Undervalued Gem Is an Income Trader’s Dream

Michael Shulman

Think you need a huge portfolio for huge returns? Think again…

Recently, I shared two stocks from a unique three-stock portfolio, one that’s capable of generating 25% to 35% in income a year. That’s right, these generous returns come from just three stocks.

The first stock in this portfolio is Apple (NASDAQ:AAPL). While no longer the hyper-growth stock it once was, this immensely profitable company is an income-generating machine for one group of traders.

The next stock is Cheniere Energy (NYSEMKT:LNG). This shipper of liquefied natural gas is the first—and currently only—company in America to be given a license by the Department of Energy to export this type of fuel.

Today, I’ll reveal the third stock; it’s our most recent addition to this one-of-a-kind income portfolio. It’s a grossly undervalued company and has the potential to generate great income.

Before I get to the third stock, let explain how we’re able to make such high levels of income from just three stocks…

The Secret

The secret is a trading strategy called the Perpetual Income Engine.

A macro shot of a blank checkbook

The Perpetual Income Engine’s power lies in its simplicity and its effectiveness.

Typically, we start by selling a weekly put. The objective is to be assigned shares of the stock at a price at which we’re willing to own it, so we can sell a covered call on that same stock the following week.

When the shares are called away, we start the process over again by selling a new put. It’s a trading wheel that goes around and around, with traders collecting cash at every stop.

Because the process is pre-defined, you always know the next step to take. So you spend less time trading and more time collecting income. Once you master the Perpetual Income Engine, it practically runs itself.

As I’ve mentioned, we apply this strategy to three stocks simultaneously. That means we have three engines churning out income each week. That’s a manageable number; traders only need to commit to about 20 minutes a week to reach the 25% to 35% annual income goal.

One benefit of this strategy is that we’re not as concerned with the movement in the prices of the stock’s in the portfolio…

Case in point: The next stock in the portfolio has basically gone nowhere in the past three years. It’s spent the vast majority of that time trading in a roughly $10 range.

However, this stock has highly liquid options that offer generous premiums—the perfect combination for a Perpetual Income Engine candidate.

Now, even though I’m not concerned with the day-to-day or weekly fluctuations in the stock’s price, I am interested in trading solid companies that will be around for the long haul.

Let’s take a closer look at this portfolio padder…

General Motors

Blue-chip General Motors (NYSE:GM) fits the bill.

This company is firing on all cylinders (pardon the pun), and analysts predict U.S. auto sales for 2017 will remain near 2016’s record level of 17.55 million.

And there’s a perfect storm brewing that should support the industry and stock for the foreseeable future: strong consumer confidence, rising household income, falling loan default rates, rising average age of vehicles on the road and low gasoline prices.

While sluggish European sales may drag on profits some, GM is benefiting from the shift to high-margin pickup trucks and SUVs in the United States.

GM is grossly undervalued with a forward price-to-earnings (P/E) ratio around 6.3. That’s a nearly 65% discount to the S&P 500, which is trading for about 17.5 times estimated earnings.

While shares may continue to bounce around in a trading range or even take more hits thanks to President Trump’s tweets, I’m confident in the amount of income we’ll be able to generate from the stock.

Since mid-December, we’ve already earned $1,290 in income by selling just five contracts on GM each week.

Based on the $18,500 we’ve allocated to this trade over the past month and a half, our current return is 7%.

So there it is. Just three stocks—General Motors, Apple and Cheniere—have us well on our way to achieving it our 25% to 35% annual income goal. And I plan to continue bringing in income on all of these stocks every week until they no longer meet the criteria for the Perpetual Income Portfolio.

Make more income with just a handful of stocks in 20 minutes a week with the Perpetual Income Engine. Learn more about this powerful strategy now!

About The Author

Michael Shulman is a 30 Year Veteran of the financial markets – as a trader, a financial analyst, a financial writer and most recently as an educator.

Mr. Shulman made his first option trade in 1985 – COMPAQ Computer calls – a position that expired worthless. His second trade broke even; the third brought him a year’s salary, a near twenty to one return on his investment. He has never looked back. He entered the financial publishing business formally in 2001 as director of research for ChangeWave Research’s institutional research business and as the writer and editor of Hedge Fund Investing.

He has published two books – Sell Short and Made in America – both of which can be found on Amazon.com, and he is a frequent contributor to reputable financial sites like Seeking Alpha, MSN, MainStreetInvestor, and Traders Reserve.

Most importantly, since 2010, he has dedicated himself to teaching income investors how to get more income from their portfolios using simple yet safe options selling strategies which produce income every week. This approach was developed from the ground up in Mr. Shulman’s own accounts, his goal to develop a strategy that cannot be replicated by institutional investors of any size and therefore independent of fads and trends that change too often to provide a consistent approach for individual traders.

His trade recommendations in his Options Income Blueprint, Perpetual Income Portfolio Club and Income Masters services maintain a 98% success ratio, meaning his trades produce the expected income 98% of the time. No one’s perfect.