By Paul Price
Bunge (BG) is the world’s largest soybean processor. The stock peaked earlier this year at $80.99 and is expected to earn $7.30 per share in 2013. After Monday’s steep selloff, BG is now trading for $66.74.
We’ve sold 1 Jan. 18, 2014 $70 put for our Virtual Put Selling Portfolio at the current bid price of $7.40 per share. That credits our account with $740 while committing us to buy 100 shares of Bunge, if exercised, at a net cost of $62.60 per share ($70 - $7.40 per share).
The ‘if put’ price would be close to the absolute bottoms hit during panic periods in 2011 and 2012. It represents less than 8.6x projected earnings. Bunge’s yield at that $62.60 net price would be 1.73%.
Bunge has touched calendar year highs between $74 - $135 during each of the past eight years, including 2013. Revenues, cash flow, earnings, dividends and book value are all projected to hit record levels by year-end.