Short
The Fresh Market Inc (TFM)
Tuesday, December 17, 2013
| Company | Symbol | Industry | Rating | YTD % Gain | Target | Stop |
| The Fresh Market Inc | TFM | Food Retail | 1.68 | -17.50% | $36.50 | $40.02 (cover) |
The Trade:
To put it nicely, The Fresh Market Inc (TFM) has "had a rough year." The Food Retail stock is down -17.50% YTD, had three tumultuous earnings announcements, and finds itself pushing to new lows as we enter the final few weeks of trading.
TFM had a major technical breakdown following a dismal Q3 earnings announcement on November 22nd. The company missed EPS ($0.23 vs. $0.26), revenues ($364.5M vs. $373.4M), and guidance ($1.42-1.47 vs. $1.53), completing the terrible trifecta. Traders responded by clobbering the stock from $50.40 to $42.58 overnight, and down to $40.87 by the close, which is a total loss of -18.9% in just one session.
In the weeks following the significant decline, TFM found some footing at $39, establishing a shaky base in no man's land. After a short-lived push higher, TFM changed course and has finished in the red for 4 (going on 5) straight sessions, pushing back down to the critical $39 support. This afternoon, the Food Retail stock is on the verge of yet another major technical breakdown.
Should TFM break down below $39, the only support below is at $36.50 dates back to November of 2011, which isn't exactly compelling support. Analysts are also not very high on TFM, as Strene, Aggee and Goldman Sachs have both downgraded the company recently.
From current prices, a short to capture a technical breakdown to $36.50 would produce a gain of +7.17%. If TFM rallies in the short-term and closes above $40.02, it would appear that the breakdown isn't happening, so our potential downside is -1.78%. The reward to risk ratio of this trade is roughly 4 to 1 with these parameters.
TFM has three major things working against it:
With these three things in mind, a short of TFM down to $36.50 for a +7.17% gain is a great looking trade today. 
When to Enter the Trade:
Short at current prices (~$39.30) or below.
When to Exit the Trade:
At a close above $40.02 (Cover) / At or below $36.50 (Profit-Taking)
Company Profile:
The Fresh Market, Inc., (The Fresh Market) is a specialty retailer. The Company focuses on perishable product categories, which include meat, seafood, produce, deli, bakery, floral, sushi and prepared foods. The Fresh Market's non-perishable product categories consist of grocery and dairy products, as well as specialty foods, including bulk, coffee and candy, and beer and wine. As of January 29, 2012, The Fresh Market operated 113 stores in 21 states, primarily in the Southeast, Midwest and Mid-Atlantic United States. In October 2011, the Company formed The Fresh Market Gift Company, LLC (Giftco), as a wholly owned subsidiary. Giftco was formed to administer the Company's gift card program. The Company's gift selection includes candles, cookbooks, kitchen items and seasonal and holiday gift baskets.
Stock Rating:
The Stock Rating indicates the combined score of our proprietary Earning Strength and Company Performance models. The rating scale is 0 - 10 with 10 being the highest.
Disclosure:
At the time of publication the editor and affiliated companies own the following positions:
None
Note: Positions may be bought or sold while this publication is in circulation without notice.
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