Apple Inc. (AAPL), Flextronics International Ltd. (FLEX): These Trades Could Deliver Up to 82% Even If the New iPhone Flops

The stock is a market leader with a relative strength rank (RS) of 100, indicating it has been among the top performers in the stock market in the past six months.

Recommended Trade Setup:

— Buy FLEX at $10 or less
— Set stop-loss at $8.70, a support level on the daily price chart
— Set initial price target at $12.50 for a potential 25% gain in 6-12 months

Another Apple supplier to consider is Jabil Circuit, Inc. (NYSE:JBL), a company that offers a number of manufacturing services to customers in the technology sector.

Our PEG ratio model shows this stock is slightly undervalued based on expected earnings for this year and about 25% undervalued based on next year’s expected earnings. With average EPS growth expected to be about 11% a year, Jabil Circuit, Inc. (NYSE:JBL) would be worth $24.75 based on this year’s expected earnings of $2.25, and $29.48 based on next year’s $2.68.

The stock is also a market leader with an RS rank of 100.

A low-priced call option could be the best way to trade JBL. A call option gives buyers the right, but not the obligation, to buy 100 shares of stock at a predefined price (the strike price) at any time before the option expires. Buyers can also sell their option at any time prior to expiration to lock in a profit or limit a loss.

A call option on JBL expiring in March 2014 with a strike price of $26 is trading at about $1.10 a share. If the stock reaches $28, this option would be worth at least $2, offering a potential return of 82% in six months. The maximum loss when you buy a call is the price paid for the option, but a stop-loss can be used to limit losses.

Recommended Trade Setup:

— Buy JBL March 2014 26 Calls at $1.25 or less
— Set stop-loss at $0.60
— Set initial price target at $2 for a potential 60% gain in six months

The article These Trades Could Deliver Up to 82% Even If the New iPhone Flops appeared on ProfitableTrading.com and is written by Michael J. Carr and Amber Hestla.

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