Buy Old Dominion, SAIA and Werner- Stock and Call Trades

By Linda McDonough • January 19, 2018

Stock Trades:

Buy Old Dominion Freight Line (NSDQ: ODFL)

Target: $168

Buy Up To: $148

Earnings date: February 8, 2018

Buy SAIA Inc. (NSDQ: SAIA)

Target: $94

Buy Up To: $80

Earnings date: February 2, 2018

Buy Werner Enterprises (NSDQ: WERN)

Target: $55

Buy Up To: $45

Earnings date: January 29, 2018

*NOTE: all trades should be executed before earnings dates

Options Trades:

Buy to open the February 16, 2018, call on Old Dominion Freight (ODFL) with a strike price of $150 at $2.43 or lower. Symbol (ODFL180216C150)

Buy to open the March 16, 2018, call on SAIA Inc. (SAIA) with a strike price of $80 at $2.80 or lower. Symbol (SAIA180316C80)

Buy to open the March 16, 2018, call on Werner Enterprises Inc. (WERN) with a strike price of $45 at $.40 or lower. Symbol (WERN180316C45)

Rationale:

My bullish short-term call on the truckers last fall turned out to be longer-term than I expected.

I’ve been watching and waiting for these stocks to dip so that I could add them to the portfolio.

Alas, they’ve gone straight up in an apparent nod to all the bullish news I read on this industry.

Increased driver regulation has forced out many of the smaller players in the less-than-truckload (LTL) industry. Larger players like Old Dominion, SAIA and Werner are left scooping up more customers and raising rates to compensate for higher driver expenses.

Pent-up demand, exploding e-commerce deliveries, and tight capacity have some industry experts telling customers to brace for a new era of higher rates. All three of these companies started to see earnings growth rebound in the second half of 2017. I expect the stocks to move higher as investors recalibrate price targets to 2019 earnings.

All three companies report earnings in the next four weeks. You will notice I have tight buy up to limits as the stocks will likely drop a bit if we get a market sell-off. I suggest buying half a position now and waiting a few days to average in, however, I suggest executing all trades before earnings.

Look for details on the earnings calls in the weekly updates. I’ll let you know how to access each call and what to listen for.

Stock Talk

Comments Oldest First

Comments Guidelines

MODERATOR: Lisa G

01/19/18 ‐ 9:54am ET January 19, 2018 at 9:54am ET

WERN filled at .45. Fidelity requires 5 cent increments on ODFL. Other 2 are working.

George McMillion

01/19/18 ‐ 10:22am ET January 19, 2018 at 10:22am ET

Thank you for the trades Linda. Have the Option trades working. Have a nice weekend.

Karl

01/19/18 ‐ 10:24am ET January 19, 2018 at 10:24am ET

As i got the email the prices for all options are much higher!
ODFL bid/ask $2.45/$3.00, last $3.00
SAIA bid/ask $2.80/$3.60, last $3.70
WERN bid/ask $0.60/0.85, last $0.90
Prices i see @ IB.
What is to do? Take the mid price? Wait?

MODERATOR: Lisa G

01/19/18 ‐ 10:39am ET January 19, 2018 at 10:39am ET

Personally, I wait. I don’t chase them and I won’t go higher. If I miss out, there is always another one. But that is the discipline I happen to follow. You need to establish your own discipline that you are comfortable with.

Linda McDonough

01/19/18 ‐ 10:58am ET January 19, 2018 at 10:58am ET

I would try to be patient. Many of these options have very wide spreads so I would place my trade and wait it out a bit.
Best,
Linda

Darryle

01/19/18 ‐ 10:32am ET January 19, 2018 at 10:32am ET

Filled
SAIA 2.75 @ TOS
WERN .35 @ TOS

Darryle

01/19/18 ‐ 10:37am ET January 19, 2018 at 10:37am ET

Well—That was very bullish or stupid on my part—Picked Feb 16 instead of March 16th….It in the books for me now.

flying3950

01/19/18 ‐ 12:41pm ET January 19, 2018 at 12:41pm ET

The option prices recommended are not even close to what you can get!!!!

Linda McDonough

01/19/18 ‐ 2:39pm ET January 19, 2018 at 2:39pm ET

Please see my comment above in response to Stanley’s question. The ODFL has not been near my limit since the open but WERN and SAIA were for a short period near the open. I do think you’ll have a chance to buy these within the suggested parameters before earnings.

I am watching them closely and will send out an update if I change the price limits.

Best,
Linda

Stanley

01/19/18 ‐ 1:34pm ET January 19, 2018 at 1:34pm ET

Hi Linda, I am new to your program and today was my first trades with you.
Currently prices are well above suggested recommendations.
I have no problem being patient with the trade, however are your trades normally a one day trade or do
you recommend good till cancel approach.
Thanks

Linda McDonough

01/19/18 ‐ 2:37pm ET January 19, 2018 at 2:37pm ET

Stanley and all-

I often wait until the open to send out an alert on options trades because the prices can change so dramatically overnight, especially when the spreads are wide.

I usually suggest a $.05-.10 band to allow around my suggested prices. Obviously, these are all much higher than even that band. Right now I suggest sitting tight and not chasing these calls.

I will send out an update if I think it’s worth the higher prices. I am hoping for a breather (even just for a day!) in the bull move so that we can grab some decent prices.

Best,
Linda

Stanley

01/19/18 ‐ 4:44pm ET January 19, 2018 at 4:44pm ET

Thank you, I am looking forward to your recommendation.

Ajax

01/19/18 ‐ 8:43pm ET January 19, 2018 at 8:43pm ET

When I saw that the marks for all three options had risen beyond the suggested purchase prices, I canceled my orders and resubmitted each $0.10 higher remembering your comment above from other alerts. I was able to purchase the call on SAIA for $2.90 probably within 30 minutes of your posting of the alert. The rest are simmering in the queue. In case it helps others in the waiting game, I can say the price to buy EBS took off on me on the day of the alert, and it wasn’t for a few weeks later that it happened to touch back down again (at the original purchase suggestion + $0.10) and I am glad it did, because though I acquired it much later, it proved to be a great trade and it is well above $1.90 now.

Madhu Talluri

01/20/18 ‐ 6:55pm ET January 20, 2018 at 6:55pm ET

Thanks for giving the stock price limits and targets in addition to the option trades. Helps me with choosing to go with stock trades if I wanted to.

George McMillion

01/23/18 ‐ 11:11am ET January 23, 2018 at 11:11am ET

SAIA Call filled this morning at 6:35 AM West Coast on TDA for $2.85

MODERATOR: Lisa G

01/29/18 ‐ 9:41am ET January 29, 2018 at 9:41am ET

SAIA filled this morning at $2.90. Does not look like ODFL will fill.

Linda McDonough

01/29/18 ‐ 12:39pm ET January 29, 2018 at 12:39pm ET

Lisa,
I am watching the ODFL calls closely. I would like to wait and see if the price comes in a bit more.
Best,
Linda

MODERATOR: Lisa G

01/30/18 ‐ 7:29am ET January 30, 2018 at 7:29am ET

Thanks Linda!

Stanley

01/29/18 ‐ 2:42pm ET January 29, 2018 at 2:42pm ET

SAIA filled for 2.90 @ Fidelity

Carlton

01/30/18 ‐ 12:53am ET January 30, 2018 at 12:53am ET

Hi Linda,

Did you change the entry price, as i am not filled….. It appears on your site, you are claiming a winning trade on this position.

You should only claim victory on your site if the ACTUAL initial posted limit price is filled. I understand you give a range for members, and I’m happy for all of the followers to get filled at a price they are comfortable with, but that is not how one should track OFFICIAL recommendation results; otherwise your entire “results” column is flawed. If price did not get down to your targeted entire price AND TRADE THROUGH IT, it simply doesn’t count as a winning trade, period!!!!!!! You know that…

If I have missed something, I apologize in advance…..

Please clarify so i better understand….

Linda McDonough

01/30/18 ‐ 10:04am ET January 30, 2018 at 10:04am ET

Carlton,

Which price are you referring to? I do not put an entry price on any position unless that stock or option has traded at that price after I post the trade alert.

I do not have the ODFL options in the portfolio as they have not traded near my suggested entry price.

Please let me know which position you are talking about so I can explain.

Best,
Linda

Paul

01/30/18 ‐ 9:41am ET January 30, 2018 at 9:41am ET

ODFL filled at $2.65 on Fidelity

MODERATOR: Lisa G

01/30/18 ‐ 9:59am ET January 30, 2018 at 9:59am ET

ODFL filled at $2.55 at Fidelity

pb

01/30/18 ‐ 10:36am ET January 30, 2018 at 10:36am ET

Hello Linda.Market moving in favour of your o/s Buys today-great!
My query is on behalf of those of your clients based in Europe whose base currency is the Euro.The weakening $ can have a big effect on our Euro profits.
Could you give a comment on a hedge we might use and take a $100,000 trading a/c as an example?
I would appreciate that.
Thank you
pb

Linda McDonough

01/30/18 ‐ 10:45am ET January 30, 2018 at 10:45am ET

Hello subscribers,

The ODFL February 16, 2018, call on Old Dominion Freight (ODFL) with a strike price of $150 is trading at $2.55, close to my prior $2.43 limit. Symbol (ODFL180216C150).

I am increasing the buy limit to $2.65, with the hope that subscribers will be able to fill this trade.

Best,
Linda

Toro

01/30/18 ‐ 4:18pm ET January 30, 2018 at 4:18pm ET

SAIA filled at 2.85 on 1/29
WERN just filled at .40 – both as instructed – at Fidelity.

As suggested have raised the limit on ODFL to 2.65 – no bites yet.

Hoping for CELG to rally to bring the original calls back to positive before expiration. Started with PCA in mid December and have closed everything except CELG for nice profits. Gaining confidence in your recommendations and gradually buying more contracts per recommendation.

Have been trading both OFI and VT since 6/17 and doing well.

Thank you,
Toro

Aaron Cavender

01/30/18 ‐ 6:17pm ET January 30, 2018 at 6:17pm ET

Linda,

My SAIA March $45 call to open just filled this afternoon at .40. The stock closed at $40.70. I presume WERN had some not so good news today. Still feeling ok about this strike price over the next month or did you get some new information that might cause you to reconsider?

Thanks again,
-Aaron

Linda McDonough

01/31/18 ‐ 9:14am ET January 31, 2018 at 9:14am ET

Aaron,
The market has had a pretty rough two days and those stocks up the most have been hit the hardest. I attribute the weakness in the truckers to this movement.

WERN actually reported what I see as a very good quarter. Below are my comments from yesterday.

There has been no change in my fundamental view of these stocks. That said, all options trades are leveraged trades that react with more volatility to market movements.

Werner’s (NSDQ: WERN) earnings look good on all fronts. Revenue was $567 million vs. estimates of $553 million and EPS was $.42 vs. $.39.

The operating ratio was incredibly low, 88.3% vs. 90.7% last year. This ratio measures the percent of expenses that eat into revenue (it is the inverse of an operating margin- don’t ask me why the trucking industry turns this number upside down!).

Rates per truck week rose 4.1%, better than the 2% I expected. In addition, the company noted that demand strengthened in November, December, and January, signaling very strong growth going forward.

Best,
Linda

Stanley

01/31/18 ‐ 9:50am ET January 31, 2018 at 9:50am ET

ZAKS upgraded SAIA and I am up 33%,
Are you that confident in Feb 2 earnings report or is a good idea to grab a quick profit.
Thanks

Stanley

01/31/18 ‐ 9:53am ET January 31, 2018 at 9:53am ET

Sorry I meant ODFL

Stanley

01/31/18 ‐ 9:59am ET January 31, 2018 at 9:59am ET

Sorry too much coffee
SAIA was upgrded

Sydnee & Howard

01/31/18 ‐ 4:32pm ET January 31, 2018 at 4:32pm ET

SAIA filled at $2.00 on 1/31. Haven’t gotten ODFL yet. Bought WERN Enterprises stock previously and down a bit but hopeful.

Ajax

02/02/18 ‐ 8:17pm ET February 2, 2018 at 8:17pm ET

Hi Linda,

I was wondering if you could answer a couple of questions for me given the current state of these three trades:

ODFL180216C150 [Recommended buy <=$2.43] Bid/Ask/Last [$2.00/$2.10/$1.74]
SAIA180316C80 [Recommended buy <=$2.80] Bid/Ask/Last [$1.80/$2.05/$1.05]
WERN180316C45 [Recommended buy <= $0.40] Bid/Ask/Last [$0.25/$0.40/$0.32]

Assuming one entered these trades at the recommended level or close to them, would buying more contracts on Monday be a good idea given each could likely be acquired at a cheaper rate now?

I realize that the advice was to buy before earnings came out. I believe the earnings announcements were positive for both SAIA and WERN, but each were victims of the overwhelming force of total market “correction/volatility” this week. ODFL’s earnings will be announced next Friday I guess. Is ODFL the only eligible one, or given the market instability, should we simply keep the positions as they are today? I know that if the market continues to drop, nothing can save a purchased call from losing value. But I am also curious if maybe the theta might be working against us at this point. I guess I’m just trying to understand if the dollar cost averaging that one might use to acquire stocks, particularly when they’re dropping in price, is a valid strategy with purchased calls such as these right now, or whether time is working against us and we should certainly not acquire more. Is a desperate attempt to lower one’s entry point foolishly throwing good money after bad (well perhaps not bad, but money that fell victim to a long-awaited market shift).

Linda, make no mistake, I think all three of these trades were excellent recommendations, confirmed by the good reports from SAIA and WERN already. It is why I am interested in seeing if adding contracts might still be appropriate.

Thank you,
Andrew

Linda McDonough

02/04/18 ‐ 8:42pm ET February 4, 2018 at 8:42pm ET

Andrew,

Such a good question and one without an easy answer. It is incredibly frustrating when a straightforward play on an event gets tangled up with a market meltdown. Unfortunately, with these stocks being part of the transportation sector, I think they are doubly punished during market declines.

It’s a tough call at this point. With options the time value is critical. Obviously, the ODFL calls need a quick turn around. The SAIA and WERN calls have a bit more time. I don’t profess to be a great market timer (most don’t until after the fact!), so I don’t have a firm answer for you. I’ve been worried the market is set up for a break but don’t think it’s headed straight down.

Buying these options now, at lower prices, is more of a market call at this point. However, I do think they will rally hard with a market lift.

Best,
Linda

Ajax

02/05/18 ‐ 11:08am ET February 5, 2018 at 11:08am ET

Thanks Linda. It would appear we have another volatile and probably rough day ahead of us. Plus it would appear that the options aren’t really trading much this morning. I will let the calls ride and not add to them.

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