PENN

What’s happened? US Focus List constituent PENN posted mixed Q4 results
yesterday before market open. Revenue declined 23% y/y, missed estimates by
5% adjusted EBITDAR also missed expectations by 1%. We recommend that
investors hold the stock

European Weekly Summary

Key points from this week’s report:

Please refer to the attached PDF for the full report.

 

Key points:

  • The Stoxx 600 was downgraded to an Uptrend Under Pressure last week, after it breached its 21-DMA. Many European markets followed a similar path, breaking below short-term support, and were downgraded to Under Pressure.
  • The market’s pullback is not surprising given the extended nature of indices two weeks ago, with the Stoxx 600 trading >12% from its 200-DMA.
  • We continue to advocate that the cyclical/value trade is exhausted. Last week, growth/defensive sectors (Tech, Staple) have relatively outperformed the general market, while cyclical/value sectors (Financial, Basic Resources) have been underperforming significantly.
  • We recommend a cautious approach. Trim positions in extended names and be very selective when buying.
  • European Focus List changes:

Relaxo

What’s happened? Relaxo reported strong Q3 FY21 (ending December) results
with a beat across all metrics. Revenue grew 12% y/y to INR 6.7B, beating
estimates by 5%, and showed a sharp acceleration from previous quarters (Q2: –
7%; Q1: -43%). EPS of INR 3.63 (+67% y/y) was 17% above estimates. This beat
was primarily driven by the healthy demand for slippers/open sandals (80% of
product portfolio) and the normalization of consumer spending. We would
recommend investors to hold positions as the stock is testing its 50-DMA and
add to positions if it breaks above its 21-DMA on decisive volume.

Emami

What’s happened? Emerging Focus List constituent EML.IN Emami posted
mixed Q3 results yesterday after market close. Revenue grew 15% y/y, beating
estimates by 2%, while net profit grew 45% y/y, missing estimates by 10%. We
recommend that investors hold the stock and add to positions if it breaks above
INR 500 on decisive volume.

Givaudan

What’s happened? Developed Focus List constituent GIVN.CH Givaudan
reported mixed FY20 results. Overall, revenue grew 2% y/y, in line with
estimates, while adjusted EPS grew 11% y/y, missing estimates by 16%. We
recommend that investors hold the stock and add to positions if it breaks above
CHF 4,100 price levels on strong volume.

European Weekly Summary

Key points from this week’s report:

Please refer to the attached PDF for the full report.

 

  • First sign of a market pullback?European markets remain extended. The average distribution days across the region increased to 4.2 versus 3.5 a week ago. France, Spain, Ireland, and Luxembourg were recently moved to an Uptrend Under Pressure after breaching their 21-DMA.
  • Several indicators suggest that the Value versus Growth trade is near exhaustion, and interestingly, we have seen a rotation toward growth this week, with Technology and Health Care leading the market.
  • Leadership Emerging Among Health Care: Our rotation chart indicates improving short-term momentum (over four weeks) among lagging (over 26 weeks) health care, and the number of health care stocks breaking out ofearly-stage bases have been increasing significantly over the past week.

O’Neil Consumer/Retail Weekly

Blue Moon Group ( BMGH.HK; $14B market cap ): We are adding Blue Moon Group to our Developed Markets
Focus List as the stock is consolidating sideways after breaking out of an IPO base on heavy volume. Strong
financials, heavy ecommerce exposure as well shifting of consumers toward liquid detergents and soaps are the
key positives for the stock. See our report here.

European Weekly Summary

Key points from this week’s report:

  • All the 17 indices we cover in the region (including the Stoxx 600) are now in a Confirmed Uptrend. We remain bullish but can’t ignore the extended nature of the market.

 

  • Risk of a short-term pullback? Several indicators suggest that the Value vs Growth trade is near exhaustion. Monitoring distribution among the indices and new rotation within sectors will be the key area to watch in the coming weeks.

 

  • Should the market continue its upward trend, led by value, we bring to reader’s attention key stocks among value sectors that are still actionable / trading constructively.

Trigano

What’s happened? Trigano released strong Q1 FY21 (ended November) sales.
Revenue beat estimates, growing 29% y/y (27% y/y like-for-like basis). We
recommend that investors hold on to positions and look for immediate support
at the 50-DMA.