Gentex (GNTX) is a major supplier to the automotive and aviation industries. Specifically, GNTX makes automatic-dimming rearview mirrors and other automotive electronics, as well as dimmable aircraft windows and fire-protection products. On October 22, the company reported that its fiscal third-quarter net income jumped 33% on improved sales. The quarter beat market expectations, and Gentex gave a better-than-expected revenue forecast, which sent its shares up in trading.
By the numbers, the company earned $55.5 million, or $0.38 per share, for the quarter, up from $41.9 million ($0.29 per share) in the same quarter last year. Its total revenue increased 8% to $288.6 million from $268.2 million. Analysts polled by FactSet were anticipating earnings of $0.32 per share on revenue of $275.2 million, so this was a handy beat.
From the chart below, it’s clear that the stock has really broken out and is projecting higher prices ahead. Option traders are putting a premium on the future expectations for the share price of GNTX, and we should be able to sell the GNTX Dec. $30 calls for a very attractive $0.60 today.
Recommendation: For every 100 shares of GNTX you own or purchase at market, use a limit order to sell to open one GNTX Dec. $30 call (GNTX131221C00030000). The potential called-away return is 5.9% at current levels.
Bryan Perry is the editor of Cash Machine, a newsletter focused on high-yield income investing with the goal of maintaining a blended total yield of 10% across two portfolios. Bryan is also the editor of Extreme Income,which uses the power of historically cheap money to create a leveraged “baby hedge fund” strategy that paves the way to massive profits and 4x greater income.
Now is the perfect time to join Bryan Perry’s breakthrough income investing service, Cash Machine Trader, and discover how selling covered-call options can help you manufacture ‘top-up dividends’ of up to 30% per year.