Time for Our Next “Out of the Box” Trade

Good day!

Well, it’s official. The economy is running hot – at least for now.

Earlier this morning, the Bureau of Economic Analysis’s advance estimate of third quarter US gross domestic product (GDP) showed the economy grew at an annualized pace of 4.9% during the period, faster than consensus forecasts. That represents the fastest pace in nearly two years.

On the surface that’s good news, but it does call into question how much of an impact the hot GDP numbers are going to have on the Federal Reserve’s interest rate policy.

At this point, I’m not going to speculate on the FED’s future actions. Instead, I’m going to focus on a new “out of the Box” recommendation for today.

Founded in 1923 and headquartered in Saint Paul, Minnesota, Ecolab Inc. (ECL) provides water, hygiene, and infection prevention solutions and services in the United States and internationally.

The company has annual sales of $14 billion, customers in 40 industries and operates in more than 170 countries around the world.

Providing water solutions might not sound as sexy as the latest A.I. meme stock – but it’s critical to food, healthcare, life sciences, hospitality and industrial markets – and it shows in the company’s numbers.

From 2020 to 2022, revenue grew 20.27% from $11.79 billion in 2020 to $14.18 billion in 2022. And on the bottom line, net income swung from a $1.2 billion loss in 2020 to a 1.09 billion profit in 2022.

Those are good numbers, but the stock has been trending down ever since it reported Q2/2023 results back in August 2023, and at this point, shares are significantly oversold – but they’re showing signs of a reversal to the upside.

The company is scheduled to report Q3/2023 results on Tuesday, October 31, 2023. That could be the catalyst that sends shares higher – and that’s our opportunity.

Action to take: Buy-to-open ECL December 15, 2023, $160/$165 Call Spread for $2.50 or less. Plan on exiting the position for a 30% profit – or if shares of ECL trade down to $155.00.

Now let’s check in on our outstanding positions, 60 targets, and protective stops.

Stocks & ETFs:

ZIM Integrated Shipping Services Ltd. (ZIM): HOLD
Benson Hill, Inc. (BHIL): HOLD
Devon Energy Corporation (DVN): HOLD
Black Stone Minerals, L.P. (BSM): HOLD Plan on adding the second half of the recommendation at $16.00.
3M Company (MMM): HOLD

Options:

SLG November 17, 2023 $25/$20 Put Spread : Plan on exiting the position at $4.00 or more.
CBRE December 15, 2023 $75/$70 Put Spread: Plan on exiting the position at $4.20 or more.
MET December 15, 2023 $50/$45 Put Spread : Plan on exiting the position at $4.31 or more.
BXP December 15, 2023 $55/$50 Put Spread: Plan on exiting the position at $4.76 or more.
WAL December 15, 2023 $35/$25 Put Spread: Plan on exiting the position at $9.38 or more.
FLR January 19, 2024 $35-$32.50 Put Spread: Plan on exiting the position at $1.70 or more.
MET January 19, 2024 $62.50-$60 Put Spread: Plan on exiting the position at $1.60 or more.
SLG January 19, 2024 $35-$30 Put Spread: Plan on exiting the position at $3.50 or more.
TBT January 19, 2024 $35/$30 Put Spread: Plan on exiting the position at $4.73 or more.
ROP November 17, 2023 $490/$500 Call Spread: Plan on exiting the position at $9.50 or more – or if shares of ROP trade down to $470.00.
WFC December 15, 2023 $40/$37.5 Put Spread: Plan on exiting the first half of the position at $1.39 or more.
TSLA December 15, 2023 $225/$220 Put Spread: Plan on exiting the first half of the position at $4.45 or more – or if shares of TSLA trade up to $230.00.
NFLX December 15, 2023 395/390 Put Spread: Plan on exiting the first half of the position at $2.30 – or if shares of NFLX trade up to $425.00.

Warm wishes for health, wealth, and happiness,

Shah