Sprouts Farmers Market, Inc. (SFM) | Daily Alert June 5
It’s time for another new buy recommendation, and this one is all about high-quality food. No, not high-quality restaurant food. We still can’t really go to restaurants like we used to. Rather, we are talking high-quality, organic meats and foodstuffs of the sort sold at high-end boutique grocers.
Specifically, we are talking about the high-quality products sold at Sprouts Farmers Market, Inc.
Full disclosure, this is a store that Jim shops at frequently because it sells all of the pills, potions and organic foods that help fuel his workouts. But you don’t have to be a fitness freak to love SFM’s stock. In fact, all you have to do is be in love with the combination of the major earnings growth and strong buying in the shares.
On the earnings front, SFM has recently reported that sales across the chain rose at a brisk pace of 16% to $1.6 billion and that same-store sales spiked 10.6%. Adjusted earnings per share also surged 72% year over year. And Wall Street loves that organic growth (pun intended) as SFM shares are up some 29% year to date.
Pandemic or no pandemic, we suspect customers will continue to shop at Sprouts, and that means more upside in sales, earnings and in the share price, as the fast money continues a flight to high quality.
So, let’s buy Sprouts at market, with a protective stop set at $20.00.
For those willing to take a bigger bet, buy the SFM Sept. $30 call options (SFM200918C00030000) at market, which last traded for $0.80 and expire on Sept. 18.
Mark Skousen & Jim Woods, FMA Trader Alert, markskousen.com, Eagle Financial, 300 New Jersey Ave. NW, Suite 500, Washington, D.C. 20001, May 18, 2020
*Glu Mobile Inc. (GLUU)
Glu Mobile Inc. develops, publishes, and markets a portfolio of free-to-play mobile games for the users of smartphones and tablet devices. It publishes titles primarily in four genres, including lifestyle, casual, mid-core, and sports and outdoors.
The company’s portfolio of compelling games based on its own intellectual property, such as Cooking Dash, Covet Fashion, Deer Hunter, Design Home, Diner DASH Adventures, and QuizUp, as well as games based on or significantly incorporating third party licensed brands, including Kim Kardashian: Hollywood, MLB Tap Sports Baseball, and Restaurant Dash with Gordon Ramsay, as well as Disney Sorcerer’s Arena. It markets, sells, and distributes its games primarily through direct-to-consumer digital storefronts, such as the Apple App Store, Google Play Store, and others.
GLUU has begun to rebound. A big reason for that was the World Health Organization (WHO), which encouraged gaming during “stay at home” orders. However, that’s not the only catalyst for GLUU stock. Demand for mobile gaming has been incredibly explosive. More than 2.7 billion global gamers are expected to spend nearly $160 billion on games just this year, according to market researcher Newzoo. Better, mobile gaming could generate up to $77.2 billion this year—13.9% growth year over year. With solid mobile gaming growth ahead, I wouldn’t be shocked to see GLUU stock double, if not triple over the next year.
Ian Cooper, The Cheap Investor, firstname.lastname@example.org, June 2020
*Trulieve Cannabis Corp. (TCNNF)
Trulieve, recommended by yours truly in Cabot Marijuana Investor has been building a nice base between 12 and 14 over the past month, so buying here is okay if you don’t own it yet. Trulieve is the established market leader in Florida, which is an all-medical market at this point, and just last week the company made further progress toward its debut in Massachusetts (where both medical and adult-use are legal), receiving approval from the Massachusetts Cannabis Control Commission to cultivate, manufacture and operate a retailestablishment in the state. BUY.
Timothy Lutts, Cabot Stock of the Week, cabot.net, 978-745-5532, June 8, 2020
*Valens GroWorks Corp. (VLNS.TO)
Valens Groworks (Speculative) keeps signing extraction agreements to process marijuana from third-party producers to make its cannabis resins and oils. Valens’ customers include Canopy Growth, Tilray and Organigram Hexo Corp. Investors also benefit from its medical cannabis extract sales online through Shoppers Drug Mart.
In the quarter ended February 29, 2020, revenue was $32.0 million, up from $2.2 million a year earlier. The company made a profit of $2.5 million, or $0.02 a share. That’s compared to a loss of $6.4 million, or $0.07. Valens’ balance sheet is also very sound, with cash of $44.3 million and no debt.
Longer term, if its niche proves successful, Valens could attract competition from larger firms. Meanwhile, regardless of which cannabis growers emerge as winners in the Canadian landscape, it, and its investors, are there to profit.
Valens GroWorks has a 3-Leaf Cannabis Quality Rating (CQR) and is a speculative buy for aggressive investors who want exposure to the marijuana industry.
Patrick McKeough, Power Growth Investor, tsinetwork.ca, 888-292-0296, June 2020
* 2U, Inc. (TWOU)
2U Inc. is a Maryland-based technology company that enables colleges and universities to bring their degree programs online. 2U recently acquired Trilogy Education, which it has folded into its offerings. Trilogy defines itself a “workforce accelerator”, partnering with universities to create and manage skills-based training programs and boot camps, mainly targeting the tech industry.
2U also provides solutions for content development, student acquisition, and application monitoring. The firm generates revenue through subscription fees to software offerings on a 10- to 15-year basis. The company has a total of 73 university partners.
Not too surprisingly, 2U is coming off very solid first-quarter results amid the coronavirus pandemic. Revenue grew an impressive 44% year over a year to $175.5 million. This growth was driven by organic growth in the company’s graduate segment and through the addition of Trilogy, which was acquired in May 2019.
As a result of the coronavirus pandemic tailwinds, 2U’s stock has already received numerous upgrades over the last month from institutional players including Berenberg, Baird, and Barrington Research.
We rate 2U Inc. a “Buy” under $35. The risk level is “Medium-High.” Investors will want to put a stop loss on this. We’re placing ours at 20%.
Jason Stutman, Technology & Opportunity, angelpub.com, 877-303-4529, May 2020