LULU, a stock to watch!Lululemon stock (LULU) has traded down into the $230's for the first time since the COVID-19 Crash of 2020. I believe that LULU is a stock to keep your eye on, for a few reasons.
- The stock is trading at a 20x p/e whereas its historical p/e is in the mid 40's.
- Margins for the company have all been steady, and remain an industry leader.
- Lululemon is still set to see 10% CAGR for EPS in the next 5 years. (consensus)
- The stock is seeing a severe correction, on par with its past decade corrections.
Above is bullish sentiment on LULU, and can be considered the "bull/base case"
Personally, I have not turned bullish on LULU yet, but with the levels it is reaching it has most certainly caught my eye and has been added to my watch list. While the stock is seeing oversold levels, I think the midterm outlook can still remain bearish for Lululemon. Below are reasons why the short/midterm outlook for LULU may not be optimal.
- Weaker forward projections compared to last 5 years.
Though LULU is expecting 10% CAGR EPS for the next 5 years, that is just a fraction of its last 5 year CAGR of 38.55%. While projections are still positive, they have certainly dampened compared to recent years' growth.
- Macroeconomic environment.
Though the economy remains hot/fine for now, there have been warning signs flashing of a rising unemployment figure across the country. With suboptimal economic conditions, the average consumer may cut down on expensive Lululemon clothing.
These Macro conditions may also continue to dampen the economy, which can cause an overall market correction, where LULU would likely follow the sentiment.
Overall, I believe that LULU offers significant reward, but the shorter term horizon is still worrisome for Lululemon and the global economy. Lululemon is a leader in the Retail Trade sector and dominates when it comes to profitability. The stock is definitely one to keep an eye on if it continues to get crushed.
Regarding technicals, I am watching this demand zone around the 200 level. The stock could trend down to this area, and reach close to COVID-19 lows if sentiment does not change. This area could also offer significant R/R for an entry point.
Disclosure: I currently hold no position in LULU stock, and have never been a shareholder.
Earningsgrowth
What happened to Amazon today?Today, after the market closed, Amazon released its Q3 earnings and revenue, as well as other financials. It outperformed earnings per share by a significant margin, so why did Amazon drop 14% in after-hours trading? Well, the answer lies in a few things which I will cover today.
1. Amazon Web Services (Includes cloud computing, a major component of Amazon's revenue) only brought in 20.5 Bil, compared to forecast of 21 BIl.
2. Due to the above reason, Amazon's revenue was lower than expectations of 127.63 Bil, only achieving 127.1 Bil, with much, much slower growth compared to the previous quarterly earnings and revenue.
3. Amazons sluggish growth in revenue can only mean one thing -- A weaking Consumer. And as the Fed hikes interest rates quickly, Amazon's revenue may go down along with inflation.
4. Guidance from Amazon shows a weak Holiday quarter (weak sales and revenue)
So, this is just an update on the latest news to keep you updated. If you want me to continue this type of posts, please comment!
CF - CF Industries Holdings, Inc.Began buying CF as it came out of its tight, coiling pattern from last week. The stock has exhibited extreme relative strength over the last couple of weeks of market turbulence. Volume patterns indicate massive institutional accumulation. Bought ~35% of max size in the morning and added ~15% of max size near the close, giving me roughly a half-sized position.
The earnings and sales growth for this company are impeccable. For its year ending 12/2021, with one quarter yet to be reported, estimates are for 185% YoY earnings growth AND estimates for next year ending 12/2022 are predicting growth of over 200%. In addition to its bottom line growth, the company is growing its top line at a fantastic clip, as well.
NVDA - Nvidia CorporationNVDA is my first buy in close to a month after being stopped out of everything at the beginning of the month.
I bought a quarter position in the morning, followed by another quarter later in the day, bringing me to a half sized position at an average price of $238.86. Not in any hurry to add size until I get some traction with the shares I have.
The green light to begin buying came on Friday's close, which was a follow-through day on the SPY & QQQ after Monday's day one bottom. Today the indexes continued to follow through, which gave me the confidence to add the second quarter to my position.
Failed Breakout for NowLike most momentum stocks, FCX is having trouble taking out the ceiling. Its at a pivot of a cup and handle formation now. Volume has been light during the Santa rally but has big potential reward vs a small risk if breakouts begin to work in this market. I would love to see continued relative strength in the setup and big volume confirmation if it can move up through the pivot in the $40 range.
PUBM - PubmaticTrade opened off of the double-bottom from the PEG day low. This is my second time trying to buy this name this week. I originally bought on Monday as it began to reclaim PEG day anchored VWAP but was quickly stopped out that same day.
PUBM has good EPS growth & sales growth to support it. Buying off of this double-bottom offer a clearly-defined level to manage risk from. If it breaks back below, I gotta go.
If the stock can reclaim its anchored VWAP, I will look to buy more and raise my stop under this afternoon's consolidation.
CPRI - Capri HoldingsStarted position as the stock came through its inside pivot & PEG day anchored VWAP. Ran up nicely before giving a lot of the move back in the afternoon.
CPRI showed massive growth in EPS last year (+205.52%) and estimates for the current year (with 2 quarters already reported) are EPS growth of 180.87% with sales growth of 33.37% supporting the EPS growth.
Will close half position if today's opening price point @ $64.76 is breached, as I would expect the PEG day anchored VWAP just above to hold as support if this stock is going to be a true winner.
LC - LendingClub CorpDoubled position @ $47.96 as it rebounded off its higher-low and reclaimed the anchored VWAP from its day 2 breakout, giving me an average price of $46.22. Stop loss raised to $43.20 but still under the PEG anchored VWAP , giving me roughly a $3.00/share risk on the entire position which results in about 50bps of risk in terms of the overall portfolio.
Looking to add size to the position one more time if it can break out over the day 3 high around $49.30, at which time I will raise the stop loss to accommodate for the new risk.
TEAM - Atlassian CorporationStarted position in TEAM this morning after it undercut & reclaimed its PEG low yesterday. Very small, 30bps risk. Will increase position size if the stock reclaims its PEG day anchored VWAP and again if it clears its inside pivot around $462.50.
Stop loss is below yesterday's undercut low.
WIRE - Encore Wire CorpHalf size position taken on the 11/10 breakout with a stop below the day's low.
Closed early as the breakout came back in on overall market weakness. Did not want it to gap against me the following day. Looking to potentially rebuy.
Company is showing absolutely elite levels of growth currently & should be boosted by the infrastructure bill.
PH had a strong earnings gap up!* Great earnings
* Very strong up trend
* High relative strength in the Industrial sector
* Broke out of a ~7 month consolidation period with very high volume (162.6% above average)
Note:
With very high volume on earnings, this very well may be a break away gap and may continue going higher from here.
Trade Idea:
* You can enter now and ride higher.
* Or you can look for buying opportunities near the $321.65 area
* A daily close below $321.65 would expose $311.70 as the next key support which should hold firmly.
OPRX - OptimizeRx CorpOpened small starter position on break over pivot from Oct 21. Stop loss below Thursday's low. Will add more shares near close if breakout holds.
OPRX has shown good strength and volume patterns since its earnings gap up, breaking out over pivot from back in February. Major volume came in on news back on Sept 30 and has consolidated and held onto its gains since. The company is showing strong EPS growth and has excellent growth estimates over the next couple of years.
Earnings coming up soon, so the position will need to give me a cushion run-up prior, otherwise I can't justify holding through the earnings report.
LC - LendingClub CorpOpened small starter position on break above inside pivot point from yesterday's earnings gap. Stop loss below the low of the inside pivot & anchored VWAP from the earnings gap.
Yesterday's earnings gap was the second strong earnings gap in a row with this stock, telling me that institutions are still behind in their accumulation of this name and still have shares to buy. I also want to accumulate more shares, but with earnings having just been reported, it gives me time to be patient in my process. In a perfect scenario, I'd like to see a strong push above my entry and another small basing pattern with a good pivot to add shares at.