For Immediate Release
Chicago, IL – August 16, 2022 – Zacks Equity Research shares GasLog Partners GLOP as the Bull of the Day and DICK'S Sporting Goods DKS as the Bear of the Day. In addition, Zacks Equity Research provides analysis on AMC Entertainment Holdings AMC, Bed Bath & Beyond BBBY and Gamestop GME.
Here is a synopsis of all five stocks:
Bull of the Day:
GasLog Partners (GLOP) is a Zacks Rank #1 (Strong Buy) that acquires, owns, and operates liquefied natural gas (LNG) carriers under multi-year charters. Higher energy prices have created big opportunities for LNG carriers, which has brought investors to companies like GasLog.
The stock was on the verge of a breakout earlier this summer, but a pullback in oil and natural gas stopped the momentum. GLOP fell over 30% from its 2022 highs, but has since stabilized.
The company recently reported earnings and estimates are headed higher. If energy prices can continue to stay strong, the stock is in a good position to make another run into year's end.
More About GasLog
The company was founded in 2014 and is headquartered in Piraeus, Greece. As of February 24, 2022, it operated a fleet of 15 LNG carriers.
GLOP has a market cap of $300 million and pays a dividend of 0.70%. The stock has a Zacks Style Score of "A" in Value, "B" in Growth, but "D" in Momentum.
Q2 Earnings Beat
In late July, GasLog reported an EPS beat of 15.63%. Q2 came in at $0.37 v the $0.10 last year and revenue was $84.9M, up from $70.4M last year. During the quarter the company reduced its leverage by selling one of their older steam powered vessels for $54 million.
CEO Paolo Enoizi, had the following comments on the quarter:
"The Partnership is glad to report a positive operating result for the second quarter of 2022, driven by an improved LNG shipping spot market and a sustained interest for term business... We continue to successfully execute on our business strategy and capital allocation plan, de-leveraging our balance sheet and continuing our preference unit repurchase program and further reducing the all-in break-evens of our fleet."
Strong demand is being fueled by low inventories in Europe and continued disruption of gas pipeline imports from Russia. LNG imports have helped Europe recover to seasonal average levels, recent issues with the Nord Stream 1 pipeline have reduced flows.
As long as the Russia/Ukraine conflict continues, investors should expect LNG demand to remain high.
Looking at the next couple quarters, analysts are taking estimates higher.
Over the last month, numbers have gone higher across the board. For the current quarter, we have seen a move from $0.24 to $0.27, or 13%. For the current year, estimates have gone 9% higher, while next year they have surged 26%.
Stifel commented that they "View this as a respectable quarter with steps in the right direction, but gradual steps only". They see GLOP trading in line with or slightly better than the peer group.
The Technical Take
The stock started to trend higher in March, shortly after the invasion of Ukraine. After hitting highs of $6, the stock pulled back to a 61.8% retracement and then hit new highs at $7.23.
The stock has once again pulled back to a 61.8% retracement, drawn from March lows to June highs. This area, which is right under the $5 level, is also the 200-day moving average.
After testing the $5 level three times, the stock has pushed higher. It is now flirting with the 50-day moving average and the $6 level. A break above this area, along with a rise in energy prices, could fuel the stock to new highs.
Investors could see the $8 level in play by the end of the year. However, the risks would be a drop in energy prices or a pullback of Russian troops in Ukraine.
GasLog has been helped by a surge of global energy prices. The company is taking the opportunity to deleverage and position themselves better for the future. If energy prices remain strong, investors should expect GLOP to resume its trend higher into the end of the year.
Bear of the Day:
DICK'S Sporting Goods (DKS) is a Zacks Rank #5 (Strong Sell) that operates as a sporting goods retailer. The company stores and online website offer athletic shoes, apparel, accessories and a broad selection of outdoor and athletic equipment for team sports, fitness, camping, fishing, water sports and more.
After falling almost 50% on the year, the stock has seen a substantial rally. Now over 65% off the 2022 lows, investors should be looking to take some profits.
The company has earnings in late August. With estimates dropping across the board, the chance for a major pullback is high.
About the Company
DICK'S is headquartered in Coraopolis, PA. The company was founded in 1948 and employs over 17,000. In addition to their traditional retail stores, DICK'S also owns and operates Golf Galaxy and Field & Stream stores as well as Team Sports HQ. It also operates an all-in-one youth sports digital platform, which offers scheduling, communications and live scorekeeping via the GameChanger mobile apps, free league management services, custom uniforms and fan wear.
DKS is valued at $8.6 billion and has a Forward PE of 10. The company holds a Zacks Style Score of "A" in Value, but "D" in Growth and Momentum. The stock pays out a dividend of 1.8%.
The company reported EPS in late May, seeing a beat of 17%. However, the company cut their guidance saying it was appropriate to be cautious due to macroeconomic conditions.
The company reported Q1 at 2.85 v the $2.43 expected. This was the eighth straight beat for DKS, which came with a slight revenue beat.
The company cut FY22 to $9.15-$11.70 v the $12.56 expected. Same store sales are now seen at negative 8% to negative 2% year over year, down from the prior flat y/y number expected.
Because of the big guide down, analysts have dropped numbers drastically since earnings.
Over the last 90 days, estimates have dropped 17% for the current quarter, from $4.20 to $3.51. For the current year, they have been lowered from $12.62 to $10.77, or 15%.
With the drop in estimates a handful of firms lowered their price targets.
UBS went from $120 to $85, Wedbush lowered to $110 from $140, while Stifel Nicolaus went to $75 from $113.
Despite the negativity, the stock rallied with the broad market and is almost back to unchanged on the year.
Investors seem to be getting a little too excited, with a big earnings risk around the corner when the company reports on August 23rd.
Looking at the chart, the stock bounced right where it was supposed to back in May. The 61.8% retracement drawn from COVID lows to 2021 highs held up perfectly. Since that low in May, the stock has rallied almost 70%.
The bulls have run out the shorts as price is above the 200-day moving average. However, investors should be very cautious if price breaks back below that level.
The $110-120 level saw a sideways trade earlier in the year, so there is likely a lot of supply in that area. Sellers will likely show up soon and the bears will press the stock lower if that 200-day MA fails.
Look for lower prices from here, with the 21-day MA offering support at $96 and the 50-day at $86. For those looking for another Fibonacci retracement, the $80-85 area is the buy zone.
DKS has seen a fantastic rally over the last two months, but with earnings risk coming in a couple weeks, investors should be taking profits. Estimates have not improved since the May quarter, so don't expect much upside from current levels.
Meme Stock Resurgence: Is Now the Time to Buy?
Meme stocks are making a triumphant return as the market has rallied sharply off the June lows. The meme stock movement originally began in the summer of 2020 when the world was in lockdown due to the coronavirus pandemic. With the general population stuck at home, many people flocked to social media (and the stock market) as they searched for ways to make some extra cash.
As stocks initially sold off hard in response to the virus outbreak, many individual companies became extremely undervalued. Combined with a high level of short interest, conditions were ripe for explosions to the upside. And so the meme stock crusade was born.
Social media platforms such as Reddit serve as the central hub for traders to post mentions, opinions, and company-related news. In the past, this increased attention has resulted in these stocks going viral – catching fire on the internet and playing a major role in a sharp surge in price.
In early 2021, meme stocks became the favorites of retail traders, as they quickly skyrocketed in price due to a sudden rush of interest online. Some may have thought that meme stocks had died out after their flame extinguished earlier this year, but the individual stock rallies in recent months suggest otherwise.
Are Meme Stocks Worth the Risk?
As fundamental analysts often point out, trading meme stocks can be very risky. Novice retail traders learned this last year – stocks can lose value just as quickly as they can rise. But characterizing meme stocks as too risky altogether may be suboptimal for many traders out there. Approaching them with a proper strategy in place can help to realize substantial gains while avoiding any significant drawdowns.
Implementing a stop-loss is a good idea in most situations, but it becomes even more important as the volatility of the underlying vehicle increases. Trading is primarily about controlling risk. Letting winners run and cutting losers early is the secret to successful portfolio management, and it's what separates the novices from the professionals.
An overlooked notion that is often left out of the meme stock conversation is this – big gains tend to follow large moves to the downside. Similar to the hefty decline during the first few months of 2020, this year has witnessed a substantial drop in equity prices. The idea is that as stocks become very oversold, conditions ripen for sudden, volatile moves as shorts get squeezed out of their positions. Combined with enhanced awareness via social media, giant gains in a relatively short amount of time tend to follow.
These Three Meme Darlings Are on the Move
AMC Entertainment Holdings, a Zacks Rank #3 (Hold),found a bottom back in May which was well before the major indices. AMC stock has since gone on a 135% tear.
AMC has beaten earnings estimates in three of the past four quarters, posting a 16.48% average beat during this timeframe. Revenues are projected to increase 71.31% this year to $4.33 billion, a positive sign for investors in shares of AMC Entertainment Holdings.
Bed Bath & Beyond, a Zacks Rank #5 (Strong Sell), appears to have bottomed in July – a tad later than the major indices. BBBY has seen better days in terms of earnings releases, as the struggling retailer has widely missed estimates in each of the prior four quarters.
Still, BBBY stock has advanced 190% since bottoming out, and more upside may lie ahead. While earnings and revenue trends are negative, traders in Bed Bath & Beyond may find the company's transformation plan favorable.
Gamestop, a Zacks Rank #4 (Sell), was the original meme stock. Interestingly, it looks like GME stock bottomed out way back in March. The video game retailer also appears to have struggled with earnings results as of late, missing estimates in each of the last four quarters.
But similar to its meme friends, GME has advanced 109% since March. Traders may be looking past Gamestop's stiff competition as the stock may have some room left to run.
Should You Invest?
The choice to invest in meme stocks depends on the individual and their risk tolerance. As we discussed, controlling drawdowns is the number one priority. But substantial gains are attainable if a proper strategy is executed.
It's safe to say – the meme stock movement is still alive and well.
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DICK'S Sporting Goods, Inc. (DKS) : Free Stock Analysis Report
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