How To Earn 14% Yield While Waiting to Buy INTU 30% Cheaper
At about $409.03 a share, Intuit (INTU) is trading about 49% below its 52W high.
Do you think INTU stock is a good long-term bet at current levels? What about at a 30% discount at about $290 per share? If you think that is a steal, and have some cash ready to go, here is a trade.
14% annualized yield at 30% margin of safety, by selling Put Options.
- Sell a long-dated Put option expiring 3/19/2027, with a strike price of $290
- Collect roughly $3,000 in premium per contract (each contract represents 100 shares)
- That’s about 9.8% annualized yield on the $29,000 you’re setting aside for the possibility of buying the stock
- This cash parked in a savings or money market account will earn an extra 4.0%, taking total yield to 13.8%
- And you give yourself a chance to buy INTU stock at deep discounted price of $290
However, this is not the only stock strategy in town. Trefis High Quality Portfolio is a sophisticated framework designed to reduce stock-specific risk while giving upside exposure.
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Possible Trade Outcomes: You Win Either Way
| Stock Price Outcome | What It Means For You |
|---|---|
| INTU stays above $290 | You keep the full $3,000 premium – 10% extra income over the next 385 days on cash that might otherwise earn you 4.0% or less. You never buy the stock and simply walk away with the cash. |
| INTU closes below $290 | You’ll be obligated to buy 100 shares at $290. But thanks to $3,000 premium, your effective cost basis is just $260.0 per share – a roughly 36% discount from current level. |
But to hold this trade with conviction, you want to see long term upside in the stock. Because if it comes to it, you want to be excited about buying the stock cheap.
First, you want fundamentals to check out. For details, see Buy or Sell INTU Stock or check Intuit Investment Highlights
Second, you want to better understand competitive advantage and industry tailwinds.
Why Hold INTU Stock Long-Term
Intuit possesses a wide economic moat built on high switching costs within its deeply entrenched QuickBooks and TurboTax ecosystems. The company benefits from the powerful secular trend of small business digitalization. Its consistent profitability, strong free cash flow, and manageable debt create a resilient financial profile, making it a high-quality compounder we are comfortable owning for the long term if assigned.
Competitive Advantage
We classify INTU’s economic moat as WIDE, with the primary source being Switching Costs
- Successfully implemented price increases with significant revenue growth in QuickBooks (+24%) and TurboTax (+12%).
- Integrated product ecosystem drives significant customer lock-in, with ecosystem revenue growing 21%.
- Improved retention and wins with higher-value mid-market customers for core offerings.
See Intuit Full Analysis.
Industry Tailwind
The industry tailwind is STRONG, with CAGR projection of 19.6% (Allied Market Research)
Secular Trend: Digitalization of Small and Medium Businesses & Shift to AI-powered SaaS
Key Risks: Regulatory scrutiny over advertising practices and potential disruption from new AI-native competitors.
Financial Guardrails
Cash Generation: Positive Free Cash Flow
Balance Sheet: Healthy balance sheet with a low debt-to-equity ratio of 0.32 and very low bankruptcy risk.
If you are not comfortable with options or stock-specific trades, Portfolios are the way to go as they can protect and grow wealth even better.
The Best Investors Think In Portfolios
Single stocks swing wildly but staying invested matters. A well built portfolio helps you stay invested, captures upside and softens the blows from individual stocks.
Beating the market consistently is hard, but the Trefis High Quality (HQ) Portfolio makes it look achievable. By selecting 30 high-conviction stocks, the HQ strategy has historically outpaced the S&P 500, S&P Mid-cap, and Russell 2000. See how this curated selection delivers superior risk-adjusted returns in our detailed performance factsheet.