With nearly four million apps in Google Play Store, developers face the daunting task of targeting potential customers. Today’s recommendation makes this effort easier by simplifying the app advertising, delivery and tracking process, helping developers and digital advertisers increase revenue and user engagement at scale.
Cabot Profit Booster 136
You really never know how diversified your portfolio is until there is major sector rotation. And I’m happy to say the last several days as hyper growth got hit hard, and cyclicals came in favor, our portfolio has performed very well as I’ve worked hard to keep the portfolio diversified!
One last note before we dive into this week’s stock idea … I oftentimes get questions from subscribers about how you would set stops or how to manage a position. I have NO problem answering those questions.
That being said, you don’t have to be terribly worried about setting stops or when to exit a trade as those responsibilities are mine as the Chief Analyst. And if we need to sell, you will get a detailed email with instructions on how to exit the trade.
The Stock – Digital Turbine (APPS)
With nearly four million apps in Google Play Store, developers face the daunting task of targeting potential customers. Digital Turbine makes this effort easier by simplifying the app advertising, delivery and tracking process, helping developers and digital advertisers increase revenue and user engagement at scale.
Digital Turbine’s software has been used by more than 40 mobile operators and OEMs (including Verizon, AT&T and Samsung), delivering more than three billion app preloads for advertising campaigns. Carriers use the firm’s DT Ignite software to install apps they want you to see during your phone’s initial set up, or after factory resetting. (To date, Digital Turbine’s software has been installed in more than 400 million devices globally.)
While lockdowns have resulted in lower ad campaign spending generally speaking, it has also resulted in much higher smartphone use among individuals (good news for future sales). The firm’s fiscal Q1 boasted 93% revenue growth to $59 million, thanks to higher revenue per device (RPD) figures from U.S. and international carrier partners. And per-share earnings of 13 cents per share were up 160% from a year ago and ahead of estimates.
Digital Turbine’s market share is expanding, but management believes it’s still under 10% of total smartphone penetration, leaving lots of room for future growth. Analysts see revenues up nearly 70% this year while earnings more than double, and even that could prove conservative.
Technical Analysis
It took a while for the bull market in APPS to gain traction after the March panic, as investors were unsure of the advertising climate as everything locked down. But all of that changed when shares broke out on June 3 on extremely high volume. Shares advanced nicely for a while after that, and the four-week rest under 14 gave way to a massive, earnings-induced gap up last week. Stop — 17.5
The Covered Call Trade
Buy Digital Turbine (APPS) Stock at 22, Sell to Open September 22.5 Strike Calls (exp. 9/18) for $1.65, or a Net Price of 20.35 or less
Static Return: $165 per covered call (8.1%)
Breakeven: 20.35
Covered Call Return (if assigned): $215 per covered call (10.56%)
Please note, the stock and options prices will be moving throughout the day, so these prices are simply an approximation of prices that you should be able to achieve.
However, the important component of this equation is that the stock price paid, minus the premium received via the call sale, equals the Net Price, or 20.35 or less. (In this case 22 minus 1.65 = 20.35. Or another example is you could pay 21.5 for the stock and sell the call for 1.15, which also equals 20.35)
For every 100 shares of stock you buy, you can sell 1 call. For every 200 shares of stock you buy, you can sell 2 calls. And so on …
Open Positions
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