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PreMarket Prep Stock Of The Day: Stamps.com

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PreMarket Prep Stock Of The Day: Stamps.com

Benzinga's PreMarket Prep airs every morning from 8-9:00 a.m. EST. During that fast-paced highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

For those who don't have the time to tune in live or listen to a recording, Benzinga will highlight a stock of the day that was featured on the show.

Stock Of The Day: Stamps.com

Once an issue becomes high-priced and volatile, especially after earnings, it will remain that way. There's no better example of this kind of price action than the trading in Stamps.com Inc (NASDAQ: STMP).

Fall From Grace

In July 2018, Stamps.com was a Wall Street darling, more than doubling since its 2016 year-end closing price ($114.65) at its August high of $284.45. For investors in the early 2000s when it bottomed at $2.20, the returns were much greater than that.

The issue began to retreat from its high for the remainder of the year, but the hammer came down twice in 2019.

Catalyst Behind The Huge Declines

The first unannounced "2-for-1 stock split" came on Feb. 22, 2019 following its fourth-quarter report, when it swooned from $198.08 to $83.65. Despite a solid EPS and sales beat, the Street was rattled when the company announced very weak guidance as the company ended its exclusive partnership with the U.S. Postal Service.

The second unannounced move lower came on May 9, when it fell from $83.39 to $36.90. Once again, the culprit wasn't an earnings miss but the company slashing 2019 EPS sales and guidance.

The Road To Recovery

The issue went on to bottom on May 31 at $32.54 and began to drift higher, when a second-quarter earnings beat on Aug. 8 propelled the issue from $46.27 to $58.98. That kept the upward momentum in tact, when the company announced on Oct. 21 a new collaboration UPS (NYSE: UPS) to provide its customer base with specially discounted rates.

That instigated another gap and go, rallying the issue from $76.13 to $90.68. A few weeks later, the company posted an earnings beat that took the issue near triple digits for the first time since January.

Moving Forward After Huge Q4 Beat

After the close on Wednesday, the company announced a huge fourth-quarter beat of $1.09 along with a sales beat of $16.22 million. That unexpected beat has the issue firmly over $100 as it rallied from Wednesday's close ($95.46) as high as $155.89 as of 1 p.m. EST.

From a technical perspective, that puts the issue in no man's land. From a fundamental perspective, retail expert Ryan Craver remains positive on the issue even after its quantum leap in today's session.

"The company continues to prove that the USPS drop was overdone," he said. "Their product suite, software and shipping partnership will keep Stamps.com uniquely positioned to benefit from the continued growth in e-commerce and direct to consumer shipping."

 

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