However counterintuitive it may sound, I love corrections and bear markets. In addition to serving as a time for reflection and for taking time away from the computer to mentally refresh, such backdrops are fertile ground for the next bull, as new leaders emerge, quietly showcasing strong relative strength in such periods.
As an inflection point sharp-shooting specialist, each earnings season always serves as the breeding ground for such new leaders to manifest themselves.
Turning to this earnings season, thus far, Deckers Outdoor Corp. (DECK) wins the prize for THE BEST Q3 inflection.
Deckers’s HOKA brand remains hot and their UGG brand’s top-line inflected strongly too. Impressive double-barrelled inflection point, with both the top and bottom lines beating strongly:
DECK’s strong inflection point is best seen from this perspective:
DECK has $30-$33 in EPS potential the next 1-2 years. With forward #s too low and this worldclass organic growth profile very rare to find in the current backdrop, I believe DECK is one of the few stocks that can work on the long side in this dangerous backdrop as investors expand its P/E multiple.
All-time highs here.
Impressive strength in a tough tape.
$600-$625 could be challenged in the coming weeks:
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Disclosure: We are long DECK in the accounts we oversee.
Disclaimer: In no shape or manner should the views expressed in this piece be considered investment advice. We reserve the right to change our positioning in these names at a moment’s notice without updating you on any such change in opinion and positioning.
Investors need to consider their investment risk tolerance before investing in the stock market and also before investing in any of the stocks mentioned in this report.
