Burlington Stores: The One Stock That Can Seem to Go South

Burlington Stores (NYSE:BURL) is the hottest stock on the block and you’ll be missing out on great gains on BURL options if you are not paying attention to my recommendations. In the last six months, I have written about trading Burlington options about four times already.

My last coverage of the stock was on January 14 in a post in which I gave 1-month update on previous BURL recommendations. In that post, I talked about my previous coverage on BURL calls and its impressive stock performance. I then recommended buying the URL Mar 2015 45.000 call (BURL150320C00045000) at an asking price of $5.80.

Six Weeks Later, Update on BURL Calls

When I recommended the BURL $45 call, the stock was trading at around $47.94 and its options had an asking price of $5.80. As at 9:40 AM EST, shares of Burlington have gained 1.04% to a $56.60 trading price. Hence, the stock has gained 18.04% in the last six weeks. In addition, the options contract that I recommended at asking price of $5.80 had gained 98.27% in six weeks to an asking price of $11.50.

The BURL $45 call option is set to expire on March 20; hence, I think it is high time we started scaling out of our positon on the stock. I recommend selling to close 60% of your position while managing the remaining 40% with stop losses of $0.10 for every $0.20 gain until the end of next week.

New BURL Coverage

Burlington Stores with its market capitalization of $4.22B is a national off-price retailer of branded apparel, operating 503 stores, inclusive of an Internet store, in 44 states and Puerto Rico. The Company offers its merchandise using an Every Day Low Price (EDLP) model with savings up to 60-70% off department and specialty store regular prices.

Burlington Stores has been having an impressive bullish run lately as the stock made a new 52-week high of $56.60 today. It might interest you to know that the shares of Burlington Stores have made 12 new highs in the last one month. Interestingly, the stock has gained 125.63% in the last one year even as it trades above its 50 and 200-day moving averages.

BURL Options

We can expect the bullish action on the stock to continue in the next couple of months based on the strong fundamentals of the company. For instance, experts are forecasting that Burlington’s revenue will climb by 8.30% this year and by another 7.60% next year. In addition, it is expected that the company’s earnings will rise by 81.10% this year and by another 31.40% next year before it continues at an annual compound rate of $34.70 over the next 5 years.

How to Trade BURL Options

Burlington Stores is set to release its Q4 2014 earnings on March 18 and I strongly believe that we can expect another quarter of outperformance from the stock. Burlington Stores has consistently beaten earnings in the last four quarters. In fact, the stock delivered an earnings surprise pf 25% in the last reported quarter and it sports an average EPS surprise of 27.02% from the last four quarters.

The stock has a Zacks Number 1 “Strong Buy” and I am optimistic about the prospects of the stock. I recommend buying the BURL Jun 2015 55.000 call (BURL150619C00055000) at an asking price of $5.20.

— Daily Option Alerts

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