This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Dykstra's Deep-in-the-Money Call: DFG

Jake Long became a very rich man this week.

For those of you who do not know who he is, Long will be the top pick in this weekend's National Football League draft. The offensive lineman has already signed a reported $57.75 million, five-year contract deal to play for the Miami Dolphins, who have the No. 1 overall pick. Slightly more than half of that, or $30 million, is guaranteed. He'll be rolling in the dough.

That's what I expect to do as well with today's pick, so let's dig right in. Unlike Long, there is no guarantee on this pick, but I'm a believer in Delphi Financial (DFG).

Delphi is a provider of insurance plans to companies. It manages all aspects of employee absence and provides the related insurance coverage, such as long-term and short-term disability, excess and primary workers' compensation, group life, travel accident and dental.

There couldn't be a better time to buy Delphi. The stock is getting pummeled following its quarterly earnings announcement. In fact, shares fell off a cliff Wednesday, hitting their lowest level in four and a half years. Delphi shares closed at $22.45, a drop of $6.88, or 23.5%. The stock traded as low as $22.26 yesterday, a new 52-week low, $25 below the 52-week high of $47.79.

The numbers were ugly. On Tuesday, the company said its profits fell by 46% from the year-ago period. It earned $21.1 million, or 42 cents per share, in the period. That's well off the $39.2 million, or 76 cents a share, it earned in the same quarter last year.

Excluding losses associated with investment losses, the company earned $25.3 million, or 51 cents a share. Wall Street had been calling for 84 cents per share.

Helping to drive shares down even further was news that the company revised its full-year projections. Delphi had previously been predicting earnings of between $3.45 and $3.60 a share, but now expects $3 to $3.30 per share in profits.

It sounds painful, but that's good news for us because Delphi is a good company that is in a slump at the moment, but is poised to break out of it.

First of all, Delphi's a solid company. It's got a price-to-earnings ratio of 9.2 and its balance sheet is in good order. When a good company has taken such a beating, it often means that its shares are trading at a big discount.

Readers of past columns of mine may remember that I am a fan of Delphi. In fact, it was an early season (Mar. 25) pick this year. However, the order did not get filled at the price I wanted and was canceled on April 1. As a reminder, I generally cancel orders that are not filled in one week's time.

Bottom line: Delphi has been oversold down to levels that make this stock a complete gift; if the operators on Wall Street want to give it away, then I will take it. Here is today's order: I am doubling my typical investment by placing a limit order at $1.40 or better to purchase 20 October $22.50 contracts (DFGJX), which will give me control of 2,000 shares. (I usually would go deeper, but this is the cheapest contract on Delphi, which shows you how ridiculously cheap this stock is.) Don't forget to place your GTC sell order one point higher once the order is filled for a $2,000 dollar victory.

Always remember: Life is a journey, enjoy the ride!

Know What You Own: DFG operates in the insurance industry, and some of the other stocks in its field include CNA Financial Corporation (CNA), Prudential Financial (PRU) and American International Group (AIG). These stocks closed at $26.45, $74.87 and $43.86, respectively. For more on the value of knowing what you own, visit's Investing A-to-Z section.

At the time of publication, Dykstra had no positions in stocks mentioned.

Nicknamed 'Nails' for his tough style of play, Lenny is a former Major League Baseball player for the 1986 World Champions, New York Mets and the 1993 National League Champions, Philadelphia Phillies. A three time All-Star as a ballplayer, Lenny now serves as president for several privately held businesses in Southern California. He is the founder of The Players Club; it has been his desire to give back to the sport that gave him early successes in life by teaching athletes how to invest and protect their incomes. He currently manages his own portfolio and writes an investment strategy column for, and is featured regularly on CNBC and other cable news shows. Lenny was selected as OverTime Magazine's 2006-2007 "Entrepreneur of the Year."

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs