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Retail tends to depend on a flourishing economy for its significant moves, but discount and variety retailers don’t necessarily have that requirement. People love bargains, no matter what. Of IBD’s 197 industry groups, the discount and variety retailers have been moving up sharply. Two months ago, the group was at No. 97; a month ago, it was at No. 62; and now, it is No. 12. Only five constituents comprise the group, but all five have Composite Ratings greater than 80. The two leaders, Ollie’s Bargain Outlet ( OLLI ) and Five Below ( FIVE ), have the best possible Composite Rating of 99. Ollie’s Bargain Outlet offers a no-frills warehouse shopping experience with prices on name brands up to 70% off department store prices. The New America recently featured the stock with a note on how the treasure-hunt style of its stores offers an experience hard for online retailers like Amazon ( AMZN ) to duplicate. The company just went public on July 16, 2015. The stock was priced at 16 and made it to a high of 22.99 on its first day of trading. That move qualifies as the prior uptrend for the cup with handle that has been forming since then. The stock deserves special attention because IPO bases tend to have the best results, in terms of success rates, after a breakout. The current buy point is 22.63, 10 cents above the high of the handle. The stock’s relative strength line has been drifting down while the handle forms, but its Accumulation/Distribution Rating is strong at a B, and its up/down volume ratio is spectacular at 2.0. Its earnings record is solid, with a three-year annual earnings growth rate of 52%. The last three quarters have seen 38%-40% earnings growth. Five Below is also a recent new issue, having gone public on July 19, 2012. The company targets the teen demographic, offering items at below five dollars, and has a solid earnings record with a three-year annual earnings growth rate of 28%. Its Earnings Stability Factor is low at 5, where the low number represents less volatility in earnings. The company opened 70 new stores in 2015, bringing the total count to 437. It was also recently featured in The New America . The base for Five Below looks atypical, having been unable to pass its all-time high of 55.28 over a two-year stretch. A buy point using a more recent area of resistance could be used at 10 cents above 41.47. Dollar General ( DG ) has already staged a strong breakout. The stock gapped up for a 10% gain March 10, passing a 76.85 buy point on volume 230% greater than average. An earnings beat by the discounter before the open acted as a catalyst. The strong move put the stock past the buying range by the end of the day on March 10. While the stock could have been bought within the 5% buying range near the open, investors should note that breakaway gaps offer an exception to the 5% buy range. A move on such power, especially when accompanied by heavy volume, deserves extra flexibility. The stock also offers a 1.2% annual dividend yield. Scalper1 News
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