The Daily Kill Sheet Picking Off Profits One Stock At A Time!

October 24, 2012

Daily Kill Sheet For October 24, 2012

Filed under: Uncategorized — Administrator @ 12:19 pm

I am closing out my 8/13 short position on Red Robin Gourmet Burgers (RRGB, $27.73) with a 12.0% gain. Originally, we had shorted the stock due to weak traffic, slowing margin expansion in the second half oand the threat of higher food costs heading into next year. These risks now seem better reflected in the share price, thus we’ll take our profits here.

October 5, 2012

Daily Kill Sheet For October 5th 2012

Filed under: Uncategorized — Administrator @ 9:32 am

Take a look at Caterpillar (CAT, $85.96) for a trade. Since hitting a near-term bottom in early July the stock has been producing a regular pattern of higher highs and higher lows suggesting that there is accumulation in the shares. Late last month CAT presented at MinExpo in Las Vegas where it lowered the bar for earnings through 2015 due to anemic economic growth. Even so, the company expects gradual economic growth next year and doesn’t see its bear case scenario (about $6.00 a share with a U.S. recession) as likely. At the current quote, the stock is trading at about 8.5x the forward consensus. CAT is a cyclical stock and will typically trade at single-digit multiples late in the cycle (such as now) Even so, signs of an improving economy (such as today’s employment numbers) and low interest rates should allow the stock to trade closer to 10x EPS, particularly as Spring approaches. With that said CAT shares are oversold here and I expect them to retest their 200-day moving average over the next few weeks as investors begin to roll ahead their investment horizons. My near-term price target for CAT shares is $95, implying about a 10.5% return to my target. Note that my target is just below the stock’s 200-day movingaverage, its next area of major resistance.

October 4, 2012

Daily Kill Sheet For October 4, 2012

Filed under: Uncategorized — Administrator @ 10:47 am

October 4, 2012
Company
September Comp
Comp Versus Expectations
Comment
Zumiez (ZUMZ)
+5.6%
+260 bps
Sales were strongest in the first week of the month and lost momentum sequentially as the month wore on. Footwear men’s and hardgoods had positive comps.
Stage Stores (SSI)
+11.1%
N/A
“September began with strong back-to-school sales and the positive momentum carried throughout the month, resulting in solid full price selling of fall selections.” Saw strength in footwear, home & gifts, junior sportswear, misses sportswear, petites and plus sizes. 
Bon-Ton Stores (BONT)
+0.6%
-40 bps
Gained momentum in the final two weeks of the month.  The best performing categories were fine jewelry, better sportswear, dresses, shoes, men’s sportswear and ladies’ large sizes. 
CATO Stores (CATO)
-4.0%
-330 bps
“September same-store sales reflect a minimal negative impact from Hurricane Issac and were mostly in line with the year-to-date trend.” The company now expects third-quarter earnings will be at the lower end of their prior guidance range of $.12 – $.17. The consensus stands at $0.15.
TJX Companies (TJX)
+6.0%
+160 bps
Customer traffic continued as the driver of comp sales increases at every division. The company is maintaining its previous guidance for third-quarter earnings to be near the high end of their range of $0.56 – $0.59, but noted that they could have raised it by $0.02 absent a charge for pension accrual in prior fiscal years. The consensus stands at $0.61.
Macy’s (M)
+2.5%
-80 bps
No real earnings guidance here. Management says they are looking forward to sales of cooler weather merchandise in the fall.
Ross Stores (ROST)
+5.0%
+70 bps
Third-quarter earnings are now projected to be in the range of $0.70 – $0.71.  The forecasted upside from their previous earnings guidance of $0.63 – $0.66 is mainly due to a combination of ahead-of-plan sales and merchandise gross margin in August and September, as well as slightly better-than-expected shortage results from their annual physical inventory in September. O
ctober same store sales are forecast to be up 3% – 4%.
Stein Mart (SMRT)
+2.4%
-20 bps
Linens and ladies’ career sportswear posted the strongest sales for the month, while ladies’ accessories, men’s sportswear and ladies’ boutique were weaker. Geographically, September sales were strongest in Texas and Florida. Looking ahead, management cautioned that “”they began to reduce regular priced coupons in November of last year, but this was preceded by a high volume of coupons in October. Therefore, the challenge in October, and the remaining holiday selling season, will be to increase sales against the prior year which included the higher amount of couponing.”
Target Corp. (TGT)
+2.1%
+10 bps
Target’s prior third-quarter guidance was $0.83 – $0.93 and GAAP EPS of $0.69 – $0.79. The $0.14 difference between the GAAP and adjusted EPS ranges was due to expenses related to the company’s Canadian market entry. Management now believes that, due to the favorable resolution of income tax matters, the difference between its third quarter adjusted EPS and GAAP EPS may be somewhat narrower than the $0.14 specified in its second quarter earnings release. The company also announced that beginning with its 2013 fiscal year it will no longer report monthly sales.  The consensus stands at $0.77.
Limited (LTD)
+5.0%
+30 bps
Victoria’s Secret +6%; Bath & Body Works +5%; La Senza -4%; Victoria’s Secret direct sales -5%.  Direct saw weakness in apparel’ strength in bras. Looking for low single-digit company comps in October.
Nordstrom’s (JWN)
+4.4%
-100 bps
The strongest categories were kid’s wear, hand bags and men’s shoes. The company faced a tough comparison in September and saw weakness in the first half of the month due to the shift in the Anniversary sale to August. This led to higher returns in the first half of the month. Sales rebounded strongly in the last two weeks of the month, however.
Costco (COST)
+6.0%
+80 bps
Higher year-over-year gasoline prices helped the comp by 100 basis points while currency translation added 100 basis points to the international comp.
Wet Seal (WTSLA)
-12.7%
N/A
Company reiterated its third-quarter loss estimate of $0.13 – $0.18. The consensus estimate stands at a loss of $0.15.
The Gap Inc. (GPS)
+6.0%
+70 bps
The Gap +5%
Old Navy +10%
Banana Republic +4%
International -3%
No earnings guidance was given in the release.
Kohl’s (KSS)
-2.7%
-280 bps
Footwear was the strongest comp, followed by men’s. Home was better than the company average, while accessories, womens’ and jewelry were weak. Juniors’ saw a low double-digit decrease. Inventories were up 9% year over year.
Fred’s Inc. (FRED)
-3.8%
-220 bps
 An accelerated shift in sales of brand-name drugs to generics within the pharmacy department hurt comps. The impact of generic pricing on the major brand conversions was more than 300 basis points in September. General merchandise sales for tobacco, soft lines and fall seasonal products also contributed to the lower comparable store sales, with tobacco sales accounting for 75 basis points of the decline. Key departments such as Pet, Celebration and Party, Auto, Hardware and Food, performed well during the month. 
The Buckle (BKE)
-0.8%
-190 bps
The Men’s business saw sales increase 2.5% during the month driven by strength in denim, knit shirts, and footwear. The women’s business was down slightly year over year, but saw strength in casual bottoms, footwear and accessories. Pricing was down 2% in mens and up 4% in women’s. Footwear pricing was up 16.5%.
Rite Aid (RAD)
-0.7%
-60 bps
Pharmacy same-store sales, which  included an approximate 911 basis points negative impact from new generic introductions, decreased 2.3%. Prescription count at comparable stores increased 4.4% over the prior-year period. September front-end same-store sales increased 2.8%.
Haverty Furniture (HVT)
+10.0%
N/A
This was their fourth consecutive quarter of increased comparable-store sales. Total written sales for the third quarter increased 12.5% year over year.
Comps were a mixed bag this month with nearly all retailers continuing their prior trends. Retailers such as Kohl’s and Wet Seal continued to struggle, while Ross Stores and TJX continued to surprise to the upside. Looking ahead, I expect the retailers to trade up seasonally ahead of holiday sales expectations. Two stocks I would look at here for potential catalysts other than sales would be The Buckle(BKE, $45.39) and Limited (LTD, $50.35). Both of these stocks have a history of paying special dividends and with the tax advantage for dividend income potentially expiring next year, I wouldn’t be surprised to see both of these companies announce special dividends before year end. Although LTD has already paid a special dividend this year, their results have been strong and they have a solid balance sheet. With that said, a special dividend by either one of these companies wouldn’t surprise me. Given the full valuation for LTD, I wouldn’t expect the share price to pop much past $55 on both a potential announcement AND the anticipation of strong sales in the holiday season. My near-term target is $55 implying about a 9.5% return. For The Buckle, today’s weaker-than-expected results complicate matters a bit. Sales have been struggling over the past few months and hard comparisons continue through the first quarter of next year. The valuation already seems to reflect that, however and a surprise special dividend could lead to short covering. All said, my near-term target for BKE is $52, implying about a 14% return. Keep a hard stop on BKE at $43 and a $48 stop on LTD.

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