6/27/24 - $levi - Skinny entry, seems overdone ~$19/shr

2024年6月27日

6/27/24 :: VROCKSTAR :: LEVI
Skinny entry, seems overdone ~$19/shr

Hard to find a discretionary name that had super clean results. ONON comes to mind and ELF too (wrote up both of those, i'd not own either at the moment - but they r ones that should be on your watchlist).

Levi a bit of a different animal. more debt on this capital stack (i wrote about this quickly in my WBA comment today) and honestly i'd guess that factor is ~50% of why this is down in the mid to high teens.

let's run some #s. so we now have a 9 bn and change enterprise value on high 7's bn of market cap. let's gross up the stock price for this debt and u get to ~$23 ($19 x 1.2x)... and EPS power this year is $1.25 - that's 18x.

18x for a solid brand that is dominant in it's industry (tho ANF is taking some healthy bites and that stock has gone on a ripper - also wrote about that). won't be growing gang busters but mid to low teens. so PEG at slightly above 1. *okay* not great, but still better than cash.

lumpier cash gen than i'd prefer for a co that's near $10 bn enterprise value, but even in a weak consumer environment i'd suspect 500 mm is a good bogey for the mkt so that's 5% rate with growth and brand.

it's a buy here, fundamentally.

but

we have a gap to just beware of in the mid 18s. so if u need to wait/ don't need to own... consider it.

and i'm sure w/ opex tmr, the chain is letting out some air that could keep this stonk px depressed still for a few days/ maybe a week.

i like the potential for a reversal into the close and continuation tmr. don't think results were so bad they merit the -16% move. the capital stack isn't like WBA (at all!) nevermind levi has a great brand (not just a brand distributor - e.g. a mall etc.).

so this is a 6/7 out of 10 idea if you're looking to swing w a decent risk reward. the risks are spelled out above. a. gap, b. more gamma out c. valuation not "cheap"/ capital stack w debt.

but it's too much for the EPS, fundamentally. so i bite small.

V

2024年6月28日

註釋

closing this one for the NKE swing.

breakeven

i don't like having multi-positions esp trades... so would rather just own NKE for bellwether status. dunno if i'll hold this one for long either - as it's only a trade. tough to own any discretionary in this environment. only one i have more LT conviction on is LULU