Posted on October 27, 2022
Fans of this letter know that we’ve had a bearish tilt for a good long time.
And we’ve made a lot of cash playing the downside.
But if you’ve paid close attention, you’ll also notice that of late we’ve been setting up a few bullish initiatives to take advantage of what we see as a potential eruption to the upside.
And today we continue in that vein, with a trade that employs Stanley Black & Decker Inc. (NYSE:SWK), a stock that can’t get a break no matter what it says or does for nearly a year and a half now.
The stock got drilled, hammered and screwed all the way from $225 to $70 over that period, and market watchers appear to have given up on any sort of turnaround.
Consider SWK’s fundamentals –
And that, too, builds confidence.
SWK reports earnings TODAY, forecasting in advance that they expect a decline. More important, however, is whether the real numbers beat estimates.
Our take is that they will.
Inflation has taken its toll on the company’s sales, true — but tools never go out of fashion, and are far less discretionary than other retail items. And Stanley/Black & Decker are industry leaders.
We’re looking for substantive action from the get-go today.
Now look at the chart.
Many happy returns!