1. Natural Beverage Corp. FIZZ, $116.92.
Background:
About 4 or 5 years ago there was a fever due to the stocks of beverages. Stories of companies that started small and were evolving due to the quality of their products became viral, as was the popular Green Mountain Coffee Rooster (now disappeared when it was acquired by JAB Holding in 2015 for $ 13.9B in cash), Sodastream SODA (israeli group, which manufactures soft drink machines at home, recently acquired by Pepsi PEP at $ 3.2B) or Monster Beverage MNST (with its energy drinks, still maintains its growth after its merger with Coca Cola KO).
Today sounds pretty good on Wall Street, the case of National Beverage, which trades on the NYSE under the suggestive FIZZ symbol. Even a Mid Cap company ($5.4B of Market Cap), its products have a lot of acceptance in the US: energy and gaseous drinks and juices, among them the popular LaCroix (its flagship product) and Shasta. After a great 2017 came the natural correction, to again be close to their all time highs.
Fundamentals:
a) In favor: nice fundamental numbers. The main: good cash flow with high revenues for 15th consecutive quarters, of increased growth. Also, net income and EPS increased more than 25% from the prior year, its 13th consecutive quarter of double-digit growth.
b) Against: the recent news. Gugghenheim iniated coverage last week with a low price target of $91. Also a recent Filing of Class Action, because they made false statements to the market between 2014 and 2018. Finally, its CEO was engaged in a pattern of sexual misconduct between 2014 and 2016.
Technicals:
The price is above all SMA levels and Ichimoku cloud, and its recover since May gives the stock near all time highs level ($129.82), achieved a year ago. In the short term it has a recent double top to beat in $125.04. Also this week its MACD shows a bearish crossover. So, two important levels to overcome, both of them. If it doesn't, is a firm candidate to short. Otherwise, its bullish rally will continue unstoppable.
Idea:
I believe FIZZ, in the short term, is a candidate for short. Put on your watchlist and wait next days its behavior in the face of those resistances.
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| National Beverage FIZZ is candidate for short If it does not overcome both resistences. |
2. Advanced Micro Devices Inc. AMD, $32.72
Background:
I remember in the 90s the indispensable requirement for a PC for home or office, was that the processor had to be 'Intel inside'. The alternative was the economic processor manufactured by a tiny company, AMD, but there was no guarantee of its proper functioning (something similar happened with Kingston memories, today a monster of the sector). The years passed and today AMD has become, along with Nvdia NVDA, a fierce competitor in the semiconductor business for the Santa Clara giant.
Since the arrival of Lisa Su as CEO in 2016 with her complete re-engineering of the company, AMD growth was exponential. Recently, its amazing entry into the design of the 7-nanometer chip before Intel INTC, usually ahead of everyone in this field, was one of the reasons for its current recovery, as these will be used in Artificial Intelligence, one of the sectors that more investors are bringing on Wall Street. Consequence of it, the stock explode the last two months (+144% YTD), and today is usually the stock with more trades on Wall Street, 170M shares on average!
Fundamentals:
However, the careful check of its fundamentals show that not everything shines there: its debt ratio is the highest in the industry (debt/capital > 60%), plus its profit margin (-12%) continues as one of the lowest in the sector, a worrying fact. Interesting data is that it maintains a high short interest of 15%.
Technicals:
With the stochastic in overbought more than 5 months (except a few days in July) and above the Ichimoku's Tenkan for more than two months, it is difficult to even apply some technical indicator with such a strong trend. It seems only a matter of time the correction, which would be the healthiest for the stock. The most important thing is to see how he will behave after it, as its competitor Nvidia do in this 2018.
Idea:
It's not too late to enter long in AMD, with a jealous management risk. It has still a long way to go upwards. But remember, that all growth very fast and exaggerated, falls, in some moment, has a correction (as has been happening with Nvdia NVDA since February) so I believe soon AMD will be in that situation, sooner or later. We will see if, after that, it consolidates its growth.
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AMD stock growth resembles that of Nvdia in 2017: explosive and unstoppable for almost a year to then reach a healthy correction, and then resume the rise. |
Good trading,
@BravoTrader
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