Super Stock Blog

Let's make our own bull run!

Category: Uncategorized

Cash is King. Easing off HABT.

I mentioned Habit (HABT) as being a nice buy-and-hold.  It was making a nice run until the last quarterly report which took the stock for a nose dive.  I still believe this will be a nice stock in the long-term but there are many factors that are causing this stock to not be as nice investment for the short-term that has caused me to get rid of it in my stock portfolio.

First, the quarterly report was rather bearish on the guidance.  It was stated to be much lower than expected.  The minimum wage rising per hour will also cause more disruption for the revenues.

Second, regarding the market, Lowes (LOW) recently had a bearish outlook to their guidance.  If you look at Home Depot (HD) and Lowes (LOW), technically, there stock price is trending downward.  Remember in the last recession, these were leading indicators that eventually led to the recession.

Again, use your own due diligence, but in the point in the market, I rather be more conservative and wait to invest during the downturn.  I was heavily invested before the last recession which meant I did take many losses as other investors did.  I rather have some reserves this time to get bargains during the next downturn.

Mall REITs still a Good Buy

As I mentioned in the previous post, mall REITs continue to be a good buy.  First it was JCPenney that had a bad quarter.  Then, Foot Locker also showed a bad quarter that also caused a drop in retail stocks and mall REITs.  WPG, Washington Prime Group, had plenty of cash flow to cover these retail shops revenue drop.  This includes paying the dividend to investors.  There is always the challenge in playing defensive in this space.  I believe playing defensive means making sure you have the cash flow to back up any investment that you take in.  This is especially true in this cycle in the stock market where things are all overvalued.  You want to find industries that are weak where there is an opportune time to purchase and that you know in the long-term will be valued correctly.

This is why Mall REITs are a good investment but the reason I recommend WPG is that it pays a strong dividend that is over 10%.  It also is a small mall REIT that are mostly based outdoors and have a strong diverse base of retail restaurants and shops that will be able to take on the downturn that some of the retail stores that will affect its sales.  It also is taking steps to transition stores like Sears, JcPenney, and Foot Locker to more stable tenants.  I believe the dividend will keep you protected in the long run as well.

Outside the mall REITs, Target had a good quarter recently.  It is a bigger player and a challenger to Amazon.  It isn’t without the risk but it does pay a nice 4% dividend.  Having been able to turn a nice quarter in a dismal retail quarter for most companies shows that Target is able to withstand the market issues and handle the situation.

I recommend investors look at both WPG and TGT for long-term buy and hold plays.  I do own both in a retirement account.

JCPenney Affecting Mall REITS

JcPenney (JCP) had a huge drop this morning in stock price over 17% as of right now.  This was due to declines in profit and same-store sales.  Of course, this is having a huge affect on Mall REITs including one that we current invest in Washington Prime Group (WPG).

Washington Prime Group has a very small percentage of rent that comes from JcPenney. This amounts to less than 2% of the rent.  Again, Sears (SHLD) also is a renter of this mall reit but also accounts for less than 2% and most likely without further due diligence I believe sears is only accounting for 1% of the annual base rent that WPG receives on an annual basis.

For someone that has some retirement funds setup, this is a great time to get into Washington Prime Group and collect a massive dividend at over 10%.

For the fundamental trader, this is a great mall reit that should pay off handsomely in dividends and appreciation as there isn’t much more downside to mall reits.  We all know that Amazon (AMZN) wants in the retail space and purchased Whole Foods for billions of dollars.

For the technical trader, there is a bearish cross which means there is further downside.  I’m not too sure about this but it did break the support at $8.50 today so it is possible to get a better price by waiting it out.

Rite-Aid Becomes Long Term Hold!

Rite-Aid (RAD) just announced earnings and, more importantly, discussed details of the merger deal.  First, the merger deal is off the table.  Walgreens will be paying $325 million for the termination agreement.  However, Walgreens (WAG) is going to purchase half of Rite-Aid stores for $5.2B.  Rite-Aid retains all of its west coast stores but will sell many stores in the other states.

For the long-term outlook, this is a great play on Rite-Aid.  There is a chance that another company possibly even Walgreens (WAG) in the future would be interested in Rite-Aid with the potential for the west coast stores and to own their pharmacy benefit manager.  Rite-aid is valued over $5 with this current outlook.  As long as they can start growing (which they have not in a long long while), there is the potential to move up to $9 which would be their price two years ago before all this merger and acquisition talk.

It is hard to predict where the stock price will be in the short-term.  However, if you wish to play this long-term, there is potential in Rite-Aid.  If another company wishes to acquire the remaining Rite-Aid, there is a good change you can double your money but don’t expect this to happen anytime soon.

Double Your Return in One Month with Rite-AID!

The Rite-Aid – Walgreens merger saga is coming to an end after two years of merger approval issues.  The end result will be $6.50-$7.00 of cash out per each Rite-AID (RAD) share.  I believe it will end up being at $6.50.  The stock is trading currently at $3.83 which means you will double your money on closing.  The only thing that can hold this up is if FTC blocks the merger.  With Amazon coming to the retail pharmaceutical business, I do not see an argument that FTC can make to block the merger.

The FTC would be doing a disservice to prevent this merger.  Amazon already has a hold of the retail market.  It wouldn’t be tough for them to change their structure to take over the pharmacy business as well.  Amazon can easily make a subscription model to customers that need antibiotics, cough syrups, medicines, etc. without going to your local CVS, Walgreens, Fred, Rite-AID, etc.  that would be cheaper and require less employees.

If you like to gamble, feel free to pick up some Rite-AID (RAD) shares.  The company is also coming out with earnings on Thursday so there is a lot of public news that will be out this week and next week.  The price was recently at $4 a share but has gone down to $3.81 this morning making this a good purchase.  If at worse case they do not merge, Rite-Aid will definitely go down to $2 per share which would still be a nice buy for a company that other competitors are interested in purchasing.

Disclosure: Long RAD stock and Long with RAD naked puts

Energy Fuels Reaching New Highs

As I discussed earlier, I was expecting to see new highs on UUUU with the volume and technical indicators turning bullish.  It is currently at $2.66 with a move up of 6% in this morning.  Expect this stock to continue to go up and down but the long-term road is for it to keep moving up.  Bet on US especially if you have the POTUS planning his executive orders to be made for “America to win.”