Tag: scripsio

Dollar Tree, Inc. operates discount variety retail stores. It operates through two segments, Dollar Tree and Family Dollar. The Dollar Tree segment offers merchandise at the fixed price of $1.00.

Dollar Tree is the largest dollar chain with over 15, 000 stores.  Dollar Tree has been successful to this point because of their perceived value.  Essentially you pay for what you get and the items are sold in a smaller unit size.  But they have done some clever things as well.  They have kept the items they sell to a minimum, so they have a high inventory turns and stores do required a whole lot footprint and they sell a ton of private label items, which helps their margins.

To compete with the likes of Walmart, they purchased Family Dollar in 2015 to expand their customer base. Dollar Tree caters to people who live in the suburbs, while Family Dollar caters to people who live in urban.   However, Family Dollar really never did their homework prior to the purchase.   Family Dollar customers have a lower income than their suburban counterparts and less likely to make impulse buys because of their budget.  That one major difference between the two customer base has hurt the earnings ever since the acquisition.

Dollar Tree finally recognized the bad business choice they made in 2015 and have since closed over 500 Family Dollar stores in 2019 and will re-brand another 1000 Family Dollar stores to Dollar Tree stores.

Dollar Tree reported earnings on Tuesday. Dollar Tree stock fell 10% on Tuesday after the company posted disappointing earnings results and gave guidance that underwhelmed Wall Street. The trade war between the US and China and the tariffs has hurt margins due to sourcing a large chunk of their merchandise from China. In addition, issues at its Family Dollar brand are pinching the company’s results. Dollar Tree posted earnings per share of $1.08, below expectations for $1.13. Its revenue of $5.75 billion narrowly beat expectations for $5.74 billion.

So where is price heading next, lets go to the charts? Price is clearly in an uptrend, but it would of been nice if prices on the monthly chart closed above the most recently high. Thus, this lowers the probability that price will make a new higher high.

However, the uptrend is an uptrend, until it not. Thus, the chart suggest to go long at the daily demand at $85.50.

This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.

Uber’s story starts more than a decade ago.  Travis Kalanick and Garret Camp were leaving a tech conference in Paris when they couldn’t get a cab. Initially, the idea was for a timeshare limo service that could be ordered via an app with Garret eventually buying the domain name UberCab.com.

Uber was born in 2009 and New York became its test market with three cars in 2010, with the official launch taking place in San Francisco in May.  Travis eventually came on board as CEO in December 2010 and with time grew to become the highest valued private startup company in the world.

Like many startups, there seems to be a culture of almost “anything goes.”  However, if those startups go grow and mature, it eventually catches up with you.  Uber was a perfect example of that.  In February of 2017, a former female Uber engineer blasted the company for its sexist culture in a 3,000-word blog post citing the culture as hostile, sexist and offensive. The post went viral and resulted in some upper managers being let go and/or resigning.  But that was just the start as an investigation, called the Holder Investigation, soon was underway.  The investigation resulted in over 40 recommendations intended to improve the culture.

Kalanick stepped down as CEO and two months later announced that Dara Khosrowshahi, CEO of Expedia (EXPE), would take over.  But it was too late, Uber’s valuation declined from $70 billion to $48 billion.  Kalanick did a great job stabilizing the culture and perception of Uber in the financial markets, so in May Uber made it IPO debut with shares set to price at $44 to $50, given the company an immediate $80 or $90 billion market cap.

In 2018, Uber’s revenue reached $11.3 billion for the year, up 43% from 2017, but encountered operating losses of $3 billion.  They even expressed at one point that they might never generate a profit.

Since Uber went public, the stock has declined by near 33% due to concerns of competition and profitability.  In additional, the lockout period expiring was last week, means that insiders, including early investors and employees, are free to sell shares.  Kalanick sold 53.24 million shares worth roughly $1.46 billion. 

So is all the bad news now priced into the stock price, well some folks on Wall Street think so?

Uber Technologies, Inc. (UBER) shares opened sharply higher during Friday’s session before giving up some ground by mid-day. The move came after Stifel upgraded the stock from Hold to Buy with a price target of $34.00 per share.

Analyst Scott Devitt believes that Uber is turning a corner, with signs of sustainable improvements in the fundamentals. He adds that the current valuation offers a more reasonable entry point for interested investors.

Despite these concerns, Barclays analyst Ross Sandler said that Uber was one major announcement away from a positive narrative change heading into the new year.

Source

Now maybe Ube is two major announcements away from a positive narrative change.  Today, London stripped Uber of its license to operate in the city, citing the company wasn’t doing enough to keep passengers safe.  London is Uber’s largest city in Europe with Europe accounting for about 10% of the company’s total revenue.

Personally, I wouldn’t have bite on the upgrade, as I thought it was premature based on what I was seeing on the charts as the chart suggests Uber isn’t a buy until the weekly demand at $34 is breached.

This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.

The internet was originally built to hold and share data, making the transfer of data timely and seamless. The internet has evolved over time, and today the internet is allowing for a timely and seamless transfer of goods.

The rise of ecommerce outlets has made it harder for traditional retailers to attract customers to their stores and there is no bigger culprit than Amazon. So what did Kohl’s do, the got in bed with the enemy a year ago and partnered with Amazon. Kohl’s now accepts Amazon returns and has Amazon shops in their stores where they sell Amazon products such as the Echo smart speakers.

The partnership simplifying the returns process for Amazon and showcasing Echo devices and other Alexa-compatible hardware and in return brings in addition foot traffic into the Kohl’s stores. Case in point, the partnership is even gaining traction with millennials, who otherwise would have ignored Kohl’s.

Kohl has even teamed up with Weight Watchers, for an in-store studio and Healthy Kitchen products at some locations.  In addition, in an effort to drive more foot traffic to its stores, Kohl’s is partnering with Planet Fitness.

Retailers closed a record 100 million square feet of store space in 2017, another 155 million square feet, according to estimates by the commercial real-estate firm CoStar Group.  This year more than 9,000 stores are expected to close in 2019.  From Sears, Kmart, Party City, Walgreens, Barneys, Family Dollar, Chico’s and others. Payless has said it plans to close all of its 2,500 stores in what could be the largest retail liquidation in history.

So is Kohl’s really just holding on for dear life?

Department store chain Kohl’s remained confident its Amazon partnership would boost sales despite cutting its full-year guidance ahead of the holiday season.

The retailer’s stock KSS, -19.49% plunged more than 17% on Tuesday after missing third-quarter sales estimates and slashing its annual earnings forecast.

The company had hoped its expanded tie-up with the e-commerce company would have a positive impact on its second-half performance. However, Kohl’s slashed its full-year earnings guidance after the third quarter—the first full quarter since the nationwide rollout of the Amazon Returns program. The company said it now expected adjusted earnings per share of $4.75 to $4.95, down from previous guidance of $5.15 to $5.45; the FactSet consensus had been $5.19. Same-store sales in the third quarter rose 0.4%, below FactSet estimates of 0.9% growth.

Despite the earnings miss, Kohl’s Chief Executive Michelle Gass said the company had “momentum” going into the holiday season, which she was confident would be strong because of the Amazon partnership and investments in new brands and products.

Source

Kohl’s stock price fell the most in three years on the earning’s announcement. So is there more pain in store, yes as the chart suggests price is heading down to the monthly demand at $35?

This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.

The Four Horsemen of
Cannabis, Canopy Growth, Tilray, Cronos, and Aurora Cannabis announced earnings
this past week.  The end result was all
four companies announced dismal results. What was once one of the hottest
sectors a year ago, has now burned up in the smoke.   Valuation
just got way ahead of the reality. At one point, Tilray was more valuable than
50% of the companies on the S&P 500…that’s just crazy.

One of the biggest reasons is a supply shortage, as a lot of Canadian growers waited too long to expand their capacity. There’s also the issue of cultivation and processing application backlogs, as well as high tax rates in the U.S. and a significant delay in the launch of the derivatives market (derivatives are products like edibles, vape pods, and infused beverages. Plus, there’s the regulatory and accounting issues that have left investors cold.

Source

Aurora Cannabis Inc. produces and distributes medical cannabis products in Canada and internationally. The company has one of the broadest international footprints, with operations in 24 countries and production capacity that may exceed 700,000 kilograms per year at peak.  But this past Friday, Aurora shares fall the most in five years when they announced disappointing numbers and said they were cancelling or delaying plans for multiple further facilities.  Nine analysts cut their price targets on the stock after the earnings announcement, with the lowest price target being $2.80.   

What would help the industry
out a lot is making cannabis legal on the federal level in the US.  If and when this happens, you will see financial
institutions flood the industry with capital. 
At the moment most companies in the industry are cash strapped.  It’s why Aurora converted C$155 million in
debt into shares as it seeks to conserve cash. 
But many private companies aren’t in the same position Aurora is in.  For example, many companies had to resort to
buying their storefronts because landlords weren’t willing to rent them the
space. So with banks not giving these companies the time and day, with the
equity markets drying up, these companies are being forced to sell off their
assets…their real estate.

What would also help get
more capital into the industry is the passing of the SAFE Banking Act.

Sept. 25, 2019, the House of Representatives passed the Secure and Fair Enforcement Banking Act, commonly known as the SAFE Banking Act. The SAFE Banking Act, if made into law, would provide protection from federal interference for financial institutions that choose to provide financial services to CRLBs. Specifically, the SAFE Banking Act would provide a safe harbor for banks by mitigating the legal risks associated with providing banking services to state-legalized cannabis businesses.

Source

Aurora’s future remains bright nevertheless.  In December when President Trump signed the Farm Bill into law to legalize the production and sale of hemp and cannabidiol (CBD) derived from the hemp plant.  Aurora will be a significant player in the U.S. as it make inroads into the U.S. hemp CBD market.  

Also, Aurora will be the
top cannabis company in the fast-growing European cannabis market. Aurora
already ranks as the leader in Germany, the most important European medical
cannabis market.  In addition, it’s acquisition
of Agropro, the largest organic hemp producer in Europe, and Borelas, another
European hemp producer and processor, sets the company up for success over the
next ten years.

 Thus, at these depressed prices, if Aurora is priced at fair value, the market suggest to go long at the monthly demand at $2.00.

This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.

Dillard’s, Inc. operates retail department stores primarily in the Southeastern, Southwestern, and Midwestern areas of the United States. The company’s stores offer a selection of merchandise, including fashion apparel for women, men, and children; accessories; cosmetics; home furnishings; and other consumer goods.

Can’t say I ever heard of Dillard as I live in the Northeast.  Either way, Dillard can’t hide…not from me, but from Amazon. The rise of ecommerce outlets has made it harder for traditional retailers to attract customers to their stores and there is no bigger culprit than Amazon.

The Amazon effect is the ongoing evolution and disruption of the retail market. Retailers closed over 102 million square feet of store space in 2017 and 2018 and in 2019, over 8,000 stores will close their doors.

However, Dillard got a victory today for retailers such as Macy’s, J.C Penny and Nordstrom. 

 Dillard’s Inc. DDS, +0.17% stock soared 17% in Thursday trading after it reported a surprise profit, and lifted other department store stocks with it. J.C. Penney Co. Inc. JCP, +0.90% shares jumped 5%, Macy’s Inc. M, +1.06% shares climbed nearly 3%, and Nordstrom Inc. JWN, +0.05% stock was up almost 2% on Thursday. Many department stores haven’t reported their latest quarterly earnings, heading into a holiday season with both bullish forecasts for sales but concerns about the shortened shopping period. Dillard’s stock has gained 32% for the year to date,

Source

Dillard is really bucking the trend.  I had no idea Dillard was up 32% this year.  I’m actually licking my chops…could this be a shorting opportunity…wow…this was a shorting opportunity.  The big picture shows a monthly supply zone at $104,

But my eyes are draw to the wicks near $85.  In the last four years, price has only been able to close above $85 once on the monthly chart.

Taking things down to a daily chart, price pierced the upper Bollinger Bands.   Bollinger Bands are a type of volatility indicator developed by John Bollinger. Bollinger Bands are lines plotted at a standard deviation level, typically two SD above and below a simple moving average of the price.  In sideway markets, meaning markets that aren’t trending, price will typically bounce off of one band to the other.

In the case of Dillard, price pierced the upper band and has since pulled back which presented a great opportunity for a short.

Personally I think price is going to fill the gap, but it doesn’t matter any longer as the trade set-up came and went.

This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.