We have had a lot of stocks pop 20-30% or more in the last few weeks during this earnings season. Today, we got one that went the other way as we had three stocks report earnings last night, two of which are posting big moves.
But first — here’s the Trade Alert. I’m going to step in and buy some Under Armour UA common stock. I’m writing a full report on why that I’ll send out this weekend, but with the stock continuing to get crushed every since a disastrous earnings report, I want to start a small position in UA with a smallish tranche of about 1/3 as many shares as I plan to buy over time.
UA is getting much more serious about becoming the leading app/software platform for smart workout technology:
“Our first shoe using HOVR [Under Armour’s new cushioning system] also features our next generation embedded connected sensor that tracks distance, cadence, pace, and shoe life,” Patrik Frisk, who joined the company earlier this year in the role of president and chief operating officer, said on Under Armour’s third quarter call. “This ties into our overall Connected Fitness strategy of connecting runners to our global community through our running apps. The HOVR launch demonstrates the first true manifestation of digital meeting physical, providing runners with advantages that make them better, smarter, and capable of more than they ever knew possible.”
UA partnered with Samsung was announced this past January, and UA is very much focusing on becoming a platform provider for wrist-worn trackers and other smart workout technologies. Under Armour developed versions of all four of its fitness apps (MyFitnessPal, MapMyFitness, Endomondo, and UA Record) for the Samsung Gear Fit2, Gear S2, and Gear S3.
Again, much more analysis on UA coming this week. For now though, I’m going to sneak in here and start building what I hope will be a long-term Revolution Investment in UA while it’s below $11 and has been left for dead, is down 85% from its all-time highs and is down 30% in the last three days since it reported earnings. I’ll give myself a little room and/or time before adding my second tranche and I don’t plan on making UA a terribly big position any time soon anyway. Just getting a toehold for now while its shareholder base is seemingly turning completely over here.
First, the ugly — Impinj $PI. I listened to the company’s earnings report last night and one thing I heard them say kept replaying in my head this morning, noted in bold below: “Yet even as we see that second wave driving significant reader and gateway volume growth, we see a few percentage points decline in second half 2017 endpoint IC unit volumes versus first half. The reasons aren’t completely clear to us, but we do not believe our market share has changed materially. Rather, we believe several factors may be in play. The delays at several large retailers. Our inlay partners adjusting to our transition from constrained supply and long lead times mid 2016 thru early 2017 to buffer stock and short lead times now. Some seasonality in retail deployment timing which our previously long lead times may have masked. A rebound from 2016’s rapid volume ramp through a long supply chain, and some retailers only partially deploying while they evaluate second wave solutions.”
The whole tone of Impinj’s earnings report conference call last night was confusion — the company just doesn’t have a clear handle on inventories, demand and have a lot of execution risk to get it all right in the next year or two.
I don’t like when a company I invest in sounds confused. I’ve got a call into the company and I also want to speak to a couple analyst sources of mine before making a final decision, but you can see how I’m leaning towards selling this name and cutting my losses. I’ve said since we first bought $PI that it was a very high risk/high potential reward kind of a investment and that’s been the case. Here’s how the stock has performed since the day we first bought it a couple years ago:
Second, another beautiful earnings report from one of our long-held big-winners — Axogen. We paid less than $5 per share two years ago when we started investing in this stock and today it’s above $23. Take a read of Axogen’s earnings call transcript and you’ll see a remarkable contrast of confidence vs the confusion in the Impinj call. Axogen’s margins, growth, penetration and business overall has continually improved even as they set the bar high. Here’s a sample: “As in prior quarters, our revenue growth is continuing from both active and new accounts as we continue to build and strengthen our commercial team. This increased focus on commercialization will allow us to drive penetration of our existing markets, expand into new applications, introduce new products and build global markets. These efforts along with the continued development of our certain education events, market awareness activities and further development of clinical data are helping surgeons develop confidence in the adoption of the AxoGen platform for nerve repair.” Here’s how the stock has performed since the day we first bought it a couple years ago:
Meanwhile, Facebook reported another remarkably strong quarter of topline and bottom line growth. I like that the company is ramping up spending on security for the networks — proactively addressing a growing issue that would cripple Facebook if ever a reality. Here’s how the stock has performed since the day we first bought it over five years ago:
