The Week Ahead – February 28, 2022

Summary

Investors continue to monitor the events of the war in Ukraine.  What will be the impact on Global markets and energy prices?

Some interesting articles recently appeared in Forbes, The NY Times, and TheStreet.com on how Russia can use cryptocurrency to mitigate sanctions.

From the Economic Times, “Russia could find willing partners in other nations targeted by U.S. sanctions, including Iran, that are also developing government-backed digital currencies. China, Russia’s largest trading partner in both imports and exports according to the World Bank, has already launched its own central bank digital currency. The country’s leader, Xi Jinping, recently described China’s relationship with Russia as having “no limits.”

OPEC meets on Wednesday to decide the fate of production boosts.

This week we will get earnings from big names like HP, Lucid Group, Target, and Costco.

Why am I buying shares of Hibbet Sports? Hibbet Sports (“HIBB”) is undervalued and ready to be scooped up.

Earnings

Monday, February 28
HP (HPQ), Workday (WDAY), Sailpoint Technologies (SAIL) and Zoom Video (ZM).
 
Tuesday, March 01 
Baidu (BIDU), Target (TGT), Kohl’s (KSS) and AutoZone (AZO).
 
It’s great time to get into TGT. We are up nearly 200% over the past 5 years. It’s true – the company has great fundamentals, but lousy technicals. I am still a long-term holder.

Wednesday, March 02  
Dollar Tree (DLTR), BRP (DOOO), Coupang (CPNG), Snowflake (SNOW) and American Eagle Outfitters (AEO).
 
I get asked about DLTR all the time. I think the valuation is too high now and growth has been stagnant. Revenue year-over-year is in the single digits at 3.8% and three-year revenue is also flat at 4.21%. The company is trading at roughly 26x forward earnings.

Thursday, March 03 
Kroger (KR), Best Buy (BBY), Costco (COST), Broadcom (AVGO), Marvell (MRVL) and Gap (GPS).

Costco is also way too hot. COST is extremely profitable (12.8% gross profit margin) and is showing great momentum. But it is trading at 40X forward earnings and its price to book is 12x.

Friday, March 04 
Hibbett (HIBB).

Growing up in NY, I had never heard of Hibbet Sports. Cookie to anyone in the NorthEast who is familiar with Hibbet Sports.

This stock is UNDERVALUED. Yes, two things are working against the stock: (1) Downward Revisions and (2) Momentum.

However, here is what I love about Hibbet. And it’s more than the attractive sales attendants and retro Nike gear.

HIBB is very profitable.

HIBB only trades at a 4.0x multiple.

HIBB has exhibited excellent growth over the past three years.

HIBB has $0 long-term debt, except for capital leases. The company maintains a record of excellent operating cash flow and free cash flow.

There is something else worth mentioning – there is a huge 20% short interest against the stock. My prediction is that we will see the stock turn around in a big way. It is oversold and the shorts will add to upward pressure when they are squeezed.

Look for this stock to move in the second half of this year into 2023.

I have said this many times, supply chains are busted in 2022. We will not see any sort of recovery until 2023.

HIBB is a great longer-term hold. I feel good about this one.

IPO Watch 
Markets are quiet this week in the US. Look for GeneTether Therapeutics to make its debut in Canada on the TSX Venture Exchange (TSXV).