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A “married put” is a stock hedged with a put.  With many implied volatilities having imploded over the past few weeks, there appear to be ample opportunities for investors to hedge good stocks with reasonably priced puts.  In this week’s screen, we have specified that we want stocks with above average fundamental and technical outlooks and a high married put ranking in our service.  We have also specified that we want expirations later than May, that we want a bid/ask spread no wider than 10%, that the options be underpriced (according to our model), and finally, that they be struck 10% to 20% below the stock price.  Our screening came up with married puts on 30 stocks, among them International Paper (IP) and Tech Data (TECD).

Company

Ticker

Industry

Stock Price

Premium (ASK)

Fair Value

Days to Expire

American Axle

AXL

Auto Parts

   12.15

          0.50

   0.83

        75

International Paper

IP

Paper/Forest Products

   32.15

          0.66

   0.76

        75

MasTec Inc

MTZ

Engineering

   21.93

          0.75

   0.89

        47

Nordstrom  Inc

JWN

Retail Store

   47.79

          1.45

   2.37

      173

Tech Data

TECD

Computers/Peripherals

   52.63

          1.95

   2.08

      229

American Axle & Manufacturing Holdings (AXL) designs, engineers, and manufactures driveline systems for trucks, sport-utility vehicles and passenger cars. The company is the principal supplier of driveline components to General Motors for its light trucks, SUVs and rear-wheel drive passenger cars. GM accounted for 75% of 2010 revenues. Also supplies driveline components to DaimlerChrysler, Ford, Nissan, Visteon, Delphi, and other original equipment manufacturers. www.aam.com.

International Paper Co. (IP) is a leading paper and packaging manufacturer and distributor. Its three segments include: Industrial packaging (61% of '10 sales); Printing Papers (27%); Consumer Packaging (12%). It owns and manages 250,000 acres of forestlands in Brazil. '10 depr. rate: 4.7%. R&D spending was 5% of '10 sales. Acq. Containerboard, Packaging, and Recycling businesses from Weyerhaeuser in 8/08. www.internationalpaper.com.

MasTec, Inc. (MTZ) engages in the building, installation, maintenance, and upgrade of communications and utility infrastructure in the U.S. Markets: Utilities (45% of '10 Revs.), including wind farms, other renewable energy, natural gas gathering systems, and pipeline infrastructure; Communications (53%), including telephone, satellite and cable TV; and Government (2%), including military base utilities. www.mastec.com.

Nordstrom, Inc. (JWN)  operated 115 specialty, upscale department stores across the U.S. at 1/29/11. Over 25% of square footage is in California. Sales per square foot were $397 and $368 in fiscal 2010 and 2009, resp. Also has a total of 89 Rack (clearance and off-price) stores and other units. Sells women's apparel (34% of '10 sales), accessories and cosmetics (22%), men's apparel (15%), shoes (23%) and other (6%). www.nordstrom.com.

Tech Data Corp. (TECD) is a leading distributor of microcomputer-related hardware and software products to value-added resellers and computer retailers troughout the Americas (43% of '10 sales; 57% of oper. income), Europe, and the Middle East (57%; 52%). Distributes more than 150,000 products, and sells to over 125,000 customers. Tech Data distributes for over 500 vendors, including Hewlett-Packard, Apple, Compaq, Cisco, Epson, IBM, Intel, Microsoft, NEC, Seagate. www.techdata.com.

 

At the time of the writing of this report, the author had no positions in any of the stocks mentioned.