Investors do not seem to be worried about the G20 outcome. Price chasing was in full bloom on Thursday after the Fed set the stage for a rate cut in July. There are no guarantees, but the chances are now 100%. An agreement with China next week could derail that hike. Likewise, a disaster at the G20 could derail the market. Time will tell but I would not be an active buyer until after the G20.
Stop Loss Updates
Check the graphic below for any new stop losses in bright yellow.
We need to always be prepared for an unexpected decline.
Check the graphic below for any profit stops in green.
We need to always be prepared for a profit exit at resistance.
Current Position Changes
BG - Bunge Ltd
The long position was entered at the open on Monday.
BOOT - Boot Barn
The long position was entered at the open on Monday.
BULLISH Play Updates
AJRD - Aerojet Rocketdyne - Company Profile
Aerojet said it has delivered the jettison motor to NASA for the upcoming test of the Orion crew capsule on the Artemis 1 launch. The company also announced upcoming tests of a non-toxic rocket fuel in its Green propellant propulsion system. The future test will provide propulsion for a 13-month test flight of a new satellite. The launch will be on June 24th. Shares hit a new high on Thursday.
Original Trade Description: May 31st.
Aerojet Rocketdyne Holdings, Inc. designs, develops, manufactures, and sells aerospace and defense products and systems in the United States. The company operates through two segments, Aerospace and Defense, and Real Estate. The Aerospace and Defense segment offers aerospace and defense products and systems for the United States government, including the Department of Defense, the National Aeronautics and Space Administration, and aerospace and defense prime contractors. This segment provides propulsion systems, such as liquid, solid, air-breathing, and electric propulsion systems for space, defense, civil, and commercial applications; and armament systems. The Real Estate segment engages in the re-zoning, entitlement, sale, and leasing of the company's excess real estate assets. It owns 11,451 acres of land adjacent to the United States Highway 50 between Rancho Cordova and Folsom, California east of Sacramento. The company was formerly known as GenCorp Inc. and changed its name to Aerojet Rocketdyne Holdings, Inc. in April 2015. Aerojet Rocketdyne Holdings, Inc. was founded in 1915 and is headquartered in El Segundo, California. Company description from FinViz.com.
Earnings July 30th.
Aerojet reported earnings of 44 cents that beat estimates for 27 cents. Revenue of $491.7 million also beat estimates for $478.2 million. Revenue was flat year over year because of the phase out of the AJ60 solid rocket motor. However, the uptick in Patriot missile components offset that end of life product. Order backlogs were $3.8 billion.
I am sure everyone has noticed the increase in launches by dozens of companies and everyone needs rocket motors. SpaceX, Blue Origin, NASA and other countries all around the world are adding to the 4,091 satellites in orbit. Every satellite requires a rocket. In addition, Aerojet has numerous contracts with the government to supply defense contracts. With the defense sector seeing increased orders from around the globe, the outlook for Aerojet is strong.
Shares rose over prior resistance at $38 on the strength of their earnings. New high resistance is $40 and only $1.50 away.
Long August $40 Call @ $2.00, see portfolio graphic for stop loss.
BG - Bunge Ltd - Company Profile
Shares of BG rolled over slightly after the huge spike in corn prices appeared to fade. The floods are ongoing so prices should not decline. I tightened the stop loss.
Original Trade Description: June 16th
Bunge Limited operates as an agribusiness and food company worldwide. It operates in five segments: Agribusiness, Edible Oil Products, Milling Products, Sugar and Bioenergy, and Fertilizer. The Agribusiness segment purchases, stores, transports, processes, and sells agricultural commodities and commodity products, including oilseeds primarily soybeans, rapeseed, canola, and sunflower seeds, as well as grains primarily wheat and corn; and vegetable oils and protein meals. It provides its products for animal feed manufacturers, livestock producers, wheat and corn millers, and other oilseed processors, as well as third-party edible oil processing companies; and for industrial and biodiesel production applications. The Edible Oil Products segment provides packaged and bulk oils and fats, including cooking oils, shortenings, margarines, mayonnaise, and others for baked goods companies, snack food producers, confectioners, restaurant chains, foodservice operators, infant nutrition companies, and other food manufacturers, as well as grocery chains, wholesalers, distributors, and other retailers. The Milling Products segment offers wheat flours and bakery mixes; corn milling products that include dry-milled corn meals and flours, wet-milled masa and flours, and flaking and brewer's grits, as well as soy-fortified corn meal, corn-soy blends, and other products; whole grain and fiber ingredients; and milled rice products. The Sugar and Bioenergy segment produces sugar and ethanol; and generates electricity from burning sugarcane bagasse. As of December 31, 2018, it had a total installed cogeneration capacity of approximately 322 megawatts. The Fertilizer segment offers nitrogen, phosphate, and potassium fertilizers; and SSP, ammonia, ammonium thiosulfate, monoammonium phosphate, diammonium phosphate, triple supersphosphate, urea, urea-ammonium nitrate, ammonium sulfate, and potassium chloride. The company was founded in 1818 and is headquartered in White Plains, New York. Company description from FinViz.com.
Bunge suffered for months from a decline in the US grain market. Since late May the floods have decimated the Midwest and grain prices have skyrocketed. Bunge will benefit from these high prices.
The new CEO said he was focused on slimming down the company and focusing on only those areas that were profitable. "We need to slim down in order to earn the right to grow again." This emphasis on profitability along with the spike in grain prices has lifted Bunge shares.
The CEO also said he preferred the stability an agreement with China would bring but they would continue to deal with the market they are given and would remain profitable.
Earnings August 7th.
The stock broke over resistance at $57.25 and the 200-day at $57.07 on Friday. The next resistance is just over $60 but I think they can regain the October highs around $70 if there is good news from the G20.
Long October $60 call @ $2.87, see portfolio graphic for stop loss.
BOOT - Boot Barn - Company Profile
No specific news but shares continued higher to close at a new high on Friday.
Original Trade Description: June 16th
Boot Barn Holdings, Inc., a lifestyle retail chain, operates specialty retail stores in the United States. The company's specialty retail stores offer western and work-related footwear, apparel, and accessories for men, women, and kids. It offers boots, shirts, jackets, hats, belts and belt buckles, handbags, western-style jewelry, rugged footwear, outerwear, overalls, denim, and flame-resistant and high-visibility clothing. The company also provides gifts and home merchandise. As of March 30, 2019, it operated 240 stores in 33 states. Boot Barn Holdings, Inc. also sells its products through e-commerce Websites, including bootbarn.com; sheplers.com; and countryoutfitter.com. The company was formerly known as WW Top Investment Corporation and changed its name to Boot Barn Holdings, Inc. in June 2014. Boot Barn Holdings, Inc. was founded in 1978 and is based in Irvine, California. Company description from FinViz.com.
Boot Barn is a niche retailer and appears to be doing well. They reported earnings of 28 cents that beat estimates for 27 cents. They reported revenue of $192.8 million that beat estimates for $189.1 million. They guided for Q2 for revenue of $178-$180 million.
Boot Barn said full year same store sales rose 10% with e-commerce sales up 12.2%. Retail store front sales rose 9.5%. Last quarter consolidates same store sales rose 12.1% and held despite Q1 normally being a down quarter for retail. Store sales rose 9.8% and 20% growth on a two-year basis. Profitable store brands rose to 18.1% of sales in Q1 compared to 16.2% in Q1-2018. They added 17 stores over the last year and six in the last quarter.
Earnings August 14th.
Shares broke out to a new high on Friday and could be poised for a new leg higher.
Long August $35 Call @ $2.70, see portfolio graphic for stop loss.
SWKS - Skyworks - Company Profile
I am recommending we close the Skyworks position. On Friday the US announced five more companies had been added to the blacklist and US companies can no longer sell them chip components. The new companies supply parts to the Chinese military and the US does not want them to benefit from the highly advanced US chip technology.
Close the position at the open on Monday.
Original Trade Description: May 25th
Skyworks Solutions, Inc., together with its subsidiaries, designs, develops, manufactures, and markets proprietary semiconductor products, including intellectual property worldwide. Its product portfolio includes amplifiers, antenna tuners, attenuators, circulators/isolators, DC/DC converters, demodulators, detectors, diodes, directional couplers, diversity receive modules, filters, front-end modules, hybrids, LED drivers, low noise amplifiers, mixers, modulators, optocouplers/optoisolators, phase locked loops, phase shifters, power dividers/combiners, receivers, switches, synthesizers, technical ceramics, voltage controlled oscillators/synthesizers, and voltage regulators. The company provides its products for use in the aerospace, automotive, broadband, cellular infrastructure, connected home, industrial, medical, military, smartphone, tablet, and wearable markets. It sells its products through direct sales force, electronic component distributors, and independent sales representatives. Skyworks Solutions, Inc. has a collaboration agreement with MediaTek Incorporated to deliver standards-based 5G solution. The company was founded in 1962 and is headquartered in Woburn, Massachusetts. Company description from FinViz.com.
Skyworks shares have been crushed in the tariff war and the resulting chip-wreck. Many of the companies that buy from Skyworks have been hit by tariffs that depress their sales. However, this could be n ideal buying opportunity.
Other than Qualcomm, Skyworks probably has the most to gain from the 5G revolution. They said the amount of Skyworks chips in 5G phones will be 40% more than in a 4G phone. Skyworks recently provided a graphic showing all the components they will be supplying for most 5G phones. Their revenue per phone will increase from $18 to $25 per phone.
5G is also going to revolutionize the Internet of Things (IoT) devices because the greater speed will allow them to perform more functions an be in more places. Skyworks will be selling those chipsets as well. Literally billions of 5G IoT devices will be sold over the next several years.
They do have risk. Huawei is on the verge of being blacklisted by the USA and the EU. They will have a hard time selling phones outside of China. Huawei is currently a large customer of Skyworks. However, just because Huawei will not be able to sell phones in the US or EU it does not mean people in those areas will not be buying phones. They will simply be buying different phones from other manufacturers and they will still contain Skyworks chips.
Skyworks rallied 36% off the December lows to close at $93.56 in April. They gave back 29% in the chip-wreck since May 1st to trade at support at $68. This is a monster drop to support and should be a buying opportunity. While we cannot foresee the future headlines, the drop back to support should prevent them from a continued decline unless the headlines are severe.
Earnings August 1st.
Long July $75 call @ $2.00, see portfolio graphic for stop loss.
WMT - Walmart - Company Profile
Walmart said it was paying $282 million to settle a long running six-year probe into bribery of foreign officials in Brazil, China, India and Mexico. The payments were made by third party intermediaries and did Walmart did not know about the payments until after the fact. They blamed delayed accounting and lack of internal controls for third party payments in foreign countries. Bribery is a way of life in those countries.
Shares closed at another new high.
Original Trade Description: June 9th
Walmart Inc. engages in the retail and wholesale operations in various formats worldwide. The company operates through three segments: Walmart U.S., Walmart International, and Sam's Club. It operates supercenters, supermarkets, hypermarkets, warehouse clubs, cash and carry stores, discount stores, drugstores, and convenience stores; membership-only warehouse clubs; e-commerce Websites, such as walmart.com, jet.com, shoes.com, and samsclub.com; and mobile commerce applications. The company offers grocery products, including meat, produce, natural and organics, deli and bakery, dairy, frozen foods, alcoholic and nonalcoholic beverages, floral and dry grocery, as well as consumables, such as health and beauty aids, baby products, household chemicals, paper goods, and pet supplies; and health and wellness products. It also provides electronics, cameras and supplies, photo processing services, wireless, movies, music, video games, and books; stationery, automotive, hardware and paint, sporting goods, and outdoor living and horticulture; apparel for women, girls, men, boys, and infants, as well as shoes, jewelry, and accessories; and home furnishings, housewares and small appliances, bedding, home decor, toys, fabrics, crafts, and seasonal merchandise, as well as brand name merchandise. In addition, the company offers fuel and financial services and related products, including money orders, prepaid cards, wire and money transfers, check cashing, and bill payment. It operates approximately 11,300 stores and various e-commerce Websites under the 58 banners in 27 countries. The company was formerly known as Wal-Mart Stores, Inc. and changed its name to Walmart Inc. in February 2018. Walmart Inc. was founded in 1945 and is based in Bentonville, Arkansas. Company description from FinViz.com.
Walmart has fought its way back to the prior highs after a 20% decline in Nov/Dec. They are hitting on all cylinders and no longer look like Amazon roadkill. They are fleshing out their online ordering, store pickup and next day delivery and showing no signs of losing market share to Amazon.
This is a technical position. The stock has risen to the prior highs and could be positioned to break out for a new leg higher. Options are cheap and the August option expires one day after earnings so it should hold its value. We will exit before earnings.
Earnings August 15th.
Long August $110 call @ $2.10, see portfolio graphic for stop loss.
BEARISH Play Updates
No Current Puts