Buy Alert: Kohl’s Corp. (KSS)

TRADE INSTRUCTIONS
Date: January 11, 2017
Name: Kohl’s Corporation
Symbol: KSS
Type: Open
Limit: Buy below $43

TRADE TARGETS
Holding Period: 4 months
Target Return: 11.6%
Annualized Return: 34.8%
Target Price: $48
Stop Loss Level: $37

COMPANY DESCRIPTION
Kohl’s Corporation operates department stores in the United States. It offers private label, exclusive, and national brand apparel, footwear, accessories, beauty, and home products to children, men, and women customers. Kohl’s Corporation was founded in 1962 and is headquartered in Menomonee Falls, Wisconsin. Link to company website.

TRADE RATIONALE
The retail sector got crushed last week after Macy’s and Kohl’s reported holiday sales that came in about 2% below expectations, with Kohl’s also reducing guidance for full year earnings by 8%. Kohl’s share price dropped 20% on the news, after having already dropped 10% in December when rumors of a weak Christmas shopping season surfaced after lackluster November numbers were released.

Sure, the stock deserved to get knocked down as a result, but according to our RPM it is now oversold and likely to bounce back soon. KSS briefly traded below its lower Bollinger Band last week before crossing back above it yesterday, so it should be able to move back up towards its 50DMA with minimal resistance now that it appears most of the selling is over.

However, it may take some convincing to get institutional investors buying back into the stock, so I am putting a four-month target holding period on KSS to encompass its next two quarterly earnings reports. The year-end report is due on February 23rd, by which time we should have a very good idea as to which way this trade is heading.

NOTE: KSS is optionable

Stock Talk

Larry Johnson

Larry Johnson

Filled at $40.50 @ TDAmeritrade

Derek: Las Vegas, NV

Derek: Las Vegas, NV

Bought July $47.50 call
Sold Feb $47.50 call

Net Debit $1.73

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at risk of asking a dumb ? so is this a calendar spread?
And a personal note hope you and yours are hi & dry

Derek: Las Vegas, NV

Derek: Las Vegas, NV

Hey BA!

Yes this is a calendar spread/horizontal spread.

The family and I are doing well, enjoying a good start to a new year. I hope the same for you. Are you going to the Wealth Summit in April?

Derek

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after 2016 don’t have enough wealth – sorry.
We are doing fine My wife and I even got in some great X-C skiing at Craftsbury, VT twice before weather turned bad. Last Sunday we got the 3 kids out. They like alpine better, but had fun on X-c too.
Thanks for the info that its a calendar. I may just try the calendar I dumped all bio/health related upon the surprise from the new Pres on he is upset with pharma. good to see some green on the screen.
Cheers

Derek: Las Vegas, NV

Derek: Las Vegas, NV

Awesome! That’s one thing I love about Vegas, we can drive 20 minutes to hit the slopes and still enjoy the warmer weather in the valley.

Now might actually be a good time to go long bio/heath while the the sectors are down. I’m sure they will rebound at some point. Personally I like buying stocks when others finds them unfavorable.

Derek

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Thanks for the tip Derek!
Hows this for dedication? Just returned from optometrist an hour or so ago had what I call the seeing eye dog test,. things are not totally clear but got in the Cal spread. I picked up the mid kid SS [read step son] now time to go back to get the youngest SD she is at knitting. Thanks to you I squeezed in another trade. GTG my next trade[s] will be after hours for tomorrow AM.
Thanks for sharing, I can see you are smarter than the average…

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Hi Derek,
On the 17 Feb 17 47.5 is your strategy to let it expire ‘worthless’?
I crack up at that term – wont be worthless to you or I.
Cheers

Derek: Las Vegas, NV

Derek: Las Vegas, NV

Hey BA,

Yes, just let it expire and then sell another one. A day or two before expiration I’ll look and see what the best option is.

Derek

Jeff

Jeff

KSS BTO April 17 37.5 put
KSS STO April 17 47.5 put
Spread filled for 6.03c

Maria R

Maria R

Did a put credit spread Apr 17 40/45 @$3.00 Cr.

Thanks, Jim and Jeff.

Jeff, I would not have the courage to do a put credit spread until your post.

Jeff

Jeff

Maria I recognize you from OFI you have skills ?

Maria R

Maria R

🙂 thanks for the vote of confidence, Jeff

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Maria did you buy or sell the 40?
Thats a Super credit fer sur

Maria R

Maria R

BTO Apr17 $40
STO Apr 17 $45
I hope it works out. Still dipping my toes in.
Thanks to all of you. And black arrow, slowly learning charts. Thanks

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The credit spread sounded GREAT – but it would not fill fer me. Not sur yet if Dereks spread is a calendar?

And although Larry got a better price than I, [again] I did get filled well in the guidelines
This is where Jim Pearces system is cool in my in my opinion, cause left to my own devices I would not have thought of buying KSS.
Thanks for a new one Jim

Derek: Las Vegas, NV

Derek: Las Vegas, NV

Same here, I would not thought of KSS as a new trade, but I do like the trade rationale.

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Hey Derek

Larry Johnson

Larry Johnson

Double-downed on the $2+ drop: picked up a couple APL $45 call options on the cheap as well as another 100 shares of the stock at $39.06/share.
Let’s see what happens.

Larry Johnson

Larry Johnson

Well, that was a nice, quick, tidy, little profit…LOL
Thanks goes out to Credit Suisse for that downgrade that was probably already built into the stock price to begin with.

Dramatic License

Dramatic License

Any idea what has been up with KSS lately? Seemed solid till just now.

Jim Pearce

Jim Pearce

I have not seen any news on it today, but I did notice that trading volume on Friday was more than double its recent daily average so that suggests either an institutional investor or share repurchase program may have been at work. Will keep an eye on it.

Dramatic License

Dramatic License

Thanks, Jim. Something is going on there. 🙂

Stephen Weil

Stephen Weil

My stop loss is at $37
should I let it kick in cost me 40.35?

Jim Pearce

Jim Pearce

The war on retailers is a bit mystifying to me, especially when esoteric metrics are being used to justify it such as this one: http://blogs.barrons.com/stockstowatchtoday/2017/03/20/the-biggest-loser-kohls-tumbles-4-8/?mod=yahoobarrons&ru=yahoo&yptr=yahoo. In the final analysis it is profitability that matters most, so I don’t feel the current sell-off is justified based on the logic being used to drive it.

Stephen Weil

Stephen Weil

sounds like hang on a bit and hold?

Jim Pearce

Jim Pearce

Yes. By rule, I have to sell any portfolio holding that closes below its stop level (dividend adjusted), but you don’t have to. Unless something material arises to justify the selling then I’d view this drop as more of a buying opportunity since the economy is still growing and people haven’t stopped spending money on clothes.

Stephen Weil

Stephen Weil

thanks

Derek: Las Vegas, NV

Derek: Las Vegas, NV

Decent earnings, but not good enough. Kohl’s’ comparable store sales decreased 2.7%, which the market doesn’t seem to like.

https://www.zacks.com/stock/news/260185/kohls-corp-kss-beats-q1-earnings-despite-comps-decline?cid=CS-ZECO-FT-260185

Derek

Jim Pearce

Jim Pearce

If Macy’s hadn’t also reported today then I think the reception to Kohl’s results would have been better, but right now they are all being painted with the same brush. I’m convinced there is the opportunity for some longer term trades in the retail sector, as not all of them are going to succumb to Amazon despite what the stock market seems to be telling us.

Dramatic License

Dramatic License

Ugh, really wishing I had just sold 15 minutes ago.

Jimmy Cook

Jimmy Cook

If you thought things couldn’t get any worse, here is some news from Marketwatch I saw this morning.
Kohl’s price target cut to $43 from $47 at Cowen & Co.

WillW

Will Wingfield

KSS sold at $36.57 just prior to your note. Had gotten out of the options earlier. Thank you, Jim.

Janis Bell

Janis Bell

What deja vu! I went to sell KSS, it was no longer in my portfolio as a stop had been triggered last month at the exact same price I am reading now.

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