Black Friday was dark gray.

Cyber Monday should be better than forecast; employment and other important economic data is filtering out through Friday.

What to do? Keep it simple. Ignore Wall Street and go with what you know.

What do we know? That all retailers definitely aren’t created equal.

Tractor Supply Company (NASDAQ:TSCO) is one of my favorite companies, and is among the few retailers I’d even consider looking at.

Why?

  • Management has delivered earnings at or above estimates for 17 of the last 18 quarters.
  • The stores are unique, offering great plaid shorts, fertilizer, pet beds, tractors and much more—all under one roof. While they do the Black Friday and Cyber Monday thing, they mostly cater to people who know what they want to buy (a wood stove, cowboy boots, etc.) and know where to get it.
  • The P/E is rich for a retailer but has been seemingly forever.

Just in case I’m wrong and the stock sells off a bit more, the way to trade this stock is to buy the shares and sell the in-the-money December 90 call.

Let’s say you buy the shares for $91.40 and sell that call for $2.75. You net $1.35 in three weeks if you’re called out.

That’s a 1.5% return or, on an annualized basis, a 26% return on your capital.

Not too shabby…

 

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