Liz here, back in the office after TWO YEARS OF COVID. We’re starting a hybrid model, two days a week in the building – and this morning we got an ominous email warning us that things might be a little disorganized while people got their computers set up and “located the bathrooms.”
“What happened to the bathrooms?” my husband said, confused. “Did they move?”
“I think it’s more likely that people forgot where to s***,” I said. “Wait, what do you mean I’m not supposed to do this in the atrium??”
We have all become savages, honestly. The past two years have not been kind.
We’re also returning to the office in the thick of possibly the maddest week in trading history: the five insanely volatile days leading up to QUADRUPLE WITCHING DAY.
I’m choosing to call this WITCH WEEK, in all caps, because it feels appropriate.
During WITCH WEEK, institutions will be forced to move $3.4 trillion worth of trades before Friday options expiration – and many under-$1 options will have the potential to triple.
Mark is trading this MF live all week, and you need to join him.
This is me in the office, by the way. I got a haircut and now I look like an orphan.
I’m highlighting WITCH WEEK trades all week here in Trading Today, and this afternoon I’ve got a fresh one from Mark for you…
He sees a pullback in a really cool oil stock that will make you feel a little better about gas prices.
This one is a FAST mover because we’re getting into it ahead of those Friday expirations. LET’S GO!
If I Have to Waste All This Gas Driving to the Office, I Might As Well Buy DVN
Mark’s WITCH WEEK pick for today is Devon Energy Corp (NYSE: DVN), a $34B American oil giant based in Oklahoma City (a place that I unnecessarily disliked for a long time because my first husband’s ex-girlfriend lived there. Recently, I spoke to her and found that she’s very nice).
Other than an unreasonable selloff lately (the reason Mark wants to jump in and buy the dip), DVN has been on a tear, for reasons you will have sadly noticed last time you went to the gas pump.
I’ll also include a picture of their Jackfish Projects plant here, for no other reason than that it looks just like that mesmerizing “interlocking pipes” screensaver we all had in the early 2000s. (Don’t lie, you did too.)
Zacks just upgraded the company, with a comment, “Devon Energy (DVN) could be a solid addition to your portfolio given its recent upgrade to a Zacks Rank #1 (Strong Buy). This rating change essentially reflects an upward trend in earnings estimates — one of the most powerful forces impacting stock prices….For the fiscal year ending December 2022, this oil and gas exploration company is expected to earn $6.40 per share, which is a change of 81.3% from the year-ago reported number.”
Last year, DVN absorbed a smaller company, WPX Energy, and proceeded to generate $4.9 billion in operating cash flow and $2.9 in free cash flow, a 50-year high.
The unique thing about DVN – which honestly makes them a great buy-and-hold play beyond WITCH WEEK – is that not only are they flush with cash, they’re obsessive about returning that money to shareholders in the form of fat dividends.
Their latest report noted a total dividend payout of $1/share – almost three times the dividend this time last year. It shakes out to something like a 7.8% total dividend, which as you know is very high.
They’ve got this sort of two-tier dividend payout scheme going on, which I like to think of as “base plus commission.” (It’s actually an industry first.) Every quarter, shareholders get a fixed base dividend, and then a variable dividend that skyrockets based on how well the company does.
It works like this:
Source: Motley Fool
Every quarter, after covering expenses and fixed dividends, DVN pays out fully 50% of its excess cash in the variable dividends. The other half of their spare cash goes towards paying down debt and making share repurchases.
(Fewer shares out in the wild means higher dividends on the shares that exist, so that’s also good for you.)
I’m in love.
Honestly, Jim Cramer refers to this stock as “insurance” and I’d own it just to own it – so maybe pick up the short-term WITCH WEEK calls and also buy and hold the stock. I think I’ll throw that stock recommendation in on my own recognizance.
Here’s what to do:
NICKEL SLOTS #1:
Action to Take:
Buy and Hold Devon Energy Corp (NYSE: DVN).
Mark’s fast expiration plan on DVN options is pretty straightforward. “DVN getting smoked today. It’s way oversold,” he said. “I would buy the $55 calls.”
He also sent me this suggestive picture of DVN being oversold.
So for a fast WITCH WEEK play, here’s what you do:
NICKEL SLOTS #2
Action to Take:
Buy to Open DVN March 18 $55.00 calls for $1.60 or better.
Enter as a Good til Canceled Order (GTC).
I’ll be off now to figure out how the cappuccino machine works (I’ve been brewing my own coffee from acorns I found in my back yard during my time of living as a hermit).
Also, please, get into Profit Revolution now because Mark is trading this historically volatile week live for members. His best WITCH WEEK trades are going to be right here – I’ll highlight what I can here in Trading Today, but this stuff will be fast-moving and you’ll want to be in this room.
March 14 2022