Sunday, August 21, 2011

RSY XXXXIV: Unload TOT

Sabrient Systems recently downgraded TOTAL SA (TOT) to Strong Sell from Hold based on its overall inferior scores on important metrics that point to weak future market performance. While TOT maintains above average Value Score of 74.5 (scores out of 100) and exceptional Fundamental Score of 82.9, its Earnings Score measures a measly 3.6 based on its earnings performance and projected outlook.

Unfortunately, the timing to sell TOT now is most inopportune with significant market weakness and that TOT has already declared an ex-dividend date on September 14 with a dividend of nearly 82 cents per share. TOT has provided a net profit of nearly $360 from declared dividends and our doubling-down on May 13th when we recommended More TOT(al) for RSY. RSY recommends a sell order of 100 shares (remaining lot) TOT at limit price of $45.51 (GTC). Hopefully it will gap up, but if not be sure to monitor it closely on Monday morning.

Since the last update, RSY recorded a little over $186 in dividends and bought the covered call option on FL. That netted the RSY portfolio $317. Overall profits, with the loss of half the shares and the dividend payouts, netted RSY $196. Considering the cost basis of $19.16, it would be possible to make profitable trades at the $17.50 call options. Since it has not traded, that seems unlikely. RSY recommends writing the covered call of 2 options of FL at the strike price of $20 for Feb '12 at a limit price of $1.50 (GTC).

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