1. The Kroger Co. KR, $23.92.
This stock is especially important in these days of Trade War escalation, using it as a hedge, due Kroger operates retail food and drug stores manufacturing its own products, so, unlike other retail stores, have little exposition to China. Last week, I emphasize that retailers could fuel a next market bullish rally, due great July Retail Sales report.
Kroger is near 20% down this year, however, the company reports decent Q1 earnings, showing that its CEO Mac Mullen probably finds a way to reverse after an ugly 2018 (-26%) a bad year for all the retail sector. An early August' upgrade from Pivotal Research fuels the stock from the $21 level, "a cheap price enough for a buy" as they said. And also last week announces a test concept with Walgreens WBA, expanding its Express store-within-a-store pilot in Tennessee. Seems interesting.
Technically, the stock is finally breaking the resistance line of its downtrend channel that began in March. Yesterday its price rises near 3% and closing above the Ichimoku cloud but still is below the key SMA200 average, and needs to confirm the breakout this week. At $24.40 level is where I place last week my buy-alert, with a target price of $27.50.
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Daily chart of Kroger KR, showing how breaks today its quarterly bearish channel. Needs to confirm this upper move this week, before its Q3 earnings report on September 11th. |
2. Ross Stores Inc. ROST, $104.57
Last week, this popular discount retailer reports its Q2 earnings and shows acceptable numbers but Wall Street didn't digest them well (closes -4%, but in a market sell-off day) with this stock as do recently with other retail stores earnings reports. Both EPS and sales, again beat consensus, its operating margin was better than expected, but lowers its full-year guidance (Ross usually did that with guidance!), due to new China' 10% tariffs, which is its main issue in the short-term if Trade War escalates more.
Despite this, analysts maintain many hold or buy ratings (Wells Fargo, Citigroup, MKM Partners, Morgan Stanley, Jeffries, Bank of America) and others also raised them, as Deutsche Bank and Guggenheim. No one downgrade, no one lowers rating: good signal for a post-earnings trade, due Ross is doing very well, and taking advantage of the pullback this week.
Technically, all 2019 its price is moving in an uptrend channel (+29% YTD) above its SMA200 average and Ichimoku cloud. Since July is ranging between $102-108 and today is testing its SMA50 average. The bias is bullish, so, I set my buy-alert this week at $104.60 its monthly-pivot, close to its all-time high at $108.20.
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Ross Stores ROST daily chart showing its year bullish channel. Analysts believe the stock can continue its bullish bias during the rest of the year. |
Good Trading!
@BravoTrader
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