27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.
With the stock up more than 40 percent since February 2017, now is the time for Duluth Holdings Inc (NASDAQ:DLTH) investors to move to the sidelines, according to Baird.
The Analyst
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Baird's Jonathan Komp downgraded Duluth Holdings from Outperform to Neutral with an unchanged $30 price target.
The Thesis
Shares of Duluth Holdings, a maker of casual wear, workwear and accessories, are up nearly 70 percent in the past three months alone due to a strong retail backdrop and increased confidence in the company's growth strategy and e-commerce platform launch, Komp said in the downgrade note. (See his track record here.)
The strong gains in the stock reflect the favorable outlook, including expectations for 20-percent earnings growth in fiscal 2019, the analyst said.
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Duluth shares are trading near 30 times NTM P/E, which is a premium to its historical average of 26.5 times and a premium to rival apparel maker Lululemon Athletica inc. (NASDAQ:LULU), which has a five-year average multiple of 27 times.
The case for a higher valuation is supported by the following factors, Komp said:
- The improvement of the e-commerce business while simultaneously avoiding the margin pressures other retailers of multiple brands face.
- Additional benefits from sales of Duluth-branded merchandise that reduce the need to discount.
- Long-term targets that add to the attractive growth story.
- A solid management that's executing well.
Price Action
Duluth Holdings shares were trading lower by 0.3 percent Thursday afternoon at $28.52.
Related Links:
For Duluth, Risks May Be Growing Faster Than Earnings
Duluth Is One Of The Best Unit Growth Stories In Specialty Retail
27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.