Suncor: Lookin' Good
Suncor has been mentioned by the analysts lately. So what’s the deal? Are they a good stock pick or bad? Whats the story? Over all, SU looks like a pretty strong pick, and these analysts agree. Here is some research and number break downs to get a better visual of SU’s potential.
"One would not get long the shares of Suncor until $30.53 due to the $2.00 in profits from the $36-34 put spread and the $1.47 net credit. Another option would be selling the January $30 puts outright for $1.18 and having a cost average below $29, which would be putting Suncor back into the March 2009 lows. However, taking the risk in unknown markets could not be worth the 4.00% return (4.81% against the $30.53 average price) if the stock stays above $36. The $1.47 net credit could be used to purchase long call options either immediately or once the market gains more visibility.
For an investor concerned about future prospects of oil prices and the general economy, the trade could be executed but the $1.47 net credit should be reserved for future call option purchases. The downside is that the market and Suncor put in a low relatively soon; the investor may then be hesitant to buy calls at higher prices. More aggressive investors could go ahead and buy call or call spreads and risk losing the net credit if they are wrong about the current market conditions."
Find additional research here: http://turnkeyoil.com/2011/08/11/4829/