99 Cents Only Stores (NDN) – 11-07-2008
NDN has been following all the discount retail stores, like DLTR and FDO, whose stocks have been doing quite well in the current economic crisis. The thinking goes, if people have less money they’ll go shop at places where they can get bargains. If you check out the numbers on NDN though, they haven’t done enough to justify bucking the market trend. Revenues are up a little, margins are horrible. Now is probably not the time to be attempting a retail expansion, and I don’t see anything in them that tells me they’re that much better than the average corporation under these conditions.
I don’t trade against trends, but if the industry gets more overbought this one should be an interesting swing trade in the down trend. Remember, look for industry trends and then look for the best candidates within that industry. In this case, wait for the discount retailer industry to hit the down trend and then look for the weakest company, NDN right now, to swing trade.
Triggers
- Below $10.50 – swing trade short
- Above $12.50 – shift lower watch point up