Hedgeye CEO Keith McCullough is adding Michaels (MIK) to the long side of Investing Ideas. Below is a brief note.
Yesterday I figured whoever was Levered Long TQQQ and forced to puke at the intraday lows was going to hit the bottle, hard (STZ)...
Now, I'm thinking some arts & crafts (MIK) for those who just want to chill because they had a risk management process…
What happens if VIX drops back below 26? High Short Interest stocks with #accelerating fundamentals (MIK) are going to get squeezed again.
Here's a good summary excerpt from Retail analyst Brian McGough on the name (new idea):
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Michaels (MIK): Adding to Long Bias list after a solid 2Q. I was surprised by the 15% sell off in Michaels on the print. The company put up a quarter that was much better than decent, and well ahead of consensus on almost every metric. Comps came in at 12% -- which is huge for a company like MIK -- vs the Street’s expectation for a 6% decline. Gross margin and SG&A each beat by about 400bps, with total EBIT margins coming in at 9.2% vs the Street at 1.5% (and last year at 7.3%). Inventory is in great shape – down 19% -- almost too lean. But I’ll take that any day. Liquidity is at $1.3bn, $100mm better than pre-pandemic. E-comm growth in the quarter was up 350%, which is one of the biggest e-comm gains we’ve seen from any retailer reporting 2Q earnings. |
Buyem after people are forced to sellem,
KM
