It is a beautiful Monday morning and I am excited about the opportunities that a new week presents to make money by trading stock options. About two weeks ago, we awakened to news that Home Depot has been affected by a security breach that is similar to the Target data breach. As at the end of last week, the data breach was confirmed by Home Depot and there are indications that more than 56 million cards might have been compromised, making the Home Depot breach much bigger than the attack of Target Corp.
However, the fact that security is becoming a major issue for businesses that conduct electronic transactions suggests that it might be time to pay more attention to the Internet security industry. More so, the appearance of private photos of celebrities on the Internet a couple of weeks back also lends credence to the wisdom of paying more attention to the Internet security industry.
It is on the strength of the inherent potential in the Internet security industry that I am exploring the options of VASCO Data Security International Inc. (NASDAQ:VDSI)
VASCO Data Security is a small cap with a market capitalization of $758.83M. The company, through its operating subsidiaries, design, develops, market and support hardware and software security systems that manage and secure access to information assets.
Additionally, the company enables secure financial transactions made over private enterprise networks and public networks, such as the Internet. VASCO boasts of more than 10,000 customers, including many top 100 global banks and 1,700 financial institutions in more than 100 countries.
Shares of VASCO are already surging with positive momentum as Internet security continues to attract more attention. For instance, shares of VASCO Data Security gained 4.76% to close at $19.13 per share last week after making a new 52-Week high of $19.31.
Shares of VASCO have already gained 147.5% in the year-to-date period as the chart above shows and I strongly believe that the stock is just emerging into another lease of growth in its share price.
It might also interest you to know that shares of VASCO are trading a 32.20% premium to the 50-day moving average and at an impressive 84.11% premium to the 200-day moving average.
Increase Analysts’ Optimism
Another reason VDSI options makes a whole lot of sense now is the increase in analysts’ optimism on the stock, which will surely fuel increased buying action. For instance, VASCO now has a Number 1 “Strong Buy” Zacks rating after it was upgraded from a “Neutral” position to an “Outperform” position. Analysts at Topeka Capital Markets raised their price target on CASCO from $17.00 t0 $21.00 to mark a 34.44% upside potential on the stock.
Impressive Financial Performance
On July 24, VASCO released impressive second quarter (Q2 2014) results to deliver earnings of $0.17 per share to beat the consensus analyst estimate of $0.09 per share. Revenue was $47.70M to beat the consensus estimate of $42.30M. VASCO has consistently reported 46 consecutive quarters of profitability and it has surprised positively with an average of $0.10 in the last four quarters.
How to Trade VDSI Options
I am particular optimistic about VASCO’s ability to ride the increasing level of security consciousness to profitability. I have a $22 price target on the stock within the next six months and I recommend buying the VDSI Mar 2015 20.000 call (VDSI150320C00020000) at an asking price of $2.15 once the markets open today.
— Daily Option Alerts