Sunday, July 30, 2017

The Week Ahead

As usual, during earnings season, there is something going on.  This week more than most.

On August 1, two of my companies report.  ACCO brands, which makes almost all of the office supplies that you are stealing from work reports.  We are expecting 26 cents.  In the last quarter, they beat expectations and confirmed guidance.  As a result, the stock declined into the last three months.  I am expecting another earnings beat and anticipating the stock improving on its current share price - if not for anything else - just for a sheer value standpoint.  While the world has been watching Facebook, Amazon, Google, et al., hard product companies like ACCO continue to earn money.  Let's see what Tuesday brings.

Pfizer also reports on the first. Jim Cramer refers to it as a "bond," since it regularly trades in the $32-per-share area and pays a 3.8% dividend.  That kind of makes it a bond.  Shareholders like me aren't interested in holding a bond based on drug prices.  If they do not make some comments about the next year and some acquisitions and/or new drug innovations, this shareholder is out.

Most importantly, on August 2, Square (SQ) reports.  As they say, the stock is "priced for perfection," and I anticipate perfection in their earnings release.  The mobile pay space is interesting.  Some think that PayPal should buy Square, and others think that it is an interesting acquisition target otherwise.  It's a volatile stock, and I'd like to see something positive come from management this quarter so that we can get through this trading range.

On August 3, Extreme Networks reports. They have been quietly growing market share, even as their share price declined from $11 to nearly $9 now.  I'm looking forward to a positive quarter and some upward revisions on earnings and growth, which I anticipate growing the share price back toward the $11 mark that we saw earlier. I haven't seen anything to make me think otherwise.

HERE'S THE BIG NEWS: With some cash left on the table, I purchased shares of JC Penney (JCP) on Friday.  In spite of closing stores and increased pressure from the likes of Amazon and online retailers, most feel that JCP can not only weather the storm, but profit during it.  I'm inclined to agree.  Like most things in life, if you aren't prepared to take a risk, you won't reap big rewards.  JCP is a huge risk-reward scenario, but I think that, at $5.40 most of the risk has already been priced-out, and the only thing left is reward. Their next earnings report is in a couple of weeks.  No less an expert in retail than Dana Telsey has made it her top pick.  You might not know who she is, but she has been a staple in retail analysis for two decades.
If it's good enough for Dana, it's good enough for me.  Take a look and make your own choice.

It's hard to quantify, but next week might go a long way toward whether I can retire in a year or have to wait for three or four more.  I'd just as soon go out sooner than later, which is why I work so hard at this.  You might say, "Why not just invest in mutual funds and quit worrying?"

It's the worrying that makes it worthwhile.

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