On 31 May 2017 the long position in TSCO has been closed at USD 54.02 due to reaching the stop loss level. The realized 1-week profit before any taxes and fees is 1.92%.
As we all know from Ocean’s trilogy, playing a story once again is probably not the best. In case of Tractor Supply Co. this feeling has been underlined by different segment and company specific factors as well:
- The outlook of the classic US retail players have been weakened mainly due to the increasing dominance of e-commerce business models. Year-to-date number on retail store closures is already outpacing that of 2008 (year of latest recession in the States) and appr. 2,880 have been announced so far this year according to Credit Suisse.
- TSCO’s share price dropped significantly and its valuation (and its expected dividend yield) is far more expensive compared to its peers.
Historical share price performance of Tractor Supply Company, source: Yahoo Finance
On the other hand the low-debt company could offer some locked in potential. Based on the analysts’ consensus the long-term growth prospects remain roboust despite the disappointing quarterly performance and the 12m projected share price might offer more than 20% return.
Considering all these pros and cons a new long position in TSCO has been opened at USD 53 on 24 May 2017.
On 7 February 2017 the Macy’s position has been sold at USD 31.4. The realized appr. 1 month returns is 2.88% before any taxes and fees.
On 10 January 2017 the Aegon position has been sold at EUR 5.082. The realized appr. half year profit is 30.24% before any taxes and fees.
On 9 January 2017 long position opened in Macy’s at USD 30.52.
The share price of Macy’s – one of the biggest retailer in the US and has appr. USD 10 bn market cap – decreased significantly after the CEO anticipated that sales values would be stronger (especially the watches and handbags segments delivered weak results). The envisaged OPEX cut initiatives are expected to result in more than half billion USD savings per year.
Historical share price development of Macy’s (USD), source: Yahoo Finance
Historical profitability metrics (mn USD), source: company reports
Key investment considerations:
- the falling share price pushed the RSI into the oversold territory from technical perspective
- current fundamental trends seem to be disadvantageous, however majority of the analysts maintained buy or hold recommendation in respect to the stock
- over 4% expected dividend yield
On 30 December 2016 the long position in Tractor Supply Company has been closed at USD 75.41. The realized profit before any taxes and fees is 10.1% (not annualized).
On 21 December 2016 the Engie position has been closed at EUR 12.26. The realized profit before any fees and taxes is 3% over the holding period between 10 Nov and 21 Dec. Not easy to hold a stock above your breakeven price limit for years in order to get the dividends:)