Extreme Trades for the Week of September 24, 2018September 24, 2018
Trade No. 1 — Kroger Company (KR)
After watching Kroger (KR) pull back on earnings, we believe it’s worth a buy at bottom of trend again. Technically, it’s oversold at the lower Bollinger Band (2,20) with overextensions on RSI, MACD and W%R. From here, we believe the stock can refill its bearish gap around $32. Unfortunately, the stock did pull back on earnings. EPS was 41 cents on revenue of $27.869 billion. That was above EPS estimates for 37 cents, but missed on $27.97 billion revenue. Same stores sales were up 1.6%, which was shy of 1.8%.
That simply tells us Walmart and Target may be eating some of KR’s lunch.
We also have to remember that KR’s investments are expected to bear fruit moving forward. After listening in on the company’s Q2 earnings call, we continue to see potential in the company. Management is employing initiatives which we believe could drive further value in the long run.
There are two ways to trade KR here. One, buy the KR stock at market prices. And, or two buy to open the KR November 16, 2018 31 calls at market prices.
Trade No. 2 – ACADIA Pharmaceuticals (ACAD)
After an incredible run on its Parkinson’s disease Psychosis (PDP) drug, ACADIA Pharmaceuticals [NASDAQ:ACAD) plummeted in recent months.
All thanks to a CNN report that highlighted a growing number of patient deaths and adverse effects, potentially related to the ACAD drug, Nuplazid. In fact, according to the report, more than 1,000 patients continued to experience hallucinations. More than 700 had died.
And, according to the report, medical experts said the drug was “approved too quickly.”
Understandably, that didn’t sit well with investors.
However, it appears the U.S. FDA just quieted those very concerns. In fact, the regulator said it couldn’t identify “any new or unexpected safety findings with Nuplazid, or findings that are inconsistent with the established safety profile currently described in the drug label.”
As found on the US FDA site:
“The U.S. Food and Drug Administration (FDA) has completed a review of all postmarketing reports of deaths and serious adverse events (SAEs) reported with the use of Nuplazid (pimavanserin). Based on an analysis of all available data, FDA did not identify any new or unexpected safety findings with Nuplazid, or findings that are inconsistent with the established safety profile currently described in the drug label. After a thorough review, FDA’s conclusion remains unchanged that the drug’s benefits outweigh its risks for patients with hallucinations and delusions of Parkinson’s disease psychosis.”
As a result of the news, ACAD shot from a low of $12.50 to $20.10. Buy the stock and hold, long-term.
Trade No. 3 — Zayo Group (ZAYO)
Over the next few months, companies will begin to roll out 5G, or 5th generation mobile networks. The goal is to provide quicker Internet speeds for users. The other objective of 5G is to help usher in the next wave of human-technology interaction, such as with the Internet of Things (IoT) and autonomous cars.
4G has a download speed of 100 megabits per second.
But that’s nothing compared to the 10,000 megabits per second that 5G can handle. That’s 100 times faster than 4G, and would be under significant demand.
And get this. By 2035, about $12.3 trillion worth of goods and services will be enabled by 5G networks, and the rollout of 5G will add approximately $3 trillion to the worldwide GDP.
Zayo Group could be one of the beneficiaries. The company provides comprehensive bandwidth infrastructure services in over 300 markets throughout the United States and Europe. Zayo delivers a suite of dark fiber, mobile infrastructure and cloud and connectivity services to wireline and wireless customers, data centers, internet content providers, high-bandwidth enterprises and government agencies across its robust 82,000 route mile network.
Buy the ZAYO stock and hold, long-term.