Joe Kunkle's  Instablog

 Brunswick (BC) May $5 call volume is soaring with shares at $4.80 on a 9% move higher, with 3,300+ calls trading against a prior open interest of just 133.  Implied volatility is down from recent highs, but is still elevated at 166%.  Shares are breaking out of a consolidation area and look to target January highs near $6.  Earnings are scheduled for April 30, and shares trade at just 1.2X cash value and have 10.3% of the float short after making a textbook double bottom at $2. 

The story is even a better one as we have seen recreational vehicle companies such as Harley (HOG), Polaris (PII), Thor Industries (THO), and Winnebago (WGO) more than double this year alone as the once thought of depression begins to look more like a recession, and consumer spending will return much sooner than originally expected.  Brunswick is lost in the shadows of these companies because it is mainly classified as a diversified machinery company, with many forgetting that it is a major player in Boating, under the Hatteras, Cabo, SeaRay, Boston Whaler, and a variety of other names.  Boating is the ultimate recreational sport, and with the Summer approaching there is a good chance that things could turn brighter for shares of the company that have fallen from $15 in October to under $5.

The company obviously has some issue to work out, but at a 47% discount to book value and the demand picture looking better for it’s business segments, there are reasons to believe that shares will head higher from here, and option traders agree, and are putting money to work.

 Disclosure: No Holdings in Bruswick