Three earning reports tonight: Lululemon, Chewy, Paychex
Partial Position: (I also have some call and more shares in my other accounts.)
E-commerce and pet-retail is on fire. Other companies in these categories have reported good earnings. Amazon, etsy and FreshPets popped post earnings. E-comm penetration is increasing in pet retail. Chewy’s subscription-based model (71% autoshipping) will help it retain the 6.6 million customers it has added since the onset of Covid. With two thirds of Chewy’s customer base also have Amazon Prime, so Amazon is not able to make a huge dent in Chewy customer base. Expectations are low for tonight which makes a post earning pop likely. Me like this stock.
Lulu was a woman’s yoga apparel company which transformed itself to athleisure and became uniform of women when working from home. Now with slow reopening women are flocking to stores to buy Lulu’s new line of clothing and shoes. Yes, Lulu got into shoes this month and the shoes are a hit. Lulu will become Nike for women. Their introduction of shoes is a game-changer. Woman buy more shoes than men and they want a premium product like Lulu. How many women wear yoga pants? a lot. How many wear athletic shoes? heck of a lot more. Me like their shoes and slim girls in yoga pants.
Paychex dominates the small-business payroll market. With people switching jobs and huge number of hirings recently I expect them to do well. Paychex benefits from high customer switching costs and a scale-based cost advantage. They will benefit from increased regulatory complexity under a U.S. Democratic administration. The only thing I don’t like about this is that the momentum is behind it. It may be a tad overpriced and who knows how long the momentum will last. For the past few month while QQQ were getting hammered, PAYX was resilient. This one has high expectations and even though I am long, I don’t think it will do as well as Chewy or Lulu.
I am trying to get this out asap since the earning reports are tonight. Hence it may not be as detailed as I usually like to be. My thoughts, not advice or research report.
Submitted March 29, 2022 at 07:14PM by OrcaBull
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