JTX (Long)...

This is an example of my inner value investor. Jackson Hewitt is the US's second largest tax preparation firm, behind H&R Block. JTX has had some major issues over the past few years, issues of the legal, operational, and financial natures. This is how a stock drops 90%.

JTX also has a LOT of debt, way more than I like to see typically (the current ratio is 0.85 and the debt/equity ratio is ~150%). Because of the high debt and previous years' earnings consistency issues, JTX does not score favourably on the screens. On the plus side, its price/sales ratio is ~0.3 and the P/E ratio is ~3.5. JTX does not pay a dividend and does not report earnings again until probably early March (I can't find a date, but the last quarter was reported back in early December).

The chart also looks like death warmed over. Again, that's what happens when a stock drops from $30 to $3 in a couple years.

What I like here is the options chain. JTX's options are dirt cheap and there are a lot of ways to play, and though the common stock is viable, I would rather play with the options. The April $2.50 calls trade at $0.7/$0.8 bid/ask, so you can sell March and/or April $5 calls against these to reduce your downside and still leave you with a tidy profit should the stock rally past $5.





Position: None

Disclaimer: This is not a recommendation and is presented for informational purposes only.