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Insiders of This Grocery Outlet are Looking Elsewhere to Shop

Posted: 04 May 2020 04:30 AM PDT

Grocery Outlet Holding Corp (GO) is supermarket company that owns and operates retail stores whose products are typically priced 40% to 70% below retail. The Company’s stores offer products from name brand and private label suppliers, and operates in California, Oregon, Washington, Idaho, Nevada and Pennsylvania. GO is scheduled to release its earnings on May 11 after the market close.

As these companies approach earnings, it's hard to gauge how much they've been helped or hurt by the closures. With so many other food and essentials options closed or limited, there may be an increase in revenue for these companies. Whether it leads to profitability or not is another story. The news from Amazon about the increased costs may not bode well.

It's with this backdrop that the insider trading is interesting. Last week, GO led all non-OTC stocks with at least a $1B market cap in number of insider sell transactions, shares sold and the dollar-value of shares sold.  Particularly in the number of shares and the dollar-volume of the shares really stand out. The list of sellers include the CEO, CFO, a 10% owner, president, SVP, and director.

While all of the sellers sold a significant amount of their ownership, the biggest seller was H&F Corporate Investors. Their holdings fell from 26.3 million to 9.6 million this week after their sale.

Action to Take: The short-term target of GO is $30.

Speculators may want to consider buying the 17 JUL 20 $25 put for around $0.50. The objective is to close half the position if the price doubles and roll down to a lower strike if the price declines to $30.

4 Stocks to Buy from This Week’s Top Industry

Posted: 04 May 2020 04:30 AM PDT

As you look at the landscape of opportunities, one way to narrow the list is using a top down methodology. This approach looks at the market generally and then drills down to sectors industries and then stocks if you looking to invest in the stock market.

The bigger picture fundamentals for the economy looks pretty suspect and we've had a number of warnings from Fed Chairman Jerome Powell or to earnings reports from Amazon.com Inc (AMZN) or Apple Inc (AAPL). As you watched the market wilt going into the end of last week, it puts into perspective that we may be encountering a more significant near-term pull-back in the market.

If the market is headed lower, it generally is led by the names mentioned above and other mega-cap names. As a result, looking at potentially more oversold and small cap names be a better place to look during periods of expanding volatility. The only issue is fining companies that show some sort of catalyst for expecting the price to rise.

This catalyst can come in the form of technical price and volume dynamics that may show that buyers are coming into a sector, industry or sub-industry. As you look across the various industries, the Commercial Services industry was the best performing last week. As you begin to dig into the sub-industries within it, you'll see that Commercial Printing and Advertising and Marketing Services were at the top in performance.

Here are 4 companies that are in the Commercial Services industry that are showing signs of strength.

Stock #1: R. R. Donnelley & Sons Company (RRD)

RRD is an integrated communications provider, enables organizations to create, manage, deliver, and optimize their multichannel marketing and business communications. The current market cap for RRD is $129 million and was up over 44% last week.

RRD broke out of a basing formation following its earnings last Wednesday on significant volume, clearing its $1.50 resistance. The move that led to the breakout saw the price rally from $1 to nearly $2 before consolidating on Thursday and Friday.

The target for RRD is $2.75 in the coming weeks.

Stock #2: InnerWorkings, Inc (INWK)

INWK is a marketing execution company. The Company’s software applications and databases create an integrated solution that stores, analyzes and tracks the production capabilities of its supplier network, as well as detailed pricing data. The current market cap for INWK is $54.75 million and was up 51.83% last week.

INWK broke out of a double bottom formation on Wednesday and is now retesting its breakout level as it approaches earnings on May 7 after the market closes. The volume expanded greatly as the price broke out and has contracted as it fell back to support.

The target for INWK is $4 over the coming weeks.

Stock #3: MDC Partners Inc (MDCA)

MDC is a marketing and communications company. The company leverage technology, data analytics, insights, and strategic consulting solutions and has over 1,700 clients worldwide. The current market cap for MDCA is $103.20 million and was up 16.7% last week.

MDCA also broke out on Wednesday following its earnings as it cleared its resistance near $1.20. The price is sitting on the resistance and at the opening price on Wednesday. The breakout occurred on significant volume and saw volume fall dramatically as it approached support.

The target for MDCA is $2.40 over the coming weeks.

Stock #4: Omnicom Group Inc (OMC)

OMC provides advertising, marketing and corporate communications services. The Company’s branded networks and agencies operate in all markets around the world and provide a range of services, which it groups into four disciplines: advertising, customer relationship management (CRM), public relations and specialty communications. The current market cap for OMC is $13.15 billion and was up 6.9% last week. OMC is the only large cap stock on the list, while the others would be considered microcaps.

OMC rallied following its earnings on Tuesday and then broke resistance on Wednesday near $57.50 on significant volume. The price slipped below support on Friday on lower volume. A Trigger would be a close above the resistance on above average volume.

The target for OMC is $80 over the coming weeks.

The Options Market is Saying that this Retailer is Moving into the Bearish Beyond

Posted: 04 May 2020 04:30 AM PDT

Bed Bath & Beyond Inc (BBBY) announced last Thursday that they have hired a new CFO and digital sales executive. That's great, but the current climate is currently fairly hostile for retailers and if a lot of the news last week didn't indicate that the troubles will be here for a while, not sure what will. That being said, many companies have been given a pass as the thought of opening the economy back up has been greeted with increased prices.

After peaking on Tuesday and fading from the high, BBBY continued to trade lower to end the week. The fact that the price was able to over double in price from its March low, may have just provided a point to reset for another leg lower. BBBY has a significant amount of short interest and so the decline might be muted as it approaches its March low.

On Friday, the options market began to take a more bearish outlook on BBBY. Over 21,000 put contracts were traded, which was over 30% higher than average. Over 65% of the contracts were traded at the ask price with 25% occurring between the market. That's a strong indication of put option buying. The interest was not in shorter-term expirations, but in the 15 JAN 21 $4 put options. Over 10,000 contracts traded for around $0.85.

Action to Take: The near-term target for BBBY is $4.

Speculators may want to consider a 19 JUN 20 6/5 long call vertical for around $0.53 or less. The max gain of $47 per contract or 89% ROR occurs if the stock is at $5 or less at expiration. Consider closing early for $0.80 of more.
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