Chewing On Chewy, Black & Blueberry, Applied Supplied Agreements
Ain’t Nothing But The Dog In Me
Hey, hey Chewy, said the way you move, gonna make me sweat, gonna make dogs groove.
Ah, ah Chewy, the way you sell pet things, gonna make Amazon burn, gonna make gains sing.
Hey, hey Chewy, when you earn that way, watch CHWY dip, can’t keep away.
Great Ones, I think I’m finally sold on Chewy (NYSE: CHWY). I was hesitant at first, and understandably so. How could another online pet supplies company compete against PetSmart and Amazon when so many others had failed?
Well, Chewy has … uhhh … found a way.
The company took full advantage of pandemic lockdowns, even roping in yours truly amid the chaos. Admittedly, I used to use both PetSmart and Amazon for my black dog’s needs. But, after using Chewy a few times, it didn’t take too long ‘fore I found out what people mean by ordering out.
My Diego (a corgi/rottweiler mix … don’t ask) is an old dog, a funky dog … an atomic dog.
He’s about 13 and has special old-dog needs that PetSmart and the ‘Zon just can’t handle.
(Got your own special pet that’s led you to reconsider how you invest? Let me know: GreatStuffToday@BanyanHill.com.)
But prescription food is no problem for Chewy … compared to the days-long hassle of approvals and confirmations I found with Chewy’s competitors. Working with my vet, Chewy made taking care of my good ol’ boy a breeze.
Now, I know this is all anecdotal. My personal experience alone is not enough reason to be bullish on CHWY.
But, you know what is? Earnings. And Chewy’s gotta roll — it can’t stand still. It’s got a flaming heart; investors can’t get their fill.
CHWY rallied more than 10% today following a surprise profit. Chewy beat Wall Street’s earnings target by $0.15 per share as revenue soared 51.1% to $2.04 billion — which, incidentally, also beat expectations for sales of $1.97 billion.
Why must you be like that? Why must you chase this cat? Won’t the gains go away after the pandemic?
Honestly? That’s a concern for Chewy.
However, returning to anecdotal sentiment, I’m not going back to Amazon or PetSmart. The pandemic may have forced me to try Chewy, but after my experience, I’ll be staying. And I think many pet owners will likely come to the same conclusion.
And so does Chewy. The company put full-year revenue expectations at $8.85 billion to $8.95 billion — just above Wall Street’s expectations. Speaking of expectations, those are about to rise. No less than three ratings firms upped their price targets and issued bullish outlooks for Chewy.
But, while I’m impressed with Chewy, I’m not ready to go full-on dogcatcher just yet. I don’t know, but I’ve been told … big-legged rallies ain’t got no soul. All I ask for when I pray, a CHWY opportunity will come my way.
I’m throwing CHWY on the watch list for either a pullback to digest these gains or a breakout above $90. Either move would throw wannabe CHWY investors a bone and give them a reason to buy.
Editor’s Note: Big Data And AI Used To Predict No. 1 Investment Of 2020s
A technology called “Imperium” is about to spark the biggest investment mega trend in history … with one small Silicon Valley company at the center of it all.
It’s something that only science geeks know about right now. Yet, according to experts, Imperium is set to go from 1 million users to 2 billion in the next four years, launching a stock market “gravy train” that almost nobody sees coming.
The Good: Apply Yourself
The market is all about consolidation, buybacks and buyouts right now. So, it’s surprising to see Applied Materials (Nasdaq: AMAT) rallying after it terminated an acquisition deal. But that’s exactly what we have today.
A long time ago, in a pre-pandemic world far, far away (July 2019, to be precise), Applied agreed to buy Japanese chip equipment maker Kokusai Electric for $2.2 billion. But China, the evil one, crept up and slipped away with approval … approval … approval, yeah.
Ahem … more specifically, Chinese regulators failed to take approval action. Furthermore, March 26 was the deadline for Applied to pay the $154 million termination fee, and now the deal is officially dead.
Well, ain’t nothing Applied can do. So, investors kept on ramblin’. Yes, Great Stuff Picks investors, we’re gonna sing that song.
You’re up more than 100% on AMAT since I recommended it back in December. My research told me Applied would have a great year as chipmakers ramped up production for post-pandemic demand. Little did I know that a chip shortage would juice the situation to this degree.
So, keep on ramblin’. We’re gonna ride this rally all around the world.
The Bad: Selling Tomorrow
Some people cry and some people die by the wicked ways of love. But BlackBerry? BlackBerry (NYSE: BB) kept on rolling along with the grace of the Lord above … until now, at least.The ex-smartphone maker’s earnings report today was a heartbreaker for any non-gambling BB investors out there.
BlackBerry is getting squished at the back end of its transition away from making phones. It’s trying to sell off its mobile device, messaging and wireless network patents to make the leap to cybersecurity stardom.
BlackBerry missed revenue and earnings expectations, blaming much of the loss on “non-cash accounting adjustments on its convertible debentures.” In other words, debt restructuring … which is common but almost always looks bad on paper.
One thing I do have on my mind — if you can clarify, please do — is the lack of licensing revenue from the still-ongoing patent sale negotiations. If BlackBerry’s already missing estimates with this licensing revenue on hold … where does that revenue come from once the patents are sold?
BlackBerry will get a one-time bump from the patent sale’s cash infusion. But after that? It’s flyin’ solo, solely sailing the cybersecurity waters sans any revenue help from its mobile phone salad days.
The company’s cybercrime-fighting future has promise, but there are too many unknown factors about its ability to grow without any new recurring revenue in the door.
The Ugly: The Lululemon Song
Mean old leggings taught me to weep and moan, and Lululemon’s earnings got what it takes to make a mountain man leave his home.
I’m more lost than usual today, Mr. Great Stuff. Help…
Per-share earnings came in at $2.58 and topped estimates for $2.49. Revenue reached $1.73 billion to also beat estimates for $1.66 billion. Much of that pandemic-prompted growth was pinned on “many people stuck at home gravitating toward workout clothing as everyday wear.”
It’s a positive spin on my newfound taste for gym short chic, if anything. But to Lululemon, one remote worker’s laziness is another’s confidence: The yoga pants peddler bumped its sales outlook for the current quarter a smidge above what analysts expected previously.
The report is what we on the street call a “double beat and raise,” but LULU ain’t raisin’ on the news today.
It’s par for the course with Lululemon’s recent earnings and the typical 2021 story: People freaked out by declining in-store traffic … which should surprise no one during a pandemic. Especially when Lululemon’s online sales more than made up for the difference, spiking 92% on the quarter.
LULU still dropped about 5% on the news today, and its plunge looks more and more like a buying op if you’re looking for growth down on this killing floor.
Great Ones, welcome to poll day! We have questions; you have answers (hopefully).
I know, I know, y’all have a few questions, comments and/or concerns yourself, but that’s tomorrow’s business.
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Now for today’s Q&A: Let’s talk buying ops and trading chops.
Lululemon’s beat-raise-and-plunge report today is far from the only time we’ve seen sharp sell-offs after solid earnings this year. Another week, another overreaction on a growth name. Ho hum, ho hum.
Around here, we call these buying opportunities, but we want to know about you. With sell-offs like LULU’s, are you bum-rushing in like Leeroy Jenkins or staying out of the froth completely?
Click below and let us know:
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Judging by last week’s poll, I expect more than a few votes on the side of temperance. We entered the judgment-free zone and asked whether or not you’re buying Robinhood’s looming IPO, and y’all hit the poll in droves.
Only 24.4% of you plan on buying Robinhood’s public debut, while another 34.4% of you plan to wait until this fresh-baked IPO cools down. But for 41.2% of you, supporting Robbinghood Sherwood be a step too far (and yes, I’ll wear out this pun until I’m good and ready).
Thanks for sharing your thoughts! And if you — yes, you — have any hot takes on Robinhood’s IPO, Lululemon’s throwdown or the Chewy vs. Amazon showdown, I want to hear!
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Until next time, stay Great!
Editor, Great Stuff