This IPO Will Be Your Bread and Butter at $40 a Share
Our first stop on today’s watchlist belongs in a league of investing that I predict will churn out 500,000 new millionaires by the end of the year.
I’m talking about initial public offerings, or IPOs. If you aren’t familiar, that’s when a company finally goes public, putting shares on the market for investors like us. It’s a great opportunity to get in at the bottom of a burgeoning company and ride all the way to the top as they grow.
Which is why I’m watching this company like a hawk. Toast Inc. (NYSE:TOST) operates a tech platform that streamlines all front and back of house work utilized by at least 40,000 restaurants in the U.S. and more abroad.
Unlike competitors like Square Inc. (NYSE:SQ), TOST’s goal is to provide services that cover all of a restaurant’s needs, from payment processing and inventory management to in-person and online ordering systems.
With attractive, user-friendly systems like this, TOST has considerable potential for expansion and, with it, considerable potential for a stock-price boom.
The IPO crowd inflated the stock value some, raising the price 56% in TOST’s initial day of trading. What I’m watching for is for this stock to come back down to around $40 – it’s original IPO price.
If TOST closes below $41 this week, I’d love to buy the stock outright and hold on to it. And, if there’s an option market available, I’d buy a TOST Call option with a $40 strike that won’t expire for 180-days.
That could have you set, and it’s not the only way to play the IPO game. There’s a way to get into companies with potential like this before they IPO by purchasing something I call pre-IPO rights. I go into much greater detail about these rights and how you might use them in a new presentation that you can watch by clicking here.
Outside of the IPO-sphere, I’ve also got my eyes on Facebook Inc. (Nasdaq:FB). The famous, or should I say infamous, company took a bit of a hit recently after The Wall Street Journal published its “Facebook Files” series.
The series is an entertaining read. In sum, the articles liken the social media platform to tobacco companies. The WSJ claims that FB knows “in acute detail” about problems surrounding its platforms and how they harm users, but the company hasn’t fixed those problems because they’re so profitable.
I’m not here to disparage FB or lend credibility to the WSJ series – but the impact this drama has on the perception of FB and, by extension, its stock is something worth our attention.
Since September 15, the day WSJ launched the series, FB’s stock has dropped 7.5%.
But let’s be honestly with ourselves, Facebook has no competition. Once current controversy dies down, the company will still be there, generating enormous amounts of money.
This is a dip I’d love to buy.
If the shares of FB close below $337, I’d buy a FB January 21, 2022 $340/$345 Call Spread for $2.50 or less.
And that’s not the only dip I’m eyeing, but this one stems from the national labor shortage. FedEx Corp. (NYSE:FDX) dropped more than 9% in a single session because they failed to meet expected profits in their latest financial report. After an investigation, FDX claimed hundreds of millions were lost due to lack of labor with an estimate 600,000 packages rerouted to compensate.
This is a big problem for FDX, but its one they’ll overcome with time.
Until then, though, I fully expect a continued slide downward to $200 – a 37.5% discount – per share before the market comes back in to scoop up shares and drive prices higher.
At that price, and at that discount, I think FDX looks like a screaming “buy”.
If FDX trades down to $200 over the next 30 days, I like buying a FDX January 21,2022 $200/$210 Call Spread for $4.00 or less.
What a way to kick off the week.
Anything special that you’ve had your eye on? Let me know! If you drop me your stock watchlist at email@example.com, there’s a chance I’ll select your stocks to be featured in this week’s Buy, Sell, or Hold video on Friday.
I hope to hear from you.