CORRECTED: Here’s The Latest On Our Holdings
Ambarella (NSDQ: AMBA) reported a strong quarter on Feb. 28. Earnings were $1.11, $0.17 higher than expected and up 100% from the prior year. However, the transition away from sick customer GoPro is not moving fast enough. First quarter earnings will be less than expected due to a draconian drop in GoPro orders. I think the stock is a raging buy after the 6% decline post earnings. Revenue from customers outside of GoPro are expected to grow 15% this year. While the next quarter or two might be bumpy as Ambarella transitions completely away from GoPro, I think we’ll be handsomely rewarded before too long.
Ambarella will be at investor meetings this week. I expect the stock to climb higher as management discusses robust demand trends from non-GoPro customers.
Chicago Bridge and Iron (NYSE:CBI) reported a dismal quarter on Feb. 28. Earnings per share equaled a mere $0.85 versus expectations for $1.45. New orders for the quarter were down 56% from the prior year, confirming my suspicion that infrastructure companies have seen little movement in orders for new projects. We closed out of our CBI put position with a nice gain but still own puts for Jacobs Engineering and Aecom, other infrastructure stocks I expect to drop hard as a reality of slower than expected growth sets in.
U.S. Concrete (NSDQ: USCR) has rallied 11% since Feb. 28 when it reported a stellar quarter. Earnings rose 49% for the quarter, a whopping $0.12 cents higher than estimates. Sell-side analysts rushed to raise their estimates and targets, many changing them close to my $80 target. Signs that the company will enter new geographic territories via acquisition and a trend of increasing volume and prices should buoy the stock.
Thor Industries, a competitor of our put option position in Winnebago (NYSE: WGO) reported on March 6 after the close and gave us more information on the motorized segment of the RV market. The rationale of the Winnebago put is that the company is focused on the least healthy part of the RV market. Towable RVs, an area where Winnebago doesn’t have much to offer, has been robust but higher priced motorized RV sales are lagging. Be on the lookout for more updates on this position in the coming days.
Editor’s Note: A previous version of this update included content from my January 3rd portfolio update. I apologize for the mistake and any confusion that resulted.
Stock Talk
John
Linda
Just wondering if you think ANIP has had a bottom yet? I’m thinking about accumulating more shares. And are we still waiting on an update for Winnebago?
Thank you
John
Linda McDonough
John,
I think ANI is a great buy here. Unfortunately the company’s mixed quarter coincided with a barrage of tweets from President Trump regarding drug prices. ANI does rely on double digit price increases to generate profits, which is one of the reasons that I like the stock. In fact, if the FDA listens to the president, it will move quickly to approve the company’s corticotropin product which will be significantly cheaper than Malinkrodt’s Acthar.
On WGO, I am watching the stock and hoping for a bigger drop to push the puts up. Thor Industries reported earnings last night. Data from the company’s written Q and A (it does not host a live investor call) was mixed. Although Thor beat revenue estimates, earnings were only a penny better than expected due to lower product margins.
The company blamed the lower product margins on a continued shift towards lower priced RVs. Its motorized RVs, the category that Winnebago competes in, saw overall profit margins drop from 8.4% last year to 6% this year.
However, this negative trend is somewhat offset by strong demand. Revenue for Class A and Class C motorhomes was strong. Commentary focused on a continued shift, even within these motorized homes towards lower priced models with less bells and whistles. These stripped-down models produce lower profit margins.
Despite the good numbers, Thor was down 2.5% after the close, an indication that this group is priced to perfection. I’m waiting to see how Winnebago trades on the open to determine when to sell these puts.
Best,
Linda
John
Linda
Thank you so much for insight. I appreciate your service @ profit catalyst . I would recommend to anyone looking for good investment guidance . Take care
John
Linda McDonough
Thank you for the kind words John. I’m working hard on this end to get us more trade ideas.
Linda
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Christopher
WGO was down 1.80 today to 32.15. Let’s hope it continues down tomorrow.
Linda McDonough
Christopher,
I agree. It’s getting late as these puts expire next week. If it doesn’t drop more by the end of the week, we may have to bail. It’s so frustrating when we get the news we want but the stock doesn’t respond as quickly or as much as necessary.
Linda
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