s strong fundamentals and the potential growth opportunity that the Aetna merger presents, management is making wise choices about how to spend its money.

After the Aetna acquisition, CVS has said it would return to profit growth next year and announced it is expanding the number of its HealthHub locations to 1,500 by 2021. HealthHub stores are mini clinics that offer on-site treatment for chronic conditions, lab services, and access to nurse practitioners and dieticians.

Providing services such as this aligns with the company’s strategy of reducing Aetna’s reimbursement costs to the chronically ill. In theory, low-cost screening will also reduce Aetna’s costs if CVS customers do not become Aetna patients asking for reimbursement. I believe this is a terrific strategy given the current state of the U.S. health care industry.

And CVS provides income hogs a real chance to collect extra cash selling weekly and month put options.

 

Increasing Chip Demand Means More Cash

We have traded Micron Technology (NASDAQ: MU) successfully three times this summer, racking up a combined total of $163 per contract.

Micron is one of the largest suppliers of NAND flash memory chips, which go into mobile devices such as phones, tablets and laptops. It is the technology leader in this market, giving the company the ability to charge more for its chips.

Business is good, based on the last earnings announcement, and management forecasts a rebound in memory demand for the rest of the year.

After a rocky 2018, shares of MU are up over 50% year to date on calls for increased chip demand and hopes of an industry-wide recovery. The stock has also garnered some positive coverage from analysts recently, which is helping boost shares.

Recently Longbow Capital upgraded MU to “buy” from “neutral,” citing improving fundamentals in the memory and flash storage chip market.

And earlier, KeyBanc Capital Markets reaffirmed its “overweight” rating, calling for improving demand for memory chips into next year.

Despite the massive run-up in shares, MU remains extremely undervalued. The combination of a dirt-cheap stock with elevated volatility (read: premiums) makes MU an ideal “income hog” stock to sell put options against.

 

Real Income From a Biotech Stock

Investors don’t think of “biotech stocks” as income investments. But there are exceptions like Exact Sciences (NASDAQ: EXAS).

This is a molecular diagnostics company that manufactures Cologuard, the only FDA-approved non-invasive screening test for colorectal cancer that can be done at home.

On a personal note, I have a family history of colorectal cancer and have been screened for it since I was 40. Cologuard is aimed at adults 50 years or older who are at average risk for colorectal cancer. One customer even shared in a recent webinar that the Cologuard test saved his life.

Exact Sciences is at the forefront of a massive R&D effort by dozens of companies to develop non-invasive tests for the early detection of various forms of cancer. In addition to Cologuard, the company is working on a blood-based test to detect a common form of liver cancer.

While Exact Sciences is not yet profitable, which is not unusual for a biotech firm at this stage, the growth of Cologuard has been impressive.

Even though shares sold off recently after a solid earnings report, management hit back immediately, releasing a statement about what they called the “unrealistic assumptions” underpinning the research. They also noted that close to 3 million people have received colorectal cancer screening with Cologuard since it was approved by the FDA.

Shares have bounced back a bit since then, but this sell-off provides an excellent opportunity for us to sell put options for generous cash profits.

 

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About The Author

Michael Shulman is a 30 Year Veteran of the financial markets – as a trader, a financial analyst, a financial writer and most recently as an educator.

Most importantly, since 2010, he has dedicated himself to teaching income investors how to get more income from their portfolios using simple yet safe options selling strategies which produce income every week. This approach was developed from the ground up in Mr. Shulman’s own accounts, his goal to develop a strategy that cannot be replicated by institutional investors of any size and therefore independent of fads and trends that change too often to provide a consistent approach for individual traders.

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