The market continued its strong rebound from its early-April lows as the indexes rose all five days last week. The S&P 500 gained 2.9%, the Dow rallied 3% and the Nasdaq advanced by 3.4%.
The Stock – ATI (ATI)
Aerospace and defense spending is projected to be strong this year and next—particularly in the U.S.—driven by factors like global tensions, increased military spending and the need to replace aging jets and expand commercial aircraft fleets. Dallas-based ATI produces high-performance titanium- and nickel-based alloys, stainless steel and specialty components for both the aerospace and defense markets and is also known for its composite fibers that reduce fuel use by replacing heavier metals.
Thanks to “robust demand and growing contractual support,” ATI got off to a strong start in 2025 and continued the momentum from the last quarter, delivering double-digit sales and adjusted EBITDA growth in Q1, with aerospace and defense accounting for two-thirds of revenue and “poised to continue to play a major role” in the firm’s success. Total revenue of $1.1 billion rose 10% from a year ago, with per-share earnings of 72 cents increasing 50% and beating estimates by 13 cents.
By segment, High Performance Materials & Components sales decreased 8% sequentially, mainly due to reduced sales of specialty energy products; however, next generation commercial jet engine demand was notably higher and contributed to a 10% year-on-year improvement, with segment EBIDTA increasing 34%. Advanced Alloys & Solutions sales increased 9% from a year ago (and 4% sequentially), thanks to higher sales of conventional energy offerings and increased demand for commercial airframe products.
The company said it’s well positioned to navigate the ongoing tariff uncertainty since the majority of its production is based in the U.S., with pass-throughs and surcharges to help offset inflation and any tariff costs.
What’s more, both defense and commercial airframers have recently reaffirmed “robust” backlogs, and ATI continues to see strong engine material orders with no cancellations or delivery pushouts. Commercial jet engines, meanwhile, are ATI’s most strategic market (37% of Q1 revenue), and as the sole source supplier for five of the seven alloys used for the “hot” (temperature-wise) section of this market, it has secured long-term contracts that extend well into the 2030s and 2040s. Looking ahead, ATI guided for full-year adjusted EBITDA of $820 million (up 12% if realized), while Wall Street expects earnings to grow by 20%.
Technical Analysis
ATI built a solid-looking base from last August into February, but trade-related uncertainties and the overall market weakness were the reasons for the stock’s big dip to the 40 area last month. But shares made a sharp U-turn from the lows, showing great tennis ball-like action, pushing back into the mid-50s by the middle of last week—and then going bananas after earnings on Thursday and Friday. Stop – 54.5
The Covered Call Trade
Buy ATI (ATI) Stock at 67.5, Sell to Open June 67.5 Strike Calls (exp. 6/20) for $3.50, or a Net Price of 64 or less
Static Return: $350 per covered call (5.46%)
Breakeven: 64
Covered Call Return (if assigned): $350 per covered call (5.46%)
Please note, the stock and options prices will be moving throughout the day, so these prices are simply an approximation of prices that you should be able to achieve.
However, the important component of this equation is that the stock price paid, minus the premium received via the call sale, equals the approximate Net Price, or 64 or less. (In this case 67.5 minus 3.50 = 64. Or another example is you could pay 67.75 for the stock and sell the call for 3.75, which also equals 64.)
For every 100 shares of stock you buy, you can sell 1 call. For every 200 shares of stock you buy, you can sell 2 calls. And so on …
Open Positions
| Stock Name and Symbol | Price Bought | Current Stock Price | Stop | Option - Price of Call Sold | Current Option Price |
| AngloGold Ashanti (AU) | 35.75 | 43.5 | 30 | May 36 -- $2.10 | $7.00 |
| Monster Beverage (MNST) | 57 | 60 | 51 | May 57.5 -- $2.65 | $4.00 |
| Comstock Resources (CRK) | 19.2 | 21 | 17.5 | May 19 -- $1.70 | $2.00 |
| Uber (UBER) | 75 | 85 | 63 | May 70 -- $7.55 | $15.00 |
| Toast (TOST) | 36 | 35 | 32.5 | May 36 -- $2.60 | $2.00 |
The next Cabot Profit Booster issue will be published on May 13, 2025.
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