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.
You may also wish to read Stock Options Made Easy Trading Philosophy
ALSO "Trading Capital Management"
Option Trade – Etsy Inc. (NASDAQ:ETSY) Calls
Friday, January 11, 2019
** OPTION TRADE: Buy ETSY FEB 15 2019 55.000 CALL at approximately $2.00. Sell price is left to your own judgment.
(or alternatively as requested by some members : Place a pre-determined sell at $4.00.
Also include a protective stop loss of $0.80.)
Brooklyn, NY-based Etsy Inc. (NASDAQ:ETSY), a commerce platform to make, sell, and buy goods online and offline, primarily in the United States, was up 164% in 2018. And, the leading online marketplace for arts and crafts keeps gaining traction. Revenue surged 41% in its latest blowout quarter, and its adjusted profit more than doubled what Wall Street pros were expecting. Making analysts look like lightweights is just what Etsy has done over the past year when it comes to barreling through bottom-line targets.
The big catalyst for its recent surge was a decision to boost its selling fees in June, something that could've scared away sellers but, thankfully for investors, that wasn't the case. Etsy's seller base has risen by 8% over the past year with gross merchandise sales climbing 20% in that span of time. It's a win-win-win. Sellers are making more sales. Buyers are finding a broader selection of crafty merchant wares on the site.
Etsy has done a fantastic job turning around its business. The crafts e-commerce portal looked close to busted three years ago. But after a 2017 management shake-up, a new CEO and team has made all the difference. Investors have noticed, driving the ETSY stock price from under $10 at the beginning of 2016 to nearly $50.
CEO Josh Silverman had undertaken extensive measures to drive Etsy’s performance. He had outlined four strategies to drive growth, which included accelerating marketing investments, providing newer tools and services to both buyers and sellers, and enhancing trust and reliability on the platform.
Under these outlined strategies, the company has been investing in TV campaigns. Etsy is also bettering its shipping policies. The company is mulling over expanding free shipping to more products. Free shipping attracts shoppers and boosts conversion rates.
Etsy is deploying machine learning and AI technology along with human curation to make the search process simpler. It’s adding buyer locations to its algorithm, which helps categorize and rank search results. Adding buyer locations should make the search process much clearer, as tastes and preferences differ considerably from region to region.
The company is also expanding internationally. It had inked a referral agreement with Germany-based online retailer DaWanda. On the third-quarter conference call, Etsy stated that Germany had become its second-biggest overseas market by domestic activity due to referral traffic from DaWanda.
About Etsy ……
Etsy, Inc operates Etsy.com, a commerce platform to make, sell, and buy goods online and offline primarily in the United States, United Kingdom, Canada, Australia, France, and Germany. It provides various seller services and tools that are designed to help entrepreneurs for starting, managing, and scaling their businesses.Influencing Factors…..
Growth has accelerated of late, rising from below 20% in the first half of 2017 to 30% in the second quarter of 2018 and then a pricing-aided 40% in Q3.
As often is the case with 'platform' companies, margins have skyrocketed as a result. EBITDA margins in the first half of last year were under 10%; post-Q3 guidance suggests something like 24% in the last two quarters of this year.
Per management commentary after Q3, the hike in merchant fees from 3.5% to 5% hasn't led sellers to exit. And Etsy is reinvesting some of that revenue in areas like television advertising, which should further drive GMS (gross merchandise sales). First-half results next year - both revenue and profits - will benefit from the higher fees, potentially further boosting the ETSY stock price.
And while Etsy clearly has strengthened its platform, there's still room for improvement. Some 60% of active buyers, according to the company's most recent presentation, only shop once a year. Driving more repeat business can drive further growth. The company estimates it has just 2% market share in online spend in major categories in its geographies, creating a long runway for increasing share, revenue, and margins. There's room for further geographic expansion as well, whether into Europe or Asia.
There's a strong growth story here. And with the recent increases in
revenue and GMS coming despite the launch of rival Amazon's Handmade, Etsy
seems to have cemented itself as the leader in the online craft space.
Etsy last announced its quarterly earnings results on Tuesday, November 6th. The specialty retailer reported $0.15 earnings per share for the quarter, beating analysts’ consensus estimates of $0.06 by $0.09. Etsy had a net margin of 15.00% and a return on equity of 14.10%.
The firm had revenue of $150.37 million during the quarter, compared to analysts’ expectations of $149.76 million. During the same period in the previous year, the company earned $0.21 earnings per share. Etsy’s quarterly revenue was up 41.4% compared to the same quarter last year. On average, equities analysts forecast that Etsy will post 0.59 EPS for the current year.
Etsy impressed investors in November when it reported
better-than-expected earnings per share for its third quarter. The
outperformance was driven by Etsy's higher seller fees, which allowed the
company to increase investments in marketing and growth opportunities. Shares surged
about 26% after the report.
Equities research analysts expect that Etsy Inc will announce sales of $194.36 million for the current quarter. Etsy reported sales of $136.27 million during the same quarter last year, which suggests a positive year-over-year growth rate of 42.6%.
Wall Street brokerages predict that Etsy Inc will post earnings per share of $0.33 for the current fiscal quarter. Etsy reported earnings of $0.15 per share in the same quarter last year, which would suggest a positive year-over-year growth rate of 120%.
The company is expected to issue its next
earnings results on Tuesday, February 26th.
Having resisted a challenge from Amazon in the form of Amazon Handmade, Etsy essentially has the online crafts space to itself, giving it a competitive advantage through its brand reputation and network effects, which should help it deliver strong profit margins -- especially as the marketplace model is one of the best ways to generate e-commerce profits.
With the broader retail industry reporting strong holiday sales, Etsy was likely a winner in the fourth quarter too. The stock could surge if the company delivers another round of strong results when its next earnings report comes out in February.
Etsy was upgraded by Zacks Investment Research from a “hold” rating to a “buy” rating in a report released on Monday. The firm currently has a $56.00 price objective on the specialty retailer’s stock. Zacks Investment Research‘s target price suggests a potential upside of 8.59% from the company’s current price.
According to Zacks, “Etsy, Inc. offers e-commerce services. It provides online and offline marketplaces to buy and sell goods. The company’s product include art, home and living, mobile accessories, jewelry, wedding, and others. It operates primarily in Berlin, Germany, Dublin, Ireland, Hudson, New York, London, United Kingdom, Melbourne, Australia, Paris, France, San Francisco, California and Toronto, Canada. Etsy, Inc. is headquartered in Brooklyn, New York. “
Loop Capital set a
$70.00 target price on Etsy in a research note issued to investors on Monday,
December 17th. The firm currently has a buy rating on the specialty retailer’s
Several other analysts have recently commented on the company…..
Five analysts have rated the stock with a hold rating and eleven have given a buy rating to the company’s stock. Etsy presently has a consensus rating of Buy and a consensus price target of $52.07.
The optimism around the stock makes sense. So does the ~400% rise in the Etsy stock price. Meanwhile, that growth would seem to set up the company - and the stock - for even better results in the coming years.
Etsy has a current ratio of 5.49, a quick ratio of 5.49 and a debt-to-equity ratio of 0.85. The company has a market cap of $5.99 billion, a P/E ratio of 135.11, a PEG ratio of 4.29 and a beta of 0.85. Etsy has a twelve month low of $16.72 and a twelve month high of $58.30.
Option Trade – New Age Beverages Corp (NASDAQ: NBEV) Calls
Thursday, January 10, 2019
** OPTION TRADE: Buy NBEV MAR 15 2019 6.000 CALL at approximately $0.80. Sell price is left to your own judgment.
(or alternatively as requested by some members : Place a pre-determined sell at $1.60.
Also include a protective stop loss of $0.35.)
Beverage maker New Age Beverages Corp (NASDAQ: NBEV) were moving higher last month after the CBD (cannabidiol) beverage maker got a boost from a passage of the pot-friendly Farm Bill and as it made an acquisition to improve its distribution, especially in Asia. As a result, the stock finished December up 12%.
New Age shares exploded in September, when the company announced a move into CBD beverages, jumping on to the cannabis bandwagon and transforming its proposition to investors. The stock's rally began on Dec. 10, in anticipation of the passage of the Farm Bill, which legalized hemp, the source of CBD, on a federal level, effectively making CBD legal and allowing interstate commerce of the non-psychoactive pot derivative.
In response to Congress' passage of the bill, New Age issued a press release, saying it was poised to aggressively expand its portfolio of CBD beverages, and that it had commitments with several major retailers pending the passage of the Farm Bill and the legalization of hemp, as well as commitments that give it more than 125 million points of distribution. The stock rose 28% over the three sessions from Dec. 10 to Dec. 12, and President Trump signed the Farm Bill into law later in the month.
With the Farm Bill now law and its merger with Morinda giving it an
expanded market, 2019 could see a lot of upside to New Age stock when CBD
beverages take off. However, expect the volatility to continue.
About New Age Beverages……
New Age Beverages Corporation, a healthy functional beverage company, engages in the development, marketing, sales, and distribution of beverages. The company offers ready to drink (RTD) tea, RTD coffee, kombucha, energy drinks, relaxation drinks, coconut waters, functional waters, and rehydration beverages, as well as functional medical beverages.Influencing Factors…..
In December New Age Beverages merged with Morinda Holdings - the much larger company behind Tahitian Noni Juice -- for just $85 million, another beverage company with a strong position in Asia that will create a combined company with annual revenue of $300 million and give New Age access to 60 countries around the world.
Morinda will prop up sales, but more important is the fact that it also expands New Age's retail and global footprint for its growing line of functional beverages. New Age Beverages was able to nab Morinda for a little more than a fifth of its current market cap, a brilliant value that will pay off nicely in the year ahead.
New Age announced the news on Dec. 3, sending
the stock up 9%.
New Age Beverages last issued its quarterly earnings results on Wednesday, November 14th. The company reported ($0.08) EPS for the quarter, missing analysts’ consensus estimates of ($0.05) by ($0.03).
The business had revenue of $13.24 million
for the quarter, compared to analyst estimates of $13.54 million. New Age Beverages
had a negative net margin of 29.08% and a negative return on equity of 23.49%.
On average, analysts expect that New Age Beverages Corp will post -0.24 EPS for
the current year.
Wall Street analysts expect New Age Beverages Corp to report earnings of ($0.04) per share for the current fiscal quarter. The company is expected to announce its next quarterly earnings report on Wednesday, February 13th.
New Age Beverages had its target price raised by analysts at Northland Securities from $6.00 to $8.00 in a report issued on Monday. The firm presently has a “sell” rating on the stock. Northland Securities’ price target would indicate a potential upside of 45.19% from the company’s previous close.
Also, ValuEngine upgraded shares of New Age Beverages from a hold rating to a buy rating in a research report published on Wednesday morning.
Several other analysts have recently commented on the company…..
Shares of New Age Beverages Corp have earned an average rating of “Buy” from the six analysts that are currently covering the firm. Three analysts have rated the stock with a hold recommendation and three have given a buy recommendation to the company. The average 12-month price target among brokerages that have updated their coverage on the stock in the last year is $8.00.
New Age Beverages has a
debt-to-equity ratio of 0.04, a quick ratio of 12.38 and a current ratio of
15.69. New Age Beverages has a fifty-two week low of $1.30
and a fifty-two week high of $9.99.
Option Trade – JD.Com Inc. (ADR) (NASDAQ:JD) Calls
Wednesday, January 09, 2019
** OPTION TRADE: Buy JD MAR 15 2019 24.000 CALL at approximately $1.60. Sell price is left to your own judgment.
(or alternatively as requested by some members : Place a pre-determined sell at $3.20.
Also include a protective stop loss of $0.65.)
Chinese e-commerce giant JD.Com Inc. (ADR) (NASDAQ: JD), often referred to the Chinese Amazon.com, despite the fact that its larger competitor, Alibaba, is often called the same; but has faced a myriad of issues all year long that have driven JD stock price down 54.4% this year. Earlier in the year, the company's CEO Liu Qiangdong faced rape charges in Minnesota but those have since been dismissed. Moreover, the China economy is significantly slower than it was at the beginning of the year and this slowdown is at the heart of JD’s struggles.
That means that JD.com’s shares won’t stay down forever. Instead, near-term pain should eventually turn into gain, and that was seen eventually turning positive last Friday when JD.com gained 9.4%; and has since continued slowly upwards.
To be fair, most widely followed stock market indexes also rallied thanks to both a strong December jobs report and comments from Federal Reserve Chairman Jay Powell that the central bank "will be patient" with regard to raising interest rates this year. But with all eyes looking to the result of the vice-ministerial-level trade talks that were had on Monday and Tuesday in Beijing, it's not terribly surprising to see the beaten-down shares of this promising Chinese company to rally more than most.
expanding into the U.S. and Europe, two markets that should be huge
opportunities for the Chinese e-commerce player. Revenue should get a nice
boost from expansion into markets like the cloud. The new cloud growth combined
with e-retail expansion should help revenue growth pick up in
2019. As this company expands its global footprint margins will trend
higher, and they will do so on a substantially larger revenue base, meaning
huge profit growth potential. Once this happens JD Stock should rally in a big way as we don't believe this
is currently priced in yet.
About JD.Com ……
JD.com, Inc, through its subsidiaries, operates as an e-commerce company and retail infrastructure service provider in the People's Republic of China. It operates in two segments, JD Mall and New Businesses. The company offers home appliances; mobile handsets and other digital products; desktop, laptop, and other computers, as well as printers and other office equipment; furniture and household goods; apparel; cosmetics, personal care items, and pet products; women's shoes, bags, jewelry, and luxury goods; men's shoes, sports gears, and fitness equipment; automobiles and accessories; mother and childcare products, toys, and instruments; and food, beverage, and fresh produce.Influencing Factors…..
Two weeks ago, for example, JD.com shares rebounded after Minneapolis police announced they will not bring charges against the company's founder and CEO, Richard Liu, over an alleged sexual assault that occurred last August. Liu, for his part, has repeatedly denied the allegations. But coupled with broader concerns over the slowing growth of China's economy, uncertainty surrounding the incident had weighed heavily on JD.com stock.
JD.com has since not only announced a new $1 billion share-repurchase program, but it's also planning to restructure the business into three different segments. Many industry watchers view both moves as apparent efforts to stem the market's concerns.
JD.com has big-money partnerships with
Walmart (NYSE:WMT) and Alphabet (NASDAQ:GOOGL, NASDAQ:GOOG), the latter of whom
took a stake in JD.com at over $40 per ADS, nearly double the current price.
The e-commerce market in China will be big enough for two winners, at least.
And JD’s better supply chain could allow it to take share from Alibaba over the
JD.Com last issued its quarterly earnings data on Monday, November 19th. The information services provider reported $0.02 EPS for the quarter, missing analysts’ consensus estimates of $0.08 by ($0.06). The firm had revenue of $104.77 billion for the quarter, compared to analyst estimates of $105.93 billion. JD.Com had a negative return on equity of 2.40% and a net margin of 0.31%.
JD.Com’s revenue for the quarter was up 25.1% compared to the same
quarter last year. During the same period in the previous year, the business
earned $1.52 EPS. As a group, analysts forecast that JD.Com Inc will post 0.02
EPS for the current fiscal year.
Brokerages expect JD.Com to report $19.15 billion in sales for the current fiscal quarter. JD.Com posted sales of $16.93 billion in the same quarter last year, which would suggest a positive year over year growth rate of 13.1%. The company is scheduled to report its next quarterly earnings results on Friday, March 1st.
On average, analysts expect that JD.Com will report full year sales of $66.58 billion for the current year, with estimates ranging from $66.26 billion to $66.90 billion. For the next year, analysts expect that the company will post sales of $78.99 billion, with estimates ranging from $78.62 billion to $79.18 billion.
Credit Suisse Group set a $31.00 price objective on JD.Com in a report published last Wednesday morning. The firm currently has a buy rating on the information services provider’s stock.
Several other analysts have recently commented on the company…..
Four research analysts have rated the stock with a sell rating, ten have given a hold rating and eight have issued a buy rating to the company. JD.Com currently has an average rating of “Hold” and an average price target of $34.35.
JD.com has a market cap of $26.14 billion, a PE ratio of 2,093.00 and a beta of 1.37. JD.Com Inc has a 12 month low of $19.21 and a 12 month high of $50.68. The company has a debt-to-equity ratio of 0.15, a quick ratio of 0.57 and a current ratio of 0.90.
Option Trade – Planet Fitness Inc (NYSE: PLNT) Calls
Monday, January 07, 2019
** OPTION TRADE: Buy PLNT FEB 15 2019 57.50 CALL at approximately $1.80. Sell price is left to your own judgment.
(or alternatively as requested by some members : Place a pre-determined sell at $3.60.
Also include a protective stop loss of $0.75.)
New Hampshire-based Planet Fitness Inc (NYSE: PLNT), which franchises and operates fitness centers through its subsidiaries under the Planet Fitness name, is a growth stock to watch as it holds strong above a key support level despite the widespread stock market sell-off. Planet Fitness stock boasts top-notch fundamentals and could be shaping a new base pattern after a multiyear run.
Along with impressive share-price gains for more than two years, Planet Fitness has solid fundamentals as its low-price; "no-judgment-zone" gyms continue to attract more members. Earnings grew 22% to 84 cents a share in 2017. Analysts expect full-year growth to have accelerated to 44% in 2018. Accelerating earnings growth is one of the key traits of top growth stocks.
The Street sees earnings rising another 18% to $1.43 a share in 2019.
Revenue rose 40% in its latest quarter, the fast-growing chain's strongest top-line growth in four years. Brisk expansion has obviously helped, but the real head-turning metric here is the gym operator's consistently positive comps. Comparable-gym revenue rose a hearty 9.7% last time out, stretching Planet Fitness' streak of positive comps to a mind-boggling 47 quarters.
The story is just getting started. CEO Chris Rondeau -- who got his start at the company as the first reception desk worker at its first gym -- feels that Planet Fitness can easily double in size from its current empire of 1,646 locations. We're at nearly a dozen years of positive comps with every passing quarter. It's hard to bet against that trend continuing into 2019.
About Planet Fitness ……
PLNT had indeed been volatile, but has in no way taken the beating that everything else has. For those not in the know, Planet Fitness has been a pioneer in a different kind of gym. The chain focuses on regular folks just trying to get back in, or stay in shape, and they do it at a discount. No frills, huge scale.
The Consensus Estimate for PLNT's full-year earnings has moved 6.26% higher within the past quarter. This shows that analyst sentiment has improved and the company's earnings outlook is stronger.
Based on the most recent data, PLNT has returned 51.83% so far this year. Meanwhile, the Consumer Discretionary sector has returned an average of -10.77% on a year-to-date basis. This means that Planet Fitness is outperforming the sector as a whole this year.
Planet Fitness published press releases revealing that Newsweek had ranked it No. 1 in customer service among fitness centers, celebrating news that the company's top franchisee had just opened its 100th location, and detailing plans to buy back $300 million in stock.
Planet Fitness is one of the largest owners and operators of health clubs in the U.S. in terms of the number of members and locations, said Dorvin Lively, president and CFO of Planet Fitness.
It boasts over 10.5 million members, up from 7 million at the end of 2012, just before Rondeau took the helm. And it has 1,500 locations nationwide. Over 95% of its stores are owned and operated by franchisees.
"We are clearly opening more health clubs in the U.S. at a faster rate than anyone," Lively said. "We've opened roughly 200 stores a year for the past three years."
On the financial front, he adds, Planet Fitness has had 43 straight quarters of positive same-store sales.
"That's 10 years plus three quarters," Lively pointed out. In the 2017 third quarter, same-store sales jumped 9.3% from a year earlier and revenue climbed 12.1%. In November it reported its best sales growth in more than four years.
Another reflection of Planet Fitness' financial success is that — along with 95% of its stores opened in the last three years having been opened by existing franchisees — more than 90% of all of the new territory being sold has been purchased by existing franchisees, Lively says.
"That proves that the brand is growing and the profitability is there, and franchisees want to continue to invest in their businesses in their local markets to grow the brand," he added.
Chris Rondeau helped revolutionize the fitness industry with a business model geared to first-time gymgoers. He helped turn Planet Fitness into one of the largest owners and operators of health clubs in the U.S. in terms of the number of members and locations
"Today, with our size and scale, we are a marketing machine that happens to be in the gym business," he said. "We're a franchise business, and the franchisees are required to spend 7% of their membership dues on marketing locally and an additional 2% of membership dues support the national marketing efforts. When you think about the marketing spending, every incremental member is 9% more dollars spent on marketing. Our budget continues to expand. Every day we sell memberships, it allows us to tap into the 80% of the population that doesn't have a gym membership."
Rondeau says an important part of his growth strategy since becoming CEO, one that's been even more important since he took the company public in August 2015, is the use of more data analytics than before.
Rondeau points out that Planet Fitness has locations in every state, every demographic and every ethnicity.
"The data we're able to hone allow us to fine-tune the business, drive same-store sales, drive store openings and better service the franchisees."
Through data analytics, the company can better segment its marketing according to certain demographic groups.
Cowen & Co. analyst Oliver Chen rates Planet Fitness stock an outperform.
"We feel Planet Fitness is 'un-Amazonable' because health and wellness can't yet be purchased online," Chen said. "Looking forward, we expect Planet Fitness to execute on creative digital innovation, including predictive analytics and big data."Future Earnings…..
The company will report its fiscal fourth quarter results sometime in February. This is a growth stock, with no impact or exposure to trade conditions. Nearly all of the chain's 1,600 locations are domestically operated, just a few international outlets scattered around the Western hemisphere, meaning that revenues are not greatly exposed to currency risk.
Total debt looks a little high when compared to cash and equivalents, but comes to much less than total assets and cash seem to be growing rapidly at that. Operating and levered cash flows are positive, both current and quick ratios appear more than fine.
Management is guiding for full-year revenue to increase 33% year over year and come in at $572 million, ahead of its previous growth target for 26% annual revenue growth. Management now expects full-year earnings per share to rise 43%, up from its previous growth target of 33%, and come in at of $1.20. Shares trade at roughly 45 times expected earnings and nine times expected sales.
Planet Fitness was
upgraded by Zacks Investment Research from a “hold” rating to a “buy” rating in
a research report issued on Tuesday. The brokerage currently has a $59.00
target price on the stock. Zacks Investment Research‘s price objective
indicates a potential upside of 10.03% from the company’s current price.
Several other analysts have recently commented on the company…..
Shares of Planet Fitness have received a consensus recommendation of “Buy” from the sixteen brokerages that are covering the company. Five research analysts have rated the stock with a hold recommendation, eight have issued a buy recommendation and one has issued a strong buy recommendation on the company.Summary
Planet Fitness has a fifty-two week low of $28.98 and a fifty-two week high of $58.50. The firm has a market cap of $5.24 billion, a price-to-earnings ratio of 65.38, a price-to-earnings-growth ratio of 1.92 and a beta of 0.74.