The Dow and Nasdaq continue moving sharply in opposite directions.
The Nasdaq has declined for three days and retested support at 6,335 on Monday. There have not been any material rebound from the -143 point drop last Thursday. The Dow has benefitted from some specific stock outperforming nearly every day. Boeing gained $30 since their earnings on Wednesday and that has added nearly 210 Dow points. The resurgence in oil prices lifted Exxon and Chevron and Home Depot and Goldman Sachs provided lift today.
The Dow and Nasdaq cannot continue this divergence. Eventually one index will change direction. With the Dow only 109 points from 22,000 I am betting the Dow is going to reverse. The index is severely overbought and despite all the headlines on Boeing, they will give back some of that $30. That is too much gain for an industrial stock in four days.
The Nasdaq has not rebounded from the lows and the support at 6,335 is in danger of failing. Amazon continues to be a drag along with Google. On Tuesday after the close Apple reports earnings and that will determine our market direction for Wednesday. The analyst community is evenly split between earnings beat or earnings miss so it will be highly watched.
The Nasdaq has fallen triple digits five times since mid March and each time the index rebounded but the June decline showed a lot more volatility suggesting the index was top heavy. The final rebound in July has run its course and with the current weakness, a miss by Apple could push the index over the cliff.
The S&P is trapped in a consolidation pattern and remains slightly bullish. The index could make a new high or a two-week low at any time because the range has been so narrow. However, the Dow has been sprinting higher and the S&P is fighting just to stay positive and losing that daily battle by a point or two every day. The generals are charging forward but the troops are lagging behind.
The support on the S&P is 2,465 and short-term resistance 2,483. The real resistance level is 2,500 and psychological resistance. The 2,450 level was the median yearend target for the top 16 analysts. When that level was broken, some raised their estimates and now the 2,500 level is even stronger resistance than the original 2,450. I would be shocked if the S&P could punch through that level in the historically weak August/September period.
The small cap Russell broke support on Monday but recovered the 1,425 level at the close. The Russell failed at 1,452 for three days and rolled over on Wednesday, a day before the Nasdaq. If the Russell falls below 1,425 again the new target would be 1,400.
After Apple earnings on Tuesday, the highlights are Tesla, Activision and YUM Brands. After this week is over more than 425 S&P companies will have reported and the earnings cycle will fall off dramatically. The second week of August is when the post earnings depression begins to appear.
The economic calendar is headlined by the payroll reports but unless there is a major miss in either direction, the market should ignore them. The focus on earnings should occupy investors attention. The Fed is on hold so the numbers are less important.
In theory, the market should be weakening after the Nasdaq/S&P action over the last three days. However, the S&P futures are up 5.75 points tonight so the odds are good the market will open higher on Tuesday. It will be interesting to see if the futures last until morning and if they will have enough pop to trigger a short squeeze. With everyone starting to lean bearish, there is always the potential for a squeeze to shake things up.
Volume was moderate today at 6.3 billion shares. Traders have not left for their last vacation yet but once Apple reports and this earnings week is over we should see volume begin to decline. I am recommending investors not be overly long as we head into the normally weak August period.
Enter passively, exit aggressively.
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NEW DIRECTIONAL CALL PLAY
AKAM - Akamai Technologies - Company Profile
Akamai Technologies, Inc. provides cloud services for delivering, optimizing, and securing content and business applications over the Internet in the United States and internationally. The company offers Web and mobile performance solutions, such as Ion, a situational performance solution that consists of an integrated suite of Web delivery, acceleration, and optimization technologies; Dynamic Site Accelerator that helps in consistent Website performance; IP Application Accelerator to enable enterprises to deliver Internet Protocol-based applications; Global Traffic Management, a fault-tolerant solution; Image Manager that automatically optimizes online images; and Cloudlets, which provides self-serviceable controls and capabilities. It also provides cloud security solutions, including Kona Site Defender, Bot Manager, Fast Domain Name System, Prolexic Routed, and Client Reputation; enterprise solutions comprising Enterprise Application Access and Akamai Cloud Connect. In addition, the company offers media delivery solutions, such as adaptive delivery solutions, download delivery solutions, media delivery acceleration solutions, media services, media analytics, and NetStorage, a cloud storage solution. Further, it provides network operator solutions, including Aura Licensed CDN suite of solutions, Aura Managed CDN solutions, and Intelligent DNS Solutions; and professional services and solutions. Company description from FinViz.com
Expected earnings Oct 24th.
Akamai beat on earnings and revenue for Q2 but analysts thought the guidance was a little light. Shares were crushed for an $8 loss. The company posted earnings of 62 cents that beat estimates for 60 cents. Revenue rose 6.4% to $608.9 million and beat estimates for $604.5 million.
The company guided for Q3 earnings of 57 to 60 cents and analysts were expecting 61 cents. Revenue guidance was $604-$616 million and expectations were $619.4 million.
Akamai is losing business from the "Big Six" including Apple, Amazon and Netflix as those companies refine their "do it in house" strategies to keep from having to pay so much to Akamai. The income from the big six fell 9% to $178.9 million. Akamai has reported on this metric for the last two years and this was the 7th quarter of decline. Akamai is still the largest content delivery service and total revenues are still rising.
Revenues in their new cyber security business rose 32% and the web performance business rose 15%. Akamai said the rapid advancement of video on demand was a strong factor in future earnings since they are the largest provider of content. Also seeing a rapid ramp was the cloud storage business. Akamai has a security hook in that growth and the redundancy of that storage.
I believe the big drop in the shares was an overreaction and their new businesses are growing so rapidly that revenue will continue to expand. They are forecasting 6% growth in Q3 and 5% to 8% growth for the year with a 64% gross margin. There is nothing wrong with their business.
If the market is going to be weak, these shares in companies that have already been punished will look like value stocks to investors looking for a safe haven after they exit the FAANG stocks.
Buy Nov $50 call, currently $2.16, initial stop loss $43.85.
If there is a trade you would like me to consider or you have comments on this newsletter please click the email link below.
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Check the graphic below for any new stop losses in bright yellow. We need to always be prepared for an unexpected decline. Any items shaded in blue were previously closed.
Current Position Changes
HAS - Hasbro
The long call position was entered at the open on Tuesday.
ADBE - Adobe Systems
The long call position was stopped at $144.65 on Thursday.
FB - Facebook
The long call position was closed on Tuesday before earnings.
RH - RH Inc
The long call position was stopped at $71.85 on Wednesday.
Original Play Recommendations (Alpha by Symbol)
ADBE - Adobe Systems - Company Profile
No specific news. Adobe was caught in the Nasdaq drop on Thursday to stop us out for a breakeven. I considered reloading the position but with the Nasdaq so weak, there is potential for another big drop.
Original Trade Description: July 10th.
Adobe Systems Incorporated operates as a diversified software company worldwide. Its Digital Media segment provides tools and solutions that enable individuals, small and medium businesses, and enterprises to create, publish, promote, and monetize their digital content. This segment's flagship product is Creative Cloud, a subscription service that allows customers to download and install the latest versions of its creative products. This segment serves traditional content creators, Web application developers, and digital media professionals, as well as their management in marketing departments and agencies, companies, and publishers. The company's Digital Marketing segment offers solutions for how digital advertising and marketing are created, managed, executed, measured, and optimized. This segment provides analytics, social marketing, targeting, advertising and media optimization, digital experience management, cross-channel campaign management, and audience management solutions, as well as video delivery and monetization to digital marketers, advertisers, publishers, merchandisers, Web analysts, chief marketing officers, chief information officers, and chief revenue officers. Its Print and Publishing segment offers products and services, such as eLearning solutions, technical document publishing, Web application development, and high-end printing, as well as publishing needs of technical and business, and original equipment manufacturers (OEMs) printing businesses. The company markets and licenses its products and services directly to enterprise customers through its sales force, as well as to end-users through app stores and through its Website at adobe.com. It also distributes products and services through a network of distributors, value-added resellers, systems integrators, independent software vendors, retailers, and OEMs. Company description from FinViz.com.
Adobe reported earnings of 81 cents that beat estimates by 4 cents. Revenue of $1.77 billion increased sequentially by 5.4% and 26.7% over the year ago quarter. Analysts expected $1.73 billion. Subscriptions accounted for 84% of Q2 revenues, up 36.9% from the year ago quarter. Revenues from digital media solutions rose 29% to $1.21 billion. Annualized recurring revenue rose $312 million to $4.56 billion. Mobile data transactions rose to 57% or all transactions.
Adobe is firing on all cylinders. They ended the quarter with $4.93 billion in cash and $901 million in receivables. They guided for the current quarter to revenue of $1.815 billion and that exceeded estimates for $1.80 billion. They guided for earnings of 72 cents to $1 and analysts were expecting 79 cents.
Expected earnings Sept 19th.
Shares had been in a solid uptrend until the recent Nasdaq decline. Unfortunately, options are expensive so this will have to be a spread.
I try not to recommend a stock in one newsletter than I am also recommending in a different newsletter. In this case, Adobe had the farthest earnings date and allowed us to avoid all the July earnings reports from other stocks. Plus this is a short-term position rather than long term.
Closed 7/27: Long Oct $150 call @ $4.20, exit $4.44, +.24 gain.
Closed 7/27: Short Oct $165 call @ $.93, exit .99, -.06 loss
Net gain 18 cents.
BABA - Alibaba - Company Profile
Dan Loeb's Third Point fund said it added a large stake in Alibaba but did not disclose the size. Alibaba is reportedly in talks to acquire about a dozen companies including Indonesia's shopping site Tokyopedia. It is a race between Amazon and Alibaba to acquire as many smaller competitors as possible. I tightened the stop loss because of the Nasdaq volatility.
Original Trade Description: July 17th.
Alibaba Group Holding Limited, through its subsidiaries, operates as an online and mobile commerce company in the People's Republic of China and internationally. It operates Taobao Marketplace, an online shopping destination; Tmall, a third-party platform for brands and retailers; Juhuasuan, a sales and marketing platform for flash sales; Alibaba.com, an online wholesale marketplace; Alitrip, an online travel booking platform; 1688.com, an online wholesale marketplace; and AliExpress, a consumer marketplace. The company also provides pay-for-performance and display marketing services through its Alimama marketing technology platform; Taobao Ad Network and Exchange (TANX), a real-time bidding online marketing exchange in China; and data management platform through TANX for marketers to execute their campaigns with proprietary and tailored data. In addition, it offers cloud computing services, including elastic computing, database, storage and content delivery network, large scale computing, security, and management and application services through its Alibaba Cloud Computing platform; Web hosting and domain name registration services; payment and escrow services; and develops and operates mobile Web browsers. The company provides its solutions primarily for businesses. Company description from FinViz.com
Alibaba is the poor investor's Amazon. With shares at $135, the options are at least reasonable but not cheap. Alibaba is growing as fast or faster than Amazon and tries to copy everything Amazon does.
When the company reported earnings for the last quarter at 63 cents, they missed estimates for 68 cents. Revenue of $5.6 billion easily beat estimates for $5.2 billion. Other than the earnings miss it was a solid quarter with ecommerce up 47% and cloud computing up 102%. Digital media growth was up 234%. Mobile MAUs rose from 493 to 507 million. That is important because 90% of China's ecommerce occurs on a mobile device.
The company announced plans to buy back $6 billion in stock over a two-year period.
Earnings August 18th.
Shares dipped on the earnings miss then spiked on the guidance to $125.50, which was a new high. After a little more than two weeks of post earnings consolidation, shares returned to that $125.50 level and closed at a new high.
There was an analyst day in early June that kicked the stock up to another level with a $10 gain. The company guided for 45% to 49% revenue growth in this year and analysts were only expecting 37%. Alibaba said it is targeting $1 trillion in gross merchandise volume in 2020. Alibaba's Singles Day promotion is 40 times larger in sales than Amazon's Prime Day. JP Morgan initiated coverage with an overweight rating and $190 target. MKM partners raised the price target to $177. Pacific Crest raised their price target to $160 from $137. Needham raised their target to $155. The Benchmark Company is targeting $175.
In late June, Mott Capital said Alibaba could be worth $210 on a fundamental basis.
In early July, Alibaba announced the Alexa clone called Genie X1, which will be available to the first 1,000 people for a one-month trial. The cost will be $73 during this live test and it only speaks mandarin.
Alibaba is far ahead of Amazon in the retail store concept. Watch this video and you wil know where Amazon is headed. Alibaba Stores
This is currently a short-term position in Option Investor.
Short Oct $175 call @ $2.01, see portfolio graphic for stop loss.
Net debit $5.33.
FB - Facebook - Company Profile
We closed the Facebook position at the open on Tuesday to capture our gains before earnings. The stock gained $6 after earnings but closed at a 3-day low today after getting hit with a sell recommendation by Pivotal Research with a $140 price target. Shares hit $175 after earnings. We could have made a few more dollars had we held over the event but we could just as easily lost our $7 gain. Never go broke taking a profit.
Original Trade Description: June 12th.
Facebook, Inc. provides various products to connect and share through mobile devices, personal computers, and other surfaces worldwide. Its solutions include Facebook Website and mobile application that enables people to connect, share, discover, and communicate each other on mobile devices and personal computers; Instagram, a mobile application that enables people to take photos or videos, customize them with filter effects, and share them with friends and followers in a photo feed or send them directly to friends; Messenger, a messaging application to communicate with people and businesses across platforms and devices; and WhatsApp Messenger, a mobile messaging application. The company also offers Oculus virtual reality technology and content platform, which allow people to enter an immersive and interactive environment to play games, consume content, and connect with others. Company description from FinViz.com.
Facebook also blew away earnings estimates and they are growing earnings at the fastest rate of any of the FAANG stocks. They have multiple revenue streams and sites like Instagram and WhatsApp that are just starting to accelerate earnings. They said Instagram had reached 50,000 advertisers. Facebook's problem is they do not have enough page views to monetize despite the 1.9 billion users. They have more advertisers than they have space.
Facebook was setting new highs last week until Friday's flash crash. The two day decline knocked the stock back from $155.50 to $144.50, and exactly to support from the May 17th bottom. This "should" be the perfect spot to open a new position on FB. The two day decline has deflated the option premiums and once the tech sector begins to rebound, the FAANG stocks should be leaders again because of their earnings growth rates.
Closed 7/25: Long Aug $155 call @ $4.30, exit $11.75, +$7.45 gain.
Previously closed 6/29/17: Long Aug $155 call @ $4.45, exit 3.75, -.70 loss.
HAIN - Hain Celestial - Company Profile
No specific news but shares continue to move higher over our $40 strike price. I tightened the stop loss again.
Original Trade Description: March 20th
The Hain Celestial Group, Inc. manufactures, markets, distributes, and sells organic and natural products in the United States, the United Kingdom, Canada, and Europe. Its grocery products include infant formula; infant, toddler, and kids foods; diapers and wipes; rice and grain-based products; flour and baking mixes; breads, hot and cold cereals, pasta, condiments, cooking and culinary oils, granolas, granola bars, and cereal bars; canned, chilled fresh, aseptic, and instant soups; Greek-style yogurt; chilies and packaged grains; and chocolates and nut butters, as well as plant-based beverages and frozen desserts, such as soy, rice, almond, and coconut. The company's grocery products also comprise juices, hot-eating, chilled and frozen desserts, cookies, crackers, gluten-free frozen entrees and bars, frozen pastas and ethnic meals, frozen fruits and vegetables, cut fresh fruits, refrigerated and frozen soy protein meat-alternative products, tofu, seitan and tempeh products, jams, fruit spreads and jelly, honey, marmalade, and other food products. In addition, it provides snack products, such as potato, root vegetable, and other vegetable chips, as well as straws, tortilla chips, whole grain chips, pita chips, puffs, and popcorn; specialty teas, including herbal, green, black, wellness, rooibos, and chai tea lattes; ready-to-drink beverages comprising organic kombucha and chai tea lattes; personal care products consisting of skin, hair and oral care, deodorants, baby care items, acne treatment, body washes, and sunscreens; and poultry and protein products, such as turkey and chicken products. The company sells its products through specialty and natural food distributors, supermarkets, natural food stores, mass-market and e-commerce retailers, food service channels and club, and drug and convenience stores in approximately 70 countries worldwide.
Company description from FinViz.com
We played Hain before back in the fall. Basically, they have not filed their quarterly reports since last May because of a review of accounting procedures. They have suffered over the last year and have reportedly spent $20 million in the complete accounting review for years past and a review of their procedures. They are facing class action suits and SEC probes but none of these things will have a lasting impact.
They are facing a new deadline of May for their reports or they will be in default with their lenders. While they will not say when they will file the back reports, they continue to assure investors there was no wrongdoing and these types of corporate autopsies for prior years take time.
They are so undervalued compared to their peers and their historical norms, it is silly not to have a long position. Once they file the reports this will all be behind them.
I am recommending we buy the August $40 call and forget about it. At $2 it is not a lot of money and they could quickly return to the $50s once they file the reports.
Update 6/23/17: After a year of accounting research, HAIN said there was no need to restate earnings. The problems they found were so minor they were not worth the effort. They implemented some additional controls and promoted James Langrock to EVP and CFO. They discussed plans to cut costs by $350 million over the next three years and said they will buy back $250 million in stock.
They also reported earnings of 33 cents that missed estimates for 52 cents. They guided for the current quarter to earnings of 40-43 cents. For the full year they guided for $1.19-$1.22 and revenue of $2.84-$2.86 billion.
Shares were very volatile on Friday with all the headlines in the press release and the CEO's appearance on CNBC. On Monday shares rose $6.4% to $33.63. We have an August $40 call and we actually have a chance of it regaining value. I was hoping for more of a spike on the earnings release but the earnings miss overshadowed the positive news about the restatement. Since there is nothing wrong with the company or the past financials and it was crushed from $57 to $31 on the initial restatement warning, we could see funds begin to buy it again.
Update 7/2/17: After waiting for three months, we finally got lucky. Hain is under attack by Engaged Capital with a 9.9% stake and they are pushing the company to sell itself and to replace 7 of the 8 board members. Shares spiked 8.5% on Friday and probably have farther to go. Engaged has had several successful attacks recently against other companies and even though they are small they are aggressive. Shares popped to $39 and we are holding the $40 strike.
Update 7/10/17: The Amazon deal for Whole Foods made the Hain position a lot more interesting. Whole Foods is Hain's largest customer. Amazon can explode Hain's sales or even acquire Hain to further reduce costs and market reach. BMI Capital said at the least it will boost sales and with Engaged Capital (10% stake) demanding the company sell itself, there may be interest in actually doing that. Other potential acquirers include Pepsi, Campbell, Hormel, General Mills, Kraft Heinz, Nestle and Unilever. There is no shortage of candidates that could be sniffing around.
Long Aug $40 call @ $1.97, see portfolio graphic for stop loss.
HAS - Hasbro - Company Profile
Hasbro and Netflix announced a new original series "Stretch Armstrong and the Flex Fighters." This is going to reinvigorate the Stretch Armstrong toy line.
Original Trade Description: July 24th.
Hasbro, Inc., together with its subsidiaries, operates as a play and entertainment company. The company operates through U.S. and Canada, International, and Entertainment and Licensing. The U.S. and Canada segment markets and sells action figures, arts and crafts, and creative play products; electronic toys and related electronic interactive products; fashion and other dolls, infant products, play sets, preschool toys, plush products, and sports action blasters and accessories; and vehicles and toy-related specialty products, as well as traditional board games, and trading card and role-playing games primarily in the United States and Canada. The International segment markets and sells both toy and game products primarily in the European, the Asia Pacific, and Latin and South American regions. The Entertainment and Licensing segment engages in consumer products licensing, digital gaming, and movie and television entertainment operations. The company sells its products to wholesalers, distributors, chain stores, discount stores, drug stores, mail order houses, catalog stores, department stores, and other traditional retailers, as well as Internet-based e-tailers. Hasbro, Inc. was founded in 1923 and is headquartered in Pawtucket, Rhode Island. Company description from FinViz.com
The company reported earnings on Monday of 53 cents, that rose 30% and beat estimates for 46 cents. Revenue of $972.5 million rose 11% but missed estimates of $973 million. Shares were crushed for a 9% drop. Seriously, earnings rose 30%, revenue 11% and the stock was killed.
The CEO said most of their products performed well but the Super Soaker and Baby Alive dolls were weaker than expected. Sales in the UK and Brazil were weak due to economic conditions. Sales in the U.S. and Canada rose 16%. He said Q2 was always their weakest quarter but Q3/Q4 should be strong because of new toys for Star Wars and My Little Pony movies.
Analysts were quick to run to Hasbro's defense for obvious reasons. There was no rational justification for a 9% decline. We are going to buy the dip. I am making the initial stop loss a little wider than usual to try and dodge any remaining volatility on Tuesday.
Long Oct $110 call @ $2.50, see portfolio graphic for stop loss.
RH - RH Inc - Company Profile
The honeymoon is over. RH shares are crashing as shorts continue to load up. Bloomberg reported this week the short interest is 72% of the outstanding shares. Since RH has bought back 50% of its outstanding shares in 2017, the reduced float caused the percentages to rise. The company spent $700 million over 6 months on the buyback program. That is 20 times the $34 million they earned in 2016. Now that the rocket ride has run out of fuel, the shorts are piling on again. We were stopped out at $71.85 and shares hit $65 today.
Original Trade Description: June 12th.
RH, together with its subsidiaries, operates as a retailer in the home furnishings market. The company offers products in various categories, including furniture, lighting, textiles, bathware, decor, outdoor and garden, tableware, and child and teen furnishings. It provides its products through its retail galleries and Source Books, as well as online through rh.com, rhmodern.com, restorationhardware.com, rhbabyandchild.com, rhteen.com, and waterworks.com Websites. As of January 28, 2017, the company operated 85 retail galleries, including 50 legacy galleries, 6 larger format design galleries, 8 next generation design galleries, 1 RH modern gallery, and 5 RH baby and child galleries in the United States and Canada; 15 Waterworks showrooms in the United States and the United Kingdom; and 28 outlet stores. The company was formerly known as Restoration Hardware Holdings, Inc. and changed its name to RH in January 2017. Company description from FinViz.com
RH reported earnings of 5 cents that beat estimates for 4 cents. Revenue of $562.1 million beat estimates for $560.4 million. So far, so good. However, they guided for Q2 earnings of 38-43 cents and analysts were expecting 53-75 cents. No, that is not a misprint.
The company said it was ditching its prior merchandising model and switching to a membership model in order to make the company Amazon proof and enhance the customer experience. They are moving away from the highly promotional retail experience with constant sales and discounts and moving to a membership model where the focus will be on the customer experience. "Members" will pay $100 a year for the ability to shop in a high quality store where they will find only high quality merchandise.
Shares crashed 26% to $42 on the guidance but the rebound has been amazing. Apparently investors like the concept and the idea of a "Costco" model but in high quality products.
Earnings August 31st.
Update 7/17/17: RH announced on Friday they had completed a $700 million share repurchase authorization. This was on top of the $300 million repurchased in Q1. In 2017, they have repurchased 20.22 million shares or 49.6% of the outstanding shares. Currently there are 21.12 million shares outstanding.
They reaffirmed guidance for revenue in the range of $595-$610 million and earnings of 43 to 50 cents. They anticipate significant free cash flow for the remainder of 2017 and plan to pay down their highest interest debt by yearend. They expect to completely retire the existing second lien term loan.
Closed 7/26: Long August $55 call @ $2.70, exit $17.30, +$14.60 gain.
THO - Thor Industries- Company Profile
No specific news. Shares fighting new resistance at $105.50.
Original Trade Description: June 19th.
Thor Industries, Inc., through its subsidiaries, designs, manufactures, and sells recreational vehicles, and related parts and accessories primarily in the United States and Canada. It operates through Towable Recreational Vehicles and Motorized Recreational Vehicles segments. The company offers travel trailers under the Airstream International, Classic Limited, Sport, Flying Cloud, Land Yacht, and Eddie Bauer trade names, as well as Interstate and Autobahn Class B motorhomes; gasoline and diesel Class A and Class C motorhomes under the Four Winds, Hurricane, Chateau, Challenger, Tuscany, Axis, Vegas, Palazzo, Synergy, Quantum, Compass, Gemini, A.C.E, Alante, Precept, Greyhawk, and Redhawk trade names; and fifth wheels under the Redwood and DRV Mobile Suites trade names. It also provides conventional travel trailers and fifth wheels under the Montana, Springdale, Hideout, Sprinter, Outback, Laredo, Alpine, Bullet, Fuzion, Raptor, Passport, Cougar, Coleman, Kodiak, Aspen Trail, Voltage, Cameo, Cruiser, ReZerve, Sunset Trail, Zinger, Landmark, Bighorn, Sundance, Elkridge, Trail Runner, North Trail, Cyclone, Torque, Prowler, Wilderness, Shadow Cruiser, Fun Finder, Stryker, Sportsmen, Spree, Venom, Durango, SportTrek, Connect, Sportster, Sonic, Jay Flight, Jay Feather, Eagle, Pinnacle, Seismic, AR-One, Launch, Autumn Ridge, Travel Star, Highlander, Roamer, and Open Range trade names. In addition, the company offers equestrian recreational vehicle products with living quarters under the Premiere, Silverado, Ranger, Laredo, Trail Boss, and Trail Hand trade names; lightweight travel trailers and specialty products under the Camplite and Quicksilver trade names; and Class A motorhomes under the Insignia, Aspire, Anthem, and Cornerstone trade names, as well as provides aluminum extrusions and specialized component products. Company description from FinViz.com
In a weak economy Thor is kicking butt. The company reported earnings of $2.11 which rose 41.6% compared to estimates for $1.87. Revenue of $2.02 billion rose 57% beat estimates for $1.96 billion. Operating cash flow rose 26.2% and gross profits rose 45.5%.
Sales of towable travel trailers rose 52.6% and sales of motorized RVs rose 78.7%. There was no bad news in the Thor report.
Estimated earnings date September 4th.
With the company posting record earnings the stock spiked from $94 to $104 on June 6th. When the market dipped, shares only pulled back to $102. Over the last week they have returned to $106 and Monday's close was a four-month high.
Winnebago (WGO) reports earnings this week and that is going to remind investors how strong Thor's report really was. I believe we will see Thor break through that post earnings resistance and head back to the highs at $115.
Long Sep $110 call @ $1.90, see portfolio graphic for stop loss.
Previously closed 6/29/17: Long Aug $110 call @ $3.20, exit $1.80, -1.40 loss.
Prices Quoted in Newsletter
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