DBI | New Long Idea. 3-Bagger Over 3 Years. A complicated and forgotten retailer with serious underappreciated earnings leverage starting in 2H21. Best Idea Long.
GME | Moving From Best Ideas List To Long Bench. After a 4-bagger in 5 weeks it’s time to double up our research efforts and crystalize the next phase of GME’s lifecycle. We’re on the case.
AZO of Short Bias list. AAP Lower on Short Bias list. We’ve been highlighting how we’re getting less bearish on Auto parts retailers. After a down week, AZO has now underperformed the XRT by over 50pts over the last 6 months. The AZO S&P relative multiple is just about as low as it’s ever been at 0.7x. Industry tailwinds are strengthening from rising vehicle life as consumers shift spending to used cars vs new. At the same time we see miles driven metrics improving, and stimulus checks flowing to the consumer. We think the odds of AZO meeting or exceeding earnings expectations, with just 5% growth expected over the next 12 months. ORLY is our favorite name (which we went long two weeks ago), MNRO our least favorite, which we think still has a sizeable downward earnings revision to come. AAP moving lower on short bias having same industry tailwinds, but also highest earnings growth expectations for this year.
*YETI was mistakenly left off short bias list on prior publication.
