Fundamental improvement drives stock re-rating
This thread/idea takes over from the previous one, where we initiated a long position at 55.
We assume a long position at $60/share to take into account the call conversions (please see related idea below).
FUNDAMENTALS ON THE UP AND UP
LULU surprised positively on both top and bottom lines
Most notable improvement = Gross margin expansion by 4.2%
Fundamental improvement --> Long-awaited re-rating in the stock
Broker upgrades are still feeding through post earnings release
TECHNICAL IMPROVEMENT
Long-term turning positive
Medium-term positive
Short-term positive, overbought
Expect some (time) consolidation in the visible term
We look for a close above $70 for further sign of strength
Next hurdle: To close the gap formed between 71.65 and 75.12
NEXT TARGET = $80/SHARE
Existing holders are already in the money and should stay long
New investors could go long here (1/2 position) and buy more (1/2 position) on a pull back towards $66
RISK/REWARD STILL COMPELLING
TARGET = $80/SHARE
STOP-LOSS = $66/SHARE
REWARD/RISK = 2.5X (assuming new position initiated at $70)
We assume a long position at $60/share to take into account the call conversions (please see related idea below).
FUNDAMENTALS ON THE UP AND UP
LULU surprised positively on both top and bottom lines
Most notable improvement = Gross margin expansion by 4.2%
Fundamental improvement --> Long-awaited re-rating in the stock
Broker upgrades are still feeding through post earnings release
TECHNICAL IMPROVEMENT
Long-term turning positive
Medium-term positive
Short-term positive, overbought
Expect some (time) consolidation in the visible term
We look for a close above $70 for further sign of strength
Next hurdle: To close the gap formed between 71.65 and 75.12
NEXT TARGET = $80/SHARE
Existing holders are already in the money and should stay long
New investors could go long here (1/2 position) and buy more (1/2 position) on a pull back towards $66
RISK/REWARD STILL COMPELLING
TARGET = $80/SHARE
STOP-LOSS = $66/SHARE
REWARD/RISK = 2.5X (assuming new position initiated at $70)
Komentarz:
The stock is consolidating to erase its previous overbought condition. This is taking place in low (nearly half) average volume and LULU closed on Friday exactly at the 200MA, just above our stop-loss. Maintain stop-loss in place at $66/share and expect a rebound from here off the 200MA, after a week of consolidation.
Transakcja zakończona: osiągnięto poziom stop:
Trading and closing below our 66 stop-loss --> Stop this trade and move on.
