Select Comfort Corp. (NASDAQ:SCSS)

CAPS Rating: 3 out of 5

The Company's principal business is to develop, manufacture, market and support premium quality, adjustable-firmness beds and other sleep-related accessory products.

Recs

2
Player Avatar TMFBigFrog (94.80) Submitted: 2/24/2012 11:04:10 PM : Underperform Start Price: $28.35 SCSS Score: +68.65

Excerpt from an unedited CAPSCall article anticipated to be published on 27-FEB-2012.

"As a shareholder of both Select Comfort and Discover Financial, I estimated a fair value to their shares that was greater than my original purchase price but less than the strike price. In Select Comfort's case, I think those $28 shares ought to really fetch closer to $20, and in Discover's case, those $30 stubs ought to be in the neighborhood of $25 .

"I bought them significantly below those levels -- paying a weighted average of $13.69 for each Select Comfort share and $13.22 a stub for each Discover one, before commissions. Now that they've surpassed what I think they're truly worth, I need to be willing to part with those shares and redeploy the capital into the next opportunity. That's where the covered call option sales come in handy."

Disclosure: I own shares of both Discover Financial and Select Comfort and have written covered calls against those shares.

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