by Ian Harvey
IMPORTANT NOTE: There is no stop-loss or pre-determined sell price recommended – this is left to the discretion of the individual trader.
Option Trade - Vipshop Holdings Ltd – ADR (NYSE:VIPS) Calls
Friday, January 05, 2018
** OPTION TRADE: Buy the VIPS FEB 16 2018 12.000 CALL at approximately $0.75.
Sell price is left to your own judgment.
Vipshop Holdings Ltd – ADR (NYSE:VIPS), an online discount retailer for brands in China, has a totally
different business model than BABA and JD, and all three companies can coexist
together. VIPS is an online discount retailer, so it does not directly compete
with BABA and JD. For comparison with the situation in the US, it is like Ross
Stores (ROST) competing with Best Buy (BBY). Both are retailers but their
business model is totally different and they even sell different goods. The
same applies to VIPS in China. VIPS revenue comes mainly from selling apparels.
Selling apparels also have some advantages over selling other goods. E.g., it
has higher gross margin: VIPS has 24% and JD 15%. I believe it is more
appropriate to compare VIPS with other online pure-play apparel retailers.
Vipshop Holdings Limited is estimated to
report earnings on Monday, February 19, 2018. Equities
research analysts predict that Vipshop Holdings will post $0.20 earnings per
share for the current fiscal quarter.
On average,
analysts expect that Vipshop will report full-year earnings of $0.71 per share
for the current financial year, with EPS estimates ranging from $0.69 to $0.72.
For the next financial year, analysts anticipate that the firm will post
earnings of $0.76 per share.
Also, Wall Street brokerages forecast
that Vipshop Holdings will report sales of $3.52 billion for the current
quarter. Analysts have provided estimates for Vipshop’s earnings, with
estimates ranging from $3.52 billion to $3.53 billion. Vipshop reported sales
of $2.73 billion during the same quarter last year, which indicates a positive
year-over-year growth rate of 28.9%.
Analysts expect that Vipshop will report
full-year sales of $3.52 billion for the current year, with estimates ranging
from $10.85 billion to $10.91 billion. For the next financial year, analysts
anticipate that the company will post sales of $12.91 billion per share, with
estimates ranging from $12.88 billion to $12.94 billion.
Influencing Factors
VIPS is operating in a niche market. It is the largest discount retailer in China, so it is naturally the first choice retailer for companies which need to sell unsold inventory. No other competitor can offer the same customer reach. BABA and JD, of course, have more customers, but companies which sell branded goods usually do not want to mix their new collection (which is fully priced) with old collections (which are selling at a discount). VIPS has ROE > 30% and ROIC > 40%.
VIPS is trading just for 0.7 P/S ratio compared to its competitors which are trading for 2.5 multiple. Private sector valuations are also higher.
VIPS has much lower operating expenses than other competing companies. Its marketing and fulfillment expenses are less than half of its competitors.
VIPS revenue growth has dramatically slowed down from triple-digit growth in past years to high 20s percentage growth. This is typical for online apparel e-commerce companies. VIPS has filled a gap in the market, so at the beginning it has grown very fast and from now on it will grow in line with the market.
Source of future growth:
Vipshop saw an improvement to its Relative Strength (RS) Rating on Tuesday, rising from 69 to 75.
Analysts and Hedge Funds Opinions
Daiwa Capital Markets raised Vipshop from a “hold” rating to a “buy” rating in a research report on Monday.
Several other analysts have also recently commented on the company…..
Four equities research analysts have rated the stock with a sell rating, three have issued a hold rating and eight have assigned a buy rating to the company’s stock. Vipshop currently has a consensus rating of “Hold” and a consensus target price of $12.95.
Institutional investors that have recently made a change to their positions in the stock….
VIPS has a good business model operating in a niche market. It is number 1 by a big margin. Revenue and income will grow. Even a small income growth would justify VIPS low valuation. VIPS can expand its product selection. VIPS is already selling other products, not just apparel but it represents small part of revenue. In future, it can use its registered customer base and cross sell also other products.
Vipshop has a market cap of $6,953.65, a price-to-earnings ratio of 24.42 and a beta of 2.11. The company has a quick ratio of 0.74, a current ratio of 1.05 and a debt-to-equity ratio of 0.54. Vipshop has a twelve month low of $7.79 and a twelve month high of $15.49.
Option Trade - Cal-Maine Foods Inc. (NASDAQ:CALM) Puts
Wednesday, January 03, 2018
** OPTION TRADE: Buy the CALM JAN 19 2018 40.000 PUT at approximately $0.30.
Sell price is left to your own judgment.
Cal-Maine Foods Inc. (NASDAQ:CALM), a producer and marketer of shell eggs in the United States, is expected to report earnings on Friday, January 05, before the market opens. The report will be for the fiscal Quarter ending Nov 2017. Analysts' forecasts that the consensus EPS forecast for the quarter is $0.5. The reported EPS for the same quarter last year was $-0.48.
And Cal-Maine Foods put options were on the move yesterday. A large number of contracts represents approximately 183,400 underlying shares, working out to a sizeable 54.6% of CALM's average daily trading volume over the past month, of 335,650 shares, was present for the day.
Cal-Maine
has been a challenging company to both analyze and invest in. All commodities
go through up and down cycles. For shell eggs, the avian influenza outbreak
during 2015 led to an extreme loss of hen laying egg production, concurrently
leading to higher egg prices and substantially stronger net sales and profits
for Cal-Maine.
Since the peak in the fall of 2015,
Cal-Maine’s stock price has been under pressure as hen egg laying production
ramped back up, inventories peaked and egg prices plummeted. This translated to
a 43-percent stock price decline from Cal-Maine’s October 2015 peak at $61 to
the August 2017 low-point above just above $34.
In the spring of 2017, analysts were
calling for Cal-Maine’s stock price to be fairly valued in the low $30s to even
below the $30 per share mark. This was expressed by both Goldman and Cleveland
Research. The most important variable for Cal-Maine’s stock price continues to
be egg price movements. The challenge has been as to the predictability of
where prices may be headed.
Influencing Factors
Cal-Maine Foods shares are edging below the MACD Histogram zero line. Current levels place the share price around 44.45, while the MACD indicates a bearish trend.
Currently, the 14-day ADX for Cal-Maine Foods is sitting at 15.57. Generally speaking, an ADX value from 0-25 would indicate an absent or weak trend.
Cal-Maine Foods’s Williams Percent Range or 14 day Williams %R currently sits at -74.63. In general, if the indicator goes above -20, the stock may be considered overbought. Alternately, if the indicator goes below -80, this may point to the stock being oversold.
Analysts and Hedge Funds Opinions
Zacks Investment Research lowered shares of Cal-Maine Foods from a buy rating to a hold rating in a research note released on Friday, December 22nd.
According to Zacks, “Cal-Maine Foods, Inc. is primarily engaged in the production, grading, packing and sale of fresh shell eggs, including conventional, cage-free, organic and nutritionally-enhanced eggs. The Company, which is headquartered in Jackson, Mississippi, is the largest producer and distributor of fresh shell eggs in the United States and sells the majority of its shell eggs in states across the southwestern, southeastern, mid-western and mid-Atlantic regions of the United States. “
Several other analysts have also recently commented on the company…..
Two analysts have rated the stock with a sell rating, two have assigned a hold rating and three have given a buy rating to the stock. The company currently has an average rating of “Hold” and a consensus price target of $39.00.
Institutional investors that have recently made a change to their positions in the stock….
Commodity stocks are highly volatile, and it must be assumed that increasing feed costs is very likely for the future which will be a deterrent to stock price growth.
Cal-Maine Foods has a market cap of $2,159.02, a P/E ratio of -36.14 and a beta of 0.76. The company has a current ratio of 6.67, a quick ratio of 4.14 and a debt-to-equity ratio of 0.01. Cal-Maine Foods Inc. has a 52-week low of $33.40 and a 52-week high of $50.40.