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Hotline Sample Report
This report is a sample for information purposes only. These recommendations are closed.
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3/4/2010 2:11:21 PM Eastern Time
Another Day of Angst (But Rays of Hope, Too)
By Charles Payne, CEO & Principal Analyst
The final countdown has begun. We go through it every month but it takes on a fresh sensation each time. The jobs report looms large as it can set the tone for the market for the next 30 days. The week has gone according to script. We came out of the gate with vigor on Monday but have since been sideways as investors digest data that has been mixed, though on balance, better than expected. Today's data was also mixed, with the big standouts being productivity trends and pending homes sales. Pending home sales tumbled big time. Consensus on the Street was +1.0% but instead the actual result was -7.6%. Initially, the news sent equities lower but when the industry explained this number was skewed by the weather all was forgiven. There is a difference; however, to rationalization that stops the market from moving lower and rationalization that provides a spark.
To be sure, there continues to be positive signs including:
* Wal-Mart (WMT) raised its dividend, continuing a trend that underscores growing confidence the worst is over. Our retail sector analyst, Brian Sozzi, reiterated his buy rating on the stock following the recent earnings release.
* AK Steel (AKS) is adding a surcharge of $330.0 per ton. The new rates begin in April on electric steel products.
Then there is the initial jobless claims which provided the "phew" moment of the session. After a shocker last week, and several weeks of trending higher, people filing for first time unemployment benefits dipped a little. Of course we have to get the number down under 400,000 before celebrating, but considering the direction we were heading it's a big relief not to have a "5" handle on this report.
On the international front the situation in Greece looks rosier today as their auction has attracted more than $21.0 billion in bids (only $5 billion was up for sale). The moral of the story is that Germany and France have no choice except to bailout their fellow EU/Euro member.
Long Idea: GUESS INC (GES) @ $41.73
Click here to view the trading alerts that followed this recommendation
| Entry Price |
Entry Limit |
Stop Loss |
Trading Target |
Target |
Long-term Target |
Options |
| $41.73 |
see comments |
$36.00 |
N/A |
$52 |
N/A |
N/A |
| Type |
Option Symbol |
Entry Price |
Strike Price |
Expiration Date |
| Call |
GES100918C00 |
$5.60 |
$40.00 |
9/18/2010 |
BACKGROUND: Guess?, Inc. designs, markets, distributes, and licenses lifestyle collections of apparel and accessories for men, women, and children. The company's products include collections of denim and cotton clothing, such as jeans, pants, overalls, skirts, dresses, shorts, blouses, shirts, jackets, and knitwear. It also grants licenses to manufacture and distribute a range of products, which comprise eyewear, watches, handbags, footwear, kids' and infants' apparel, leather apparel, swimwear, fragrance, jewelry, and other fashion accessories. The company markets its apparel under various trademarks, including GUESS, GUESS?, GUESS U.S.A., GUESS Jeans, GUESS? and Triangle Design, Question Mark and Triangle Design, a stylized G, GUESS Kids, Baby GUESS, YES, G by GUESS, GUESS by MARCIANO, and MARCIANO. It offers its products through retail, wholesale, e-commerce, and licensing distribution channels. As of January 31, 2009, the company operated 425 stores in the United States and Canada, which include 92 GUESS? retail stores, 104 GUESS? factory outlet stores, 52 GUESS by MARCIANO stores, 43 G by GUESS stores, and 34 GUESS? Accessories stores. It also operated 61 stores in Europe, 24 stores in Asia, and 11 stores in Mexico. The company was founded in 1981 and is headquartered in Los Angeles, California.
SKINNY: Guess not only has significant brand momentum overseas, but is regaining traction at its domestic store fleet. Moreover, the seasoned management team has done a fine job in controlling expenses, bringing the operating margin base by segment to levels not seen since the consumer spending boom of 2007. Long-term, Guess has a strong square footage growth profile for all its concepts, notably for the value-oriented G by Guess internationally. We believe the stock is a great play following the much better than expected same-store sales data today. Our price target is $52.00, and we suggest a mental stop-loss at $36.00.
| Analyst Coverage |
| Jefferies & Co- Initiated BUY |
Credit Suisse- Initiated OUTPERFORM |
Boenning & Scattergood- Initiated MARKET PERFORM |
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