In Any Thriving Industry, Buy the Suppliers

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  • During a gold rush, the folks who went out to sift, mine, and hack away at the earth to find the yellow metal often don’t end up with much. The real winners? The suppliers. The folks who sell the pickaxes, shovels, and jeans.

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  • While that still applies to the mining sector, it applies to all sectors that need to be supplied. That can create some tremendous investment opportunities in unexpected places.

    One such player is Zebra Technologies (ZBRA). The company sells a range of products such as mobile computers and barcode scanners and imagers. It’s a top supplier to retail outfits, whether selling out of stores or warehouses, who need to track inventory with tools like radio frequency IDs.

    So it should be no surprise that shares are in the spotlight following an earnings beat, and that the company’s guidance has been raised going forward.

    Action to take: Shares have more room to run, especially with a strong holiday sales season expected. Traders should consider the February 2021 $330 calls. Trading for about $5.15 on the bid/ask spread, it’s an inexpensive way to control 100 shares without having to lay out the cost of owning them outright.

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  • The return potential is huge, as a move in shares to $340 alone nearly doubles the value of the option.