Category Archives: Possible Trade Tartgets

Possible Trade Targets reflect what may happen based on my trading rules and plan.

DAVE

DAVE

Famous Dave’s (DAVE) is a restaurant chain based in Minnetonka, Minnesota. The company owns 37 restaurants and franchises 141 more. This is your typical barbeque, grilled meat restaurant chain.

As you can see by the list below DAVE has had relatively strong earnings compared to 2016.

FY12 $0.55

FY13 $0.59

FY14 $0.98

FY15 $0.64

FY16 $0.07

An average of years 2012 through 2016 is $0.69 per annum.

When looking at the chart notice the higher low, double bottom and the breakout through first resistance at $5.25. All these are turnaround indicators.

On October 12, 2016 Michael Lister was appointed CEO.

Famous Dave’s appoints Michael Lister as CEO succeeding Adam Wright   (5.28 -0.03)

10/12/2016, 6:57:53 PM ET

  • Co announced that Adam J. Wright, Chief Executive Officer, is no longer an employee of the Company, and has resigned from the Board of Directors. Michael W. Lister has been appointed to replace Adam Wright as Chief Executive Officer and has also been appointed Chief Operating Officer. Lister is an accomplished restaurant industry executive with more than 35 years of experience, including a 19-year history with Famous Dave’s of America. He has been a franchisee of the Company since 2001, operating among the most successful franchise groups in the Company.

Courtesy of Briefing.com

He will be the fourth CEO since 2012. As a 35 year veteran of the restaurant industry and one of DAVE’s most successful franchisees, Mr. Lister looks like he will be able to refocus and energize the management team of Famous Dave’s.

Lister and his team have been honored with multiple community and franchise awards, which includes Famous Dave’s Franchise of the Year for excellence in operations, financial performance and outstanding Guest service.  Lister also won the 2012 Tennessee Small Business Person of the Year Award by the U.S. Small Business Administration.

The negatives on this trade are book value of $3.00 to $3.32, depending on who you get your information from and 2016 earnings of only seven cents per share. With no turnaround in revenue or earnings per share (EPS) DAVE could continue lower to the $3.00 area.

The positives are a new CEO with a proven track record, a proven concept, a turnaround in consumer confidence with our new president which will generate consumer spending, low debt, earnings estimates have increased to 30 cents per share for FY17, a 500 percent increase from a few months ago. Let’s not forget that increased EPS will raise P/E to 25/30 area if not more.

If, and that’s a big IF, Michael Lister can turn DAVE around and return the company to 65/70 cents per share sales Dave should be able to return to the $20/22 area within two years.

Ten days ago I bought a few hundred shares at $4.60. Today I bought a larger position at $4.75. On 12/06/2016 Dave popped up to $5.35 which is now first resistance. When it clears that I will add to this just above there or at $3.00, whichever comes first.

Next earnings are Feb. 23, 2017. This will tell the tale. For those who only trade a sure thing, the best entry would be after the earnings call. The only problem there is there could be a large gap up on a good earnings.

Dave C

Trump

Trump

The election is finally over. Much to the establishments chagrin Donald Trump is now President Elect of the United States. Personally I and my friends are happy campers but the other half of the country thinks Hitler is manifest in the land.

The problem for us traders/investors is do we get into the market now and stay in or get out and stay out.

The big money backed Hillary Clinton because she was in their pocket. That made her a sure thing for them. If they needed legislation or a presidential push to favor their business interests she would be there for them. Although the democrats bill themselves as the party of the people in the last 25 years they have reversed rolls with the republicans and become the party of big money.

In the meantime the republicans moved from fiscal conservatives to cowards who were willing to do anything to win an election. Because Donald Trump exposed the republicans for the two-faced *%#holes they have been for the last 30 years and the democrats slipped into communism a complete neophyte on the political scene won election to president of the U.S.A.

Although I think Donald Trump is what the country needs to straighten out our fiscal and social problems at this time, I also think he will be very disruptive to our economic markets for the first year or two of his term.

You may have noticed that when the FBI dropped their email investigation last Friday the DJIA jumped more than 300 points. Conversely when it became apparent the Trump was going to become president elect the DJIA futures dropped more than 900 points in the overnight trading on the international markets. That was big money’s reaction to not getting what they wanted and expected. I expected three or four days of trading down but was surprised to see the DJIA only down about 350 at 6:30 the next morning and then ending the day with a 317 point gain. Quite a reversal. I think the reversal was caused by we, the people.

So, should we sit on the sidelines or jump in now. Truthfully I am torn by this decision because the Donald is going to be a big market/economic disrupter.

On the one hand he will be great for the country in the long run, but on the negative side Donald will immediately on entering office dismantle and rebuild the health care system, he will start building a wall between us and Mexico, hopefully institute E Verify to stop employers from hiring illegally immigrants.

On the positive side, he will lift restrictions on the oil industry, cancel billions in funding to climate change boondoggles, renegotiate NAFTA and cancel many of Obama’s executive actions.

These are only a few samples. But every one of these actions would have a huge impact on the market on any given day or week or month. As you read the plus and minus paragraphs, realize that I could switch one into the other and they would still be mostly valid.

As we all know the markets are a forward looking mechanism and these things and more are going to disrupt investors outlook.

For those who feel they must be in the market (what your broker will tell you) I wouldn’t put more than half of your cash in and I would put a stop market order in just under the 18000 area.

The markets have been overpriced for quite some time and we are long overdue for a major correction. This is an excellent opportunity for this to occur.

Yesterday and today (currently up 222) we are experiencing euphoria based on not being inflicted with an even more corrupt government and possible getting a president who could actually straighten some of the problems out.

Dave C

GNC

As you all know I got out of GNC at $21.50 on Oct. 21. The reason was the long sideways movement and no credible offers for the company. Earnings were right around the corner (a week away) and I had low confidence in their ability to beat their projections.

GNC Holdings misses by $0.12, misses on revs  (20.14)

10/27/2016, 6:55:48 AM ET

  • Reports Q3 (Sep) adj. earnings of $0.59 per share, $0.12 worse than the Capital IQ Consensus of $0.71; revenues fell 8.1% year/year to $628 mln vs the $651.32 mln Capital IQ Consensus.
  • Negative domestic retail same store sales of 8.5%, which includes GNC.com, resulted in a $35.2 million decrease in revenue year-over-year. Negative same store sales were primarily due to lower sales in the protein, vitamins and food/drink categories and a significant decrease in e-commerce sales due in part to better aligning web promotions to the Company’s stores. E-commerce sales were 6.8% of consolidated revenue during the current quarter compared with 7.3% of consolidated revenue in the prior year quarter. In addition, corporate stores decreased from 3,546 at September 30, 2015 to 3,512 at September 30, 2016 in connection with the Company’s refranchising strategy.
  • “Our results for the quarter fell short of our expectations, but we have been moving quickly to address the key issues that are critical to returning GNC to growth. We are focused on eliminating confusion regarding our product pricing, providing customers with an improved loyalty program, enhancing the customer experience in our stores and reinvigorating the GNC branded product innovation pipeline.
  • Peer: Vitamin Shoppe (VSI).

They actually did much worse than I expected. Along with a 12 cent miss on earnings their revenue declined by 8.1 percent.

GNC is definitely in need of a change in management which would occur with a buyout. Or the board of directors could bring it about any day now. This huge slump in earnings and revenue could bring it about. Even they should know by now that they need to act in one capacity or another. Even I as a lowly trader can come up with several scenarios that would turn this company around.

Future earnings have been reduced to $2.59 this year, $2.47 in 2017 and 2018 and $2.60 in 2019.

Based on earnings of $2.47 per annum in 2017 and 2018 GNC’s current forward P/E is 5.46. This is definitely in the buy range of 4 to 7 P/E’s. I am currently watching GNC for a turnaround in price based on price action. Be aware that a 4 P/E would value GNC at $9.88. That would be the worst case downside in mine opinion, so don’t go overboard on share size.

blog-gnc-d-2016

This slow grind down is an indication that GNC will continue down, but

blog-gnc-15-m-11-2-2016

after setting a new low this morning GNC broke through the upper band of the channel you see on the 15 minute chart above.

If it does not set a new low and breaks above $13.65, the high set today, I will reenter here.

The reason is this now a much better buyout candidate,

it is now a serious value play at a forward P/E of 5.46,

it will have set a cup and handle reversal pattern

and fair value is $37.05 at a 15 P/E.

Target is $24.50

No stop price.

Dave C

 

TGI

Triumph Group, Inc. TGI is an OEM manufacturer of aircraft components. They design, manufacturer, engineer, overhaul, repair, and distributes aero structures worldwide.

Over the last year or so TGI seems to have had some execution issues but I am hearing that these are pretty much behind them now.

Deloitte’s 2016 Aerospace and Defense Sector outlook states that this sector should be bullish for the next 20 years so the business is there if TGI’s management has gotten their act together and can sign some major business to the books.

Dan Crawley was hired as CEO and President of TGI on Jan 4 this year. He has 32 years experience in the aerospace and defense industries and was last with Raytheon as the President of Raytheon Integrated Defense Systems, Inc.

blog-tgi-d-9-21-2016

blog-tgi-w-9-21-2016

As you can see on the daily chart above the projected earning for FY 18 are $4.48. With the new CEO I assume that every negative thing that could be found has been thrown into the last couple of earnings reports, and this is pretty apparent with negative sales growth for the past year.

Using the worst projected earnings TGI’s of $4.48 current P/E is 5.96. If we use last years earnings their P/E is 5.27.

In 2013 TGI had a high of $85.50 and a low of $13.44 in 2009.

Currently we have strong support at $23.00 then $18.00, 16.20, 14.60 and finally $13.44.

I would be astonished if TGI broke $23.00 but I’ve been surprised before. Currently I am watching TGI daily waiting for a reversal signal because it is way oversold.

Initial target is $40.00. With an improvement in sales and profit $70.00 within 18 months.

Dave C.

 

CXRX

Concordia misses by $0.02, reports revs in-line; lowers FY16 guidance below consensus; suspends dividend; CFO stepping down  (16.36)
8/12/2016, 7:08:35 AM ET
  • Reports Q2 (Jun) earnings of $1.38 per share, excluding non-recurring items, $0.02 worse than the Capital IQ Consensus of $1.40; revenues rose 208.1% year/year to $231.7 mln vs the $232.57 mln Capital IQ Consensus.
  • Co issues downside guidance for FY16, lowers FY16 revs to $859-888 mln from $1.02-1.06 bln vs. $939.14 mln Capital IQ Consensusl lowers adjusted EBITDA to $510-540 mln from $610-640 mln; ~66 percent of revenues to be generated outside the U.S; target 2016 year-end Net Debt/EBITDA of 6.4x or below.
    • Changes to financial guidance are primarily due to the following business factors:
    • Reduction in the GBP/USD foreign exchange rate Introduction of generic competition for Nilandron in July 2016
    • Competitive marketplace pressures with respect to two key products: Donnatal and Plaquenil
  • Adrian de Saldanha, Concordia’s Chief Financial Officer, will be leaving the organization to pursue other opportunities. Mr. de Saldanha will be replaced by Concordia’s current Executive Vice President, Edward Borkowski. Mr. de Saldanha will remain with the Company during a transition period.
  • Concordia’s Board unanimously agreed to suspend the $0.075 dividend per common share, payable quarterly. The Company believes the dividend payments can be better deployed towards long-term value-creating initiatives or debt repayment.
  • Courtesy of Briefing.com

This one is so ridiculous i,m afraid of it.

blog cxrx fib mm 8-12-2016

Above is an enlargement of the measured move I used to arrive at a target.

blog cxrx d 8-12-2016

Here we have the current chart as of this morning.

If we use the FY16 projected earnings of $6.53 the current P/E is 1.76.

As you read in CXRX’s report this morning they are receiving new competition on two drugs that have gone off patent.

They reduced their guidance by 50 to 80 million which i assume (ohoh) is the anticipated loss in revenue from those two drugs.

I’m sure that everyone is anticipating   a cut in EPS guidance but if they cut it in half (highly unlikely) the new forward P/E would be 3.1.

The first chart above shows how and where I measured the Fibonacci Retracement that gives us a target of $9.97.

As I have been writing CXRX as fallen to $11.05. At $10.11 or when CXRX forms a cup and handle reversal I will enter.

Dave C