“Cut-to-the-Chase” Recommendations
- Week Beginning -
Monday, December 04, 2017

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 - Ollie's Bargain Outlet Holdings Inc. (NASDAQ:OLLI) Calls

Tuesday, December 05, 2017

** OPTION TRADE: Buy the OLLI DEC 15 2017 50.000 CALL at approximately $1.10.

Sell price is left to your own judgment.

The retailer of brand name merchandise Ollie's Bargain Outlet Holdings Inc. NASDAQ:OLLI), reports Q3 earnings tomorrow, Wednesday December 6, and Wall Street expects EPS to jump 24% to 21 cents on revenue up 15% to $232 million. Estimates for the full year were recently revised upward.

In terms of top and bottom line numbers, the company has posted rising EPS growth over the last two quarters. Sales gains have also risen during the same period.

Shares have surged more than 60% this year and are just below a flat-base buy point of $47.00 after breaking out last month.

News stories about Ollie’s Bargain Outlet have been trending positive according to Accern reports. The research group identifies negative and positive media coverage by monitoring more than 20 million news and blog sources in real time. Accern ranks coverage of publicly-traded companies on a scale of negative one to positive one, with scores nearest to one being the most favorable. Ollie’s Bargain Outlet earned a media sentiment score of 0.28 on Accern’s scale.

Ollie’s Bargain Outlet Holdings, Inc. offers food products, housewares, books and stationery products, bed and bath products, floor coverings, electronics, and toys; and other products, including hardware, personal health care, candy, clothing, sporting goods, pet products, luggage, automotive, seasonal, furniture, summer furniture, and lawn and garden. It has a 40.56 P/E ratio. As of January 28, 2017, it operated 234 Ollie’s Bargain Outlet locations across 19 states in the United States.

Analysts and Hedge Funds Opinions

Zacks Investment Research upgraded shares of Ollie’s Bargain Outlet from a “hold” rating to a “buy” rating and set a $51.00 target price on the stock in a report on Tuesday, September 19th.

Several other analysts have also recently commented on the company…..

  • Morgan Stanley assumed coverage on shares of Ollie’s Bargain Outlet in a report on Monday, September 25th. They issued an “equal weight” rating and a $46.00 target price on the stock.
  •  KeyCorp reiterated a “buy” rating and issued a $50.00 target price on shares of Ollie’s Bargain Outlet in a report on Friday, September 29th.
  • Citigroup assumed coverage on shares of Ollie’s Bargain Outlet in a report on Friday, November 17th. They issued a “sell” rating and a $39.00 target price on the stock.
  • Finally, Jefferies Group reissued a “buy” rating and issued a $48.00 price target on shares of Ollie’s Bargain Outlet in a research report on Wednesday, August 23rd.

One research analyst has rated the stock with a sell rating, seven have given a hold rating and eight have given a buy rating to the company’s stock. The company currently has a consensus rating of “Hold” and a consensus target price of $46.92.

Institutional investors that have recently made a change to their positions in the stock….

  • Capital World Investors acquired a new stake in Ollie’s Bargain Outlet in the 2nd quarter worth $38,979,000.
  • BlackRock Inc. grew its position in Ollie’s Bargain Outlet by 17.3% in the 2nd quarter. BlackRock Inc. now owns 5,659,483 shares of the company’s stock worth $241,093,000 after purchasing an additional 832,667 shares during the last quarter.
  • Kayne Anderson Rudnick Investment Management LLC grew its position in Ollie’s Bargain Outlet by 22.8% in the 3rd quarter. Kayne Anderson Rudnick Investment Management LLC now owns 2,640,797 shares of the company’s stock worth $122,533,000 after purchasing an additional 490,295 shares during the last quarter.

Summary

Ollie’s Bargain Outlet has a current ratio of 2.80, a quick ratio of 0.29 and a debt-to-equity ratio of 0.17. The company has a market cap of $2,920.00 and a price-to-earnings ratio of 43.98. Ollie’s Bargain Outlet has a 1-year low of $27.75 and a 1-year high of $49.75.

Option Trade - Dollar General Corp. (NYSE:DG) Calls

Tuesday, December 05, 2017

** OPTION TRADE: Buy the DG DEC 15 2017 95.000 CALL at approximately $1.00.

Sell price is left to your own judgment.

Tennessee-based Dollar General Corp. (NYSE:DG), a discount retailer, is expected to post its third-quarter numbers on Thursday, December 07. The company will report its quarterly numbers before the market open, with the consensus calling for earnings of $0.94, up from $0.89 during the same period last year; on revenue of $5.80 billion, climbing 9%. The Earnings Whisper number is higher at $0.95 per share.

Yesterday saw Dollar General shares hit a new 52-week high during trading. The stock traded as high as $90.74 and last traded at $87.98, with a volume of 3151800 shares traded. The stock had previously closed at $88.08.

The earnings season has been mixed for retailers, with online retailers thriving and mall-based retailers struggling. Dollar General does not benefit from a strong online business, but it also does not face the same challenges as mall-based retailers.

Consumer confidence remains strong, but consumers still remember the lessons learned during the economic crisis, and as such discount retailers have been strong.

Dollar General has grown earnings by 11.2% per annum over the last five years, and is expected to grow profits an additional 7.5% per year over the next five years.

Dollar General is one of the largest discount retailers in the US. As of August 2017, the company operated about 14,000 stores in 44 US states. Dollar Tree also operates 14,000 stores across 48 US states and five Canadian provinces.

Influencing Factors

Short interest has decreased by 45.5% since the company's last earnings release while the stock has drifted higher by 21.4% from its open following the earnings release to be 16.6% above its 200 day moving average of $75.48.

Overall earnings estimates have been revised higher since the company's last earnings release.

Year-to-date (YTD), the company’s top line has improved 7.3% to $11.4 billion. Dollar General has recorded positive sales growth in every quarter for the last ten years. This consistent growth has been driven by strong comps growth as well as continuous store expansion, both of which have enabled the company to gain market share.

Dollar General’s strength lies in its strong business model of providing convenience as well as quality products at competitive prices.

Technical indicators for DG are bullish and the stock is in a strong upward trend. The stock has recent support above $85.50 and recent resistance below $89.80.

Analysts and Hedge Funds Opinions

Dollar General had its price objective increased by MKM Partners to $96.00 in a report issued on Monday morning. They currently have a buy rating on the stock.

Several other analysts have also recently commented on the company…..

  • Zacks Investment Research raised Dollar General Corporation from a hold rating to a buy rating and set a $94.00 target price for the company in a report on Tuesday, November 14th.
  • Goldman Sachs Group, Inc. (The) reaffirmed a neutral rating and set an $89.00 target price on shares of Dollar General Corporation in a report on Tuesday, November 14th.
  • Bank of America restated a “buy” rating and issued a $90.00 target price on shares of Dollar General in a research report on Friday, August 25th.
  • Raymond James Financial restated a “buy” rating on shares of Dollar General in a research report on Sunday.
  • Finally, KeyCorp restated a “hold” rating on shares of Dollar General in a research report on Friday, November 10th.

Two equities research analysts have rated the stock with a sell rating, ten have given a hold rating and fourteen have assigned a buy rating to the stock.

Institutional investors that have recently made a change to their positions in the stock….

  • Norinchukin Bank The’s holdings in Dollar General were worth $1,572,000 as of its most recent filing with the Securities and Exchange Commission (SEC).
  • Finally, Rothschild Asset Management Inc. raised its stake in shares of Dollar General by 1.2% during the second quarter. Rothschild Asset Management Inc. now owns 9,483 shares of the company’s stock valued at $684,000 after acquiring an additional 111 shares in the last quarter.

Summary

Dollar General’s consistent financial performance and its ability to survive competition is evident in its stock market performance this year. The company has risen 16.5% so far this year as of November 27, 2017.      

The street expects Dollar General will report its fourth-straight earnings beat as investor sentiment going into the company's earnings release has 79% expecting earnings beat. The stock has an attractive valuation, with a P/E of 19.9, so there is definitely upside potential on another earnings beat.

The company has a current ratio of 1.42, a quick ratio of 0.18 and a debt-to-equity ratio of 0.47. The firm has a market cap of $24,800.00, a PE ratio of 19.51, a price-to-earnings-growth ratio of 1.73 and a beta of 0.96.

Option Trade - American Eagle Outfitters (NYSE:AEO) Calls

Tuesday, December 05, 2017

** OPTION TRADE: Buy the AEO DEC 15 2017 17.000 CALL at approximately $0.55.

Sell price is left to your own judgment.

American Eagle Outfitters (NYSE:AEO), a specialty retailer, operating over 1,000 retail stores and online at ae.com and aerie.com in the United States and internationally, is expected to report earnings before the market opens tomorrow, Wednesday, December 6, 2017. The consensus earnings estimate is $0.39 per share and sales are projected to climb 2.57% to hit $964.78 million. The Earnings Whisper number is $0.40 per share. For the full-year, the company’s sales are projected to climb 3.13% to reach as high as $3.78 billion.

Short interest has decreased by 6.9% since the company's last earnings release. Overall earnings estimates have been revised higher since the company's last earnings release.

American Eagle is trading at 13.33x earnings, which marks a discount compared to its industry’s average and fairs well against the S&P 500.

In the last four weeks alone, shares of American Eagle have surged 15.10%.

Influencing Factors

American Eagle has been one of the standout players in the teen apparel space, and has managed to grow its revenues despite a slowdown in the industry.

After a stellar second quarter, where the company delivered a tenth straight quarter of comparable sales improvement, the momentum is expected to carry on in the third quarter. This sales growth is likely to be driven by an upsurge in the company's online channel, which has been doing well of late.

American Eagle delivered a tenth straight quarter of double-digit gains in its online sales in the second quarter, which represented 23% of the total revenue. Given the robust performance of this business, the company has focused its marketing on the digital space, which should be highly effective in drawing in new customers. Moreover, to reel in these customers, the company has also launched a new rewards program in the third quarter, which should drive some growth in the future as well.

The Aerie brand is another strong contributor to the growth the company has seen recently. In the second quarter, it achieved 26% comp improvement, building on the 24% seen in the prior-year quarter. This figure is all the more impressive when compared to the growth figures delivered by its competitors. While the brand is much smaller in terms of sales when contrasted with Victoria’s Secret, the latter posted a comparable decline of 14% in Q2.

New product lines such as swimwear, including Chill.Play.Move, in addition to its lingerie segment, can be expected to drive growth in the third quarter. The brand's marketing campaigns have been largely successful, which should allow its strong performance to continue. This division has also benefited from the immense growth of the online business, which represented 40% of the sales posted by Aerie in the second quarter.

Analysts and Hedge Funds Opinions

American Eagle Outfitters was upgraded by equities research analysts at Wolfe Research from an “underperform” rating to a “market perform” rating in a report released recenly.

Several other analysts have also recently commented on the company…..

  • SunTrust Banks, Inc. set a $15.00 target price on shares of American Eagle Outfitters and gave the company a “buy” rating in a report on Thursday, August 24th.
  • FBR & Co restated a “buy” rating and set a $15.00 target price (up previously from $13.00) on shares of American Eagle Outfitters in a report on Tuesday, September 5th.
  • B. Riley restated a “buy” rating on shares of American Eagle Outfitters in a report on Wednesday, November 1st.
  • Cowen and Company set a $14.00 price target on shares of American Eagle Outfitters and gave the stock a “buy” rating in a research note on Wednesday, August 23rd.
  • Finally,Royal Bank Of Canada set a $14.00 target price on shares of American Eagle Outfitters and gave the stock a “buy” rating in a research note on Tuesday, August 29th.

Three equities research analysts have rated the stock with a sell rating, nine have assigned a hold rating and twelve have given a buy rating to the company. American Eagle Outfitters has an average rating of “Hold” and an average target price of $14.57.

Institutional investors that have recently made a change to their positions in the stock….

  • New York State Teachers Retirement System lowered its holdings in American Eagle Outfitters by 4.7% in the 3rd quarter. The firm owned 325,369 shares of the apparel retailer’s stock after selling 16,000 shares during the quarter. New York State Teachers Retirement System owned about 0.18% of American Eagle Outfitters worth $4,653,000 at the end of the most recent quarter.
  • Marshall Wace North America L.P. boosted its holdings in American Eagle Outfitters by 807.2% during the 2nd quarter. Marshall Wace North America L.P. now owns 496,468 shares of the apparel retailer’s stock worth $5,958,000 after acquiring an additional 441,740 shares during the last quarter.
  • Finally, LSV Asset Management boosted its holdings in American Eagle Outfitters by 1.1% during the 2nd quarter. LSV Asset Management now owns 7,339,955 shares of the apparel retailer’s stock worth $88,446,000 after acquiring an additional 76,600 shares during the last quarter.

Summary            

American Eagle's top line growth has been impressive given the soft state of the apparel retail market in the country, it was at least partly driven by the promotions put in place by the company. The sales trends were better than the first quarter, with positive traffic, more transactions, and a higher average unit retail price in the second quarter.

The company has a market cap of $2,625.64, a price-to-earnings ratio of 12.90, a price-to-earnings-growth ratio of 1.50 and a beta of 1.10.

Option Trade - Veeva Systems Inc. (NYSE:VEEV) Calls

Monday, December 04, 2017

** OPTION TRADE: Buy the VEEV DEC 15 2017 65.000 CALL at approximately $0.65.

Sell price is left to your own judgment.

Veeva Systems Inc. (NYSE:VEEV), a growing mid cap company within the Healthcare sector, with a  goal to become the leading strategic technology partner to the life science industry, will report earnings after the market closes tomorrow, Tuesday, December 5, 2017. The consensus earnings estimate is $0.22 per share on revenue of $172.39 million.

The company's guidance was for earnings of $0.21 to $0.22 per share on revenue of $171.00 million to $172.00 million. Consensus estimates are for year-over-year earnings growth of 4.76% with revenue increasing by 20.74%.

The results are expected to show steady growth on Subscription services revenues. Strong growth in the segments is likely to be driven by Veeva Vault, OpenData and the company’s latest technologies in the commercial cloud platform.

Veeva Systems ranks in the top 10% of its industry group, Health Care Technology, and in the top quarter of its sector group, Health Care, with a market value of $8.8 billion. From an investment attractiveness viewpoint, VEEV is ranked in the top quartile of the sector with a ranking of 110 among the 781 companies in the sector.

Veeva Systems’ share price movement continues to be robust. The stock has surged 34.2% in a year, outperforming the broader industry’s 31.4% growth.

Investor sentiment going into the company's earnings release has 83% expecting an earnings beat.

Influencing Factors

Veeva Systems has increased EPS consistently over the past three years at a CAGR of 52%. Starting at .09 in quarter 2 of 2015 and now .23 reported for quarter 2 of fiscal year 2018. . If Veeva Systems can maintain their annual earnings growth rate of 52%, they will reach .53 by 2020. This is almost double analysts' current forecasts, which is just one of the many reasons this stock is undervalued in the market.

From 2013 to 2017, the company has produced a compounded annual growth rate of 43%, concerning revenue. In their 2017 report, they filed total revenues equaling 544 million. At this rate, the company could potentially see over a billion in revenue by fiscal year 2019; total revenue coming out to just over $1.1 billion.

In a bid to expand digital asset management capabilities, Veeva Systems VEEV announced a new platform on the same that simplifies the process of creating portals plus organizing and showcasing content within Veeva Vault PromoMats, which are expected to hit the markets this December.

Marketing teams can share digital assets and campaigns at one go using the Veeva Vault PromoMats Brand Portal. Per management, Vault PromoMats Brand Portalis the only application that unifies digital asset management with medical, legal and regulatory review to eliminate the need to move, duplicate and manage content across numerous systems.

Meanwhile, the adoption of Vault QualityDocs and Vault QMS is also growing by the day. The company gained considerable footing in the market with eight of the top 20 pharmaceuticals companies being standardized on the Vault eTMF platform.

In the last reported second quarter, Subscription services revenues were up 28% year over year. Professional services revenues increased almost 23.4%, primarily owing to strong adoption of the Vault platform.

The company has announced a strategic partnership with Accenture to provide Veeva Vault RIM solutions to life sciences and pharma companies, which is expected to strengthen Veeva Systems customer base and drive subscription revenues.

Veeva Systems is a definite buy due to their substantial revenue growth and widening margins. Veeva also has a very experienced leadership team with great track records. This company is in both a prosperous sector and industry, which is a very good equation that could lead to large returns. Analysts' expectations for earnings and revenue are very conservative, which is causing the stock price to be considerably cheap in the market. Their projections are far below the CAGR's that Veeva has been producing. The company is also debt free with an AAA rating. This is a strong buy at the stock's current price.

Analysts and Hedge Funds Opinions

BidaskClub raised Veeva Systems from a “buy” rating to a “strong-buy” rating in a research note on Wednesday, September 6th.

Several other analysts have also recently commented on the company…..

  • Needham & Company LLC reissued a “buy” rating and issued a $70.00 price objective on shares of Veeva Systems in a research note on Friday, August 25th.
  •  JMP Securities reaffirmed a “buy” rating and issued a $70.00 price target on shares of Veeva Systems in a research report on Saturday, August 26th.
  • KeyCorp reaffirmed a “buy” rating and issued a $70.00 price target on shares of Veeva Systems in a research report on Friday, August 25th.
  • Finally, Canaccord Genuity reaffirmed a “buy” rating and issued a $70.00 price target on shares of Veeva Systems in a research report on Tuesday, August 22nd.

Five investment analysts have rated the stock with a hold rating, seven have issued a buy rating and one has issued a strong buy rating to the company. Veeva Systems presently has a consensus rating of “Buy” and an average price target of $67.45.

Institutional investors that have recently made a change to their positions in the stock….

  • State of Wisconsin Investment Board cut its position in shares of Veeva Systems. The institutional investor owned 142,298 shares of the technology company’s stock after selling 8,078 shares during the period. State of Wisconsin Investment Board owned 0.10% of Veeva Systems worth $8,027,000 as of its most recent SEC filing.
  • Los Angeles Capital Management & Equity Research Inc. boosted its position in Veeva Systems by 31.0% in the third quarter. The firm owned 285,141 shares of the technology company’s stock after purchasing an additional 67,555 shares during the period. Los Angeles Capital Management & Equity Research Inc. owned approximately 0.21% of Veeva Systems worth $16,085,000 as of its most recent SEC filing.
  • Finally, Public Employees Retirement Association of Colorado raised its stake in shares of Veeva Systems by 1.6% in the 2nd quarter. Public Employees Retirement Association of Colorado now owns 20,863 shares of the technology company’s stock valued at $1,279,000 after acquiring an additional 326 shares in the last quarter.

Summary            

The company has hit both earnings and revenue estimates each quarter since 2014 and will more than likely do so on this earnings release. Veeva Systems also has a strong balance sheet and is debt free. This is a very fundamentally stable company in a promising sector.

Veeva Systems has a 52 week low of $40.50 and a 52 week high of $68.07. The company has a market cap of $8,247.10, a P/E ratio of 100.78, a P/E/G ratio of 4.87 and a beta of 1.61.

Option Trade - Toll Brothers Inc. (NYSE:TOL) Calls

Monday, December 04, 2017

** OPTION TRADE: Buy the TOL DEC 15 2017 50.000 CALL at approximately $1.40.

Sell price is left to your own judgment.

The U.S. housing market is booming!

According to the U.S. Commerce Department, sales of new U.S. single-family homes rose by 6.2% in October, to 685,000 units. That's the highest home sales level in a decade, with new home purchases in the U.S. Northeast leading the charge with a 30% hike in October..

Real estate experts say the good times should continue to roll in the U.S. housing market, mostly due to an increasingly robust economy.

"Home prices will continue to increase in 2018 because of low unemployment, an improving economy and a limited supply of new homes which has not kept up with the increased pace of demand," says Dean Sioukas, chief executive at Magilla Loans.

Which means that this provides a great opportunity for housing market stock; and homebuilder, Toll Brothers Inc. (NYSE:TOL), which is engaged in designing, building, marketing, selling and arranging financing for detached and attached homes in luxury residential communities, is front-and-center in regard to this matter.

Toll Brothers will announce fiscal fourth-quarter results tomorrow, December 5. The company will report its fiscal Q4 numbers before the market open, and Wall Street sees EPS surging 78% to $1.19, with revenue up 12% to $2.08 billion; and the Earnings Whisper number is $1.21 per share.

Overall earnings estimates have been revised higher since the company's last earnings release.

Costs for labor, materials and land have been rising, but the homebuilding sector has been hot amid indications that more millennials are finally shifting to homeownership vs. renting.

Toll Bros. shares are up about 60% this year, and have shot up more than 20% since breaking out of a 41.17 flat-base buy point in September.

The stock is already on an upward trend, with TOL stock up 4.25% over the past month, and up by 27.9% over the past 90 days.

Last month, D.R. Horton (DHI) reported in-line Q4 earnings and better-than-expected revenue.

Influencing Factors

The housing market remains strong, and homebuilders have enjoyed big gains this year. There is no sign that the housing recovery is slowing, and with inventories very low across the country, the outlook remains bright for the entire sector.

TOL has grown earnings by 26.4% per annum over the last five years, and analysts expect 46.3% growth this year, and 13.6% average growth over the next five years.

Optimism remains upbeat for the sector, and if TOL is able to extend its three-quarter streak of better than expected top and bottom line results the stock will trend higher.

The street expects another earnings beat.

Analysts and Hedge Funds Opinions

Toll Brothers had its price objective upped by MKM Partners to $54.00 in a report published last Wednesday. The brokerage currently has a buy rating on the construction company’s stock.

Several other analysts have also recently commented on the company…..

  • Royal Bank Of Canada reaffirmed a buy rating and set a $45.00 price target on shares of Toll Brothers in a research note on Wednesday, November 15th.
  • Zacks Investment Research raised shares of Toll Brothers from a “hold” rating to a “buy” rating and set a $48.00 target price for the company in a research report on Tuesday, October 10th.
  • UBS started coverage on shares of Toll Brothers in a research report on Wednesday, October 25th. They set a “buy” rating and a $50.00 target price for the company.
  • Finally, Keefe, Bruyette & Woods reissued a “hold” rating and set a $47.00 target price on shares of Toll Brothers in a research report on Friday, October 20th.

Institutional investors that have recently made a change to their positions in the stock….

  • Ameriprise Financial Inc. grew its stake in shares of Toll Brothers by 9.7% during the 3rd quarter. The institutional investor owned 1,321,280 shares of the construction company’s stock after acquiring an additional 117,142 shares during the period. Ameriprise Financial Inc. owned 0.81% of Toll Brothers worth $54,794,000 as of its most recent SEC filing.
  • BlackRock Inc. grew its holdings in Toll Brothers by 1.8% during the second quarter. BlackRock Inc. now owns 16,811,380 shares of the construction company’s stock valued at $664,216,000 after purchasing an additional 291,112 shares during the period.
  • Vanguard Group Inc. grew its holdings in Toll Brothers by 2.6% during the second quarter. Vanguard Group Inc. now owns 12,540,189 shares of the construction company’s stock valued at $495,464,000 after purchasing an additional 323,334 shares during the period.

Summary            

Toll Brothers has a current ratio of 6.75, a quick ratio of 1.10 and a debt-to-equity ratio of 0.84. Toll Brothers Inc. has a one year low of $29.17 and a one year high of $50.95. The company has a market capitalization of $8,232.73, a PE ratio of 18.71, a price-to-earnings-growth ratio of 1.08 and a beta of 1.56.