I started My Own Analyst two years ago to help individual investors who invest on their own. One of the features that has gained in popularity is what I call "Ask Alan" - there's a button to push on the website that launches an email to me. I respond on the website. Here is one that I received two months ago:
Question on DECK
Tim asks:Are you familiar with Deckers (DECK) or do you have an opinion on the stock? I think the company is very well run with a strong balance sheet. The recent earnings haircut due to rising material costs looks to be factored into the current price.
I don't follow DECK closely at all. I have always felt that it was too much a fad (Uggs), though that has proved incorrect. The margins are quite high - so high they scare me a bit. It's easy to get lulled into a feeling of "cheapness" when the PE is low (especially considering the $6 per share of cash) when the margins are inflated. Over longer periods of times, those margins inherently come under pressure. I have liked CHS because its margins were low and rising. When I look at SKX, it too had historically high margins (though not nearly as high as DECK) and reliance on a single product's trendiness before it crashed when the trend changed. CROX is a better example perhaps. Outside of shoes, there are lots of examples. This is a long way of saying that I would be careful with DECK. With that said, from a trading perspective, it seems a bit overdone, but I don't see support anywhere near here. When a stock goes from 12.40 to 119 in two years, there are lots of big LT gains embedded. The stock could pull back 62% of that move and still be in a LT uptrend. This would be 53 or so. When I look at the 2-year weekly chart, I see 53-55 as support. Fundamentally, it's easy to blame weather and to dismiss potential negative longer-term trends. I hope that is not what is going on here. If I had a bullet to shoot at a fallen angel in the retail sector, it would be TRLG.
At the time, DECK was 68.31, while TRLG was at 26.22. Subsequently, DECK reported earnings and plunged, closing this evening at 52.50 after trading as low as 50.18 on 4/30. Meanwhile TRLG suprised the market with a big initial dividend along with a small share repurchase authorization and closed in the after-hours at 30.50 (and traded as high as 32).
Subscribers to My Own Analyst get this type of advice every single day. It doesn't always play out this well, but often it does. For example, another feature is what I call "Short-term Trades", where I set a target and stop price with a two-week limit. This morning, I went out with a buy on CRK just after the open, with a buy price of 15.84, a stop of 15.25 and a target of 18. The trade was closed out within a couple of hours - that's almost 14%. Of course, many of these trades, which are set up typically as 3.5 to 1 up/down, don't work out - they become small losses, but the wins really add up and have produced large gains overall.
If you could use a professional input into your own investment process, why don't you check out this service? If you can avoid one or two mistakes a year, the service more than pays for itself. Click here for the brochure. If you like what you see, email me and I will let you take a look for the next week.