European Weekly Summary

Key points from this week’s report:

Please refer to the attached PDF for the full report.

 

  • The Stoxx 600 was moved to an Uptrend Under Pressure on Friday. With increasing pressure in the region reflected by rising distribution among major indices, several markets have been moved to an Uptrend Under Pressure. France, Norway, and Austria are the only countries remaining in a Confirmed Uptrend.
  • We recommend a near-term cautious approach given this week’s severe price break, spike in volatility, rise in distribution, failed breakouts, and narrowing leadership.
  • Recent weakness in the market coincides with a strong rotation toward value/re-opening trades. We have reason to believe that this “re-opening trade” may have another leg to run. Watch list – re-opening trade ideas include:

O’Neil Consumer/Retail Weekly

  • Bim Birlesik Magazalar (BMI.TR; $5.4B market cap): We removed BIM from our Emerging Markets Focus List due to a technical breakdown and deterioration in the fundamental backdrop. The stock is trading 16% off highs and has breached all key moving averages on big volume. The regulatory backdrop has worsened due to antitrust investigation and there has been a rotation toward more cyclical names as investors bet on an economic rebound in H2. See our report here.

Draftkings

What’s happened? Draftkings (DKNG) reported Q4 FY20 results on Friday
before market. Revenue grew 98% y/y on organic basis to $322M, compared
with estimates of $233M and accelerating from 42% growth in Q3. This was
driven by strong customer acquisition and retention. The stock gained more
than 6% post strong revenue growth and increase in guidance for the second
consecutive quarter. The stock is extended from an ideal buy point. Hence, we
recommend that investors hold the stock and add to positions when the stock
retraces to its 50-DMA.

European Weekly Summary

Key points from this week’s report:

Please refer to the attached PDF for the full report.

 

  • The Stoxx 600 is in a Confirmed Uptrend, but distribution remains elevated at seven days, which calls for a cautious approach when adding positions to portfolios.
  • About half of the countries in the region are now in an Uptrend Under Pressure with an average distribution day count of six. The elevated distribution day count remains a concern.
  • Over the past 10 days, we removed three stocks from the list (Solaria, SEM.ES; Scatec, SCAT.NO; and Kering, KER.FR) and added two new names (Comet Holding, COTN.CH and GN Store, GSN.DK).
  • Actionable names in the Focus List include Comet (COTN.CH), De Longhi (DLG.IT, Straumann Holding (STMN.CH), Lonza Group (LONN.CH, and GN Store Nord (GSN.DK.
  • Watch List: Bhp (BHP.GB), Navigator (NVG.PT), Kloeckner (KCOX.DE), Whitbread (WTB.GB), Leroy Seafood (LSG.NO), Admiral (ADM.GB), BNP (BNP.FR), ING (INGA.NL), Société Générale (SGE.FR), Swiss Life (SLHN.CH), Asos (ASC.GB), Teamviewer (TMVX.DE), Fortnox (FORT.SE).

Kering

What’s happened? Kering reported Q4 FY20 results today before market with
revenue missing estimates. In Q4 FY20, revenue contracted 4.8% on an organic
basis as compared with estimates of a 0.8% decline, mainly attributable to
renewed lockdowns in Europe. There was a beat in the bottom-line estimates
for FY20. Operating income was recorded at €3.14B as against expectations of
€3.08B, leading to an operating margin of 23.9%, beating estimates by 80bps.
The stock gapped down 7% owing to poor numbers and breached its key levels
of support. We recommend that investors trim positions.

India Rural Report

Reader’s Digest
Data show that India’s rural economy has been faring far better than its urban one
following COVID-19 lockdowns. This report will show investors how to play this trend

through consumer companies as we see the rural economy’s outperformance continu-
ing in the coming quarters.

Malibu Boats

What’s happened? MBUU reported strong Q2 FY21 results with revenue and
EPS growing 9% and 31%, respectively. We would like investors to hold
positions as the stock is currently extended from an ideal buy point, trading 10%
above its 50-DMA.