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.
Thursday, 9th June, 2016
Godaddy Inc (NYSE:GDDY) Puts
**OPTION TRADE: Buy the GDDY July 15 2016 30.000 put at approximately $0.55. Sell price is left to your own judgment.
Citi has downgraded Godaddy Inc (NYSE: GDDY), a technology provider to small businesses, Web design professionals and individuals, to Neutral from Buy on valuation and slower margin expansion.
"While we remain constructive on the long-term growth outlook of the business, near-term valuation/upside potential, combined with the possibility of slower margin expansion and growth near-term cause us to move to the sidelines," analyst Mark May wrote in a note.
May noted that the stock is within 4 percent of $34, a level which it has been unable to hold in previous trading.
Further, May expects growth and margin expansion to slow, at least in the near term due to difficult comps in the high-margin Non-Domains revenue segments.
For 2016, GoDaddy expects gross margin expansion to be slower than in recent years, due to some merchandising tactics and the lapping of the growth of Office 365, which has been a major driver of growth in Business Applications revenue.
The company believes gross margin expansion should once again become more meaningful in 2017. But, the analyst differs saying that the delta between the growth of Domains and of Non-Domains has narrowed, meaning that the mix shift will provide only a moderate benefit to gross margins.
As a result, GoDaddy must find new avenues of operating leverage or introduce new high-margin products. However, this is unlikely to occur in the near term, thereby adding a degree of uncertainty.
"[W]hile we expect GDDY to continue to add roughly one million new paying customers per year, the law of large numbers is likely to impact customer growth, and acceleration in ABPU growth is unlikely to provide an offset," May highlighted.
On the GDDY technical chart, price has just turned the corner after a Sell Signal Stack. GDDY’s typical retracement from this position is -30.55% over the next 8.52 weeks. If GDDY gives of another typical performance, it would drop to $23.32 by mid-August.
Wednesday, 8th June, 2016
J M Smucker Co (NYSE:SJM) Calls
**OPTION TRADE: Buy the SJM June 17 2016 135.000 call at approximately $1.25. Sell price is left to your own judgment.
J M Smucker Co (NYSE: SJM), a manufacturer and marketer of consumer food and drink products and pet food and pet bites in North America, is scheduled to release its fiscal fourth-quarter results before the market opens tomorrow, June 9, with analysts forecasting earnings of $1.19 per share, and revenue of $1.75 billion for the quarter.
SJM has a strung together three consecutive better-than-expected quarterly reports, and if it can extend that streak with its fiscal Q4 results; the stock should build on its recent gains.
Despite several bouts of market turbulence in the last year, J.M. Smucker Company's stock has bucked the trend and continued higher. The company has been bolstered by steadily rising sales and profit, and the stock has outperformed the broader stock market as measured by the S&P 500.
The J. M. Smucker Company (SJM) has been steadily rising over the last year, and shares have gained 6.7% during the current year.
KeyBanc assumed coverage on J M Smucker in a report on Wednesday, May 25th. They set a “sector weight” rating on the stock. One analyst has rated the stock with a sell rating, seven have assigned a hold rating and five have issued a buy rating to the company’s stock. J M Smucker currently has a consensus rating of “Hold” and a consensus target price of $137.30.
One analyst has rated the stock with a sell rating, seven have assigned a hold rating and five have issued a buy rating to the company’s stock. J M Smucker currently has a consensus rating of “Hold” and a consensus target price of $137.30.
Shares of J M Smucker Co will open at $132.53 this morning. The firm’s 50-day moving average price is $128.76 and its 200-day moving average price is $126.26. The company has a market capitalization of $15.86 billion and a PE ratio of 38.06. J M Smucker Co has a 12-month low of $104.30 and a 12-month high of $133.21.
There have been upbeat reports from other stocks in the sector recently, with both ConAgra (CAG) and Mondelez International (MDLZ) posting solid results in their last quarterly reports. The entire sector has been strong in 2016, and there should be more strength ahead. With the SJM stock’s strong gains so far this year, analysts forecast earnings growth of 7.4% this year, and 10.6% next year. Given the stock’s forward growth estimates, there should be additional upside potential. Expect a decent report, and the stock to trend higher.