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Investing Specialists

The Market for Perpetual Options -- Page 2

Current market conditions have stocks displaying their option characteristics.

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There are a few characteristics that can be used to identify stocks with a great deal of optionality. Low multiples of price/sales, price/trailing earnings, and price/book are key signs. A number of high-optionality companies are listed below.

American Reprographics Company
Moat Rating: Narrow | Fair Value Uncertainty Rating: Medium | Morningstar Rating: 5 Stars
From the Analyst Report: " American Reprographics Company  (ARP) has carved itself a niche by providing document-management services to the nonresidential construction industry. The firm manages production and delivery of large-format blueprints, which, in the construction business, is a common language for numerous constituencies, from architects to subcontractors. We like ARC's experienced management team and its ability to generate healthy cash flows even during an economic downturn."

Alumina, Ltd.
Moat Rating: none | Fair Value Uncertainty Rating: Medium | Morningstar Rating: 5 Stars
From the Analyst Report: " Alumina, Ltd.  (AWC) has a 40% interest in Alcoa World Alumina and Chemicals, the world's largest alumina producer.  Alcoa (AA) owns the other 60%. AWAC is predominantly exposed to the first two stages in the aluminum production chain: bauxite mining and alumina refining."

Philip Guziec does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.