Labor Ready (NYSE:LRW) is an international provider of temporary employees for manual labor jobs. The company serves thousands of customers while it puts people to work through dispatch offices in all 50 of the United States, in Puerto Rico, in five provinces of Canada and in the United Kingdom. The company's customers are primarily businesses in the transportation, warehousing, hospitality, landscaping, construction, light manufacturing, retail, wholesale, sanitation and printing industries. These businesses typically require workers for lifting, hauling, cleaning, assembling, digging, painting and other types of manual or unskilled work. In addition, many customers use Labor Ready to screen prospective employees for future permanent hires.
There were far fewer candidates (than normal) this week as we searched for issues with favorable chart patterns and robust option premiums. However, a relatively low-risk position emerged as we evaluated the technical pattern and fundamental data for LRW. The stock has been in a bullish trend since early February, when the company announced stronger-than-expected fourth-quarter earnings, due to higher revenues and effective cost controls. In addition, the CEO said he expects the "trends to continue" with gross margin estimated to average 30.5% percent in 2005.
Traders who agree with a positive outlook for the company's share value in the coming weeks should consider this position. It will not be included in the "model" portfolio.
Fundamentals Chart Earnings Dates Analyst Ratings
Suggested (Bullish) Option Position:
Sell Put APR 17.50 LRW-PW
Current Bid = $0.30 Open Interest = 32
Potential Profit (5 contracts) = $150
Initial Margin (5 contracts) = $3,270
Return on Investment (max) = 7.0%
Cost Basis in Stock = $17.20
Days to Expiration = 20