Gentex () is a major supplier to the automotive and aviation industries. Specifically, GNTX makes automatic-dimming rearview mirrors and other automotive electronics, as well as dimmable aircraft windows and fire-protection products. On October 22, the company reported that its fiscal third-quarter net income jumped 33% on improved sales. The quarter beat market expectations, and Gentex gave a better-than-expected revenue forecast, which sent its shares up in trading.
By the numbers, the company earned $55.5 million, or $0.38 per share, for the quarter, up from $41.9 million ($0.29 per share) in the same quarter last year. Its total revenue increased 8% to $288.6 million from $268.2 million. Analysts polled by FactSet were anticipating earnings of $0.32 per share on revenue of $275.2 million, so this was a handy beat.
From the chart below, it’s clear that the stock has really broken out and is projecting higher prices ahead. Option traders are putting a premium on the future expectations for the share price of GNTX, and we should be able to sell the GNTX Dec. $30 calls for a very attractive $0.60 today.
Recommendation: For every 100 shares of GNTX you own or purchase at market, use a limit order to sell to open one GNTX Dec. $30 call (). The potential called-away return is 5.9% at current levels.
Bryan Perry is the editor of , a newsletter focused on high-yield income investing with the goal of maintaining a blended total yield of 10% across two portfolios. Bryan is also the editor of
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