Here are some stocks I think are poised for a sharp turnaround in the second half of 2018.
$VSI Vitamin Shoppe
While falling to record lows late in 2017 two investment firms began amassing a large stake in Vitamin Shoppe. Shah Capital and Vintage Capital Management now own some 35% of $VSI's outstanding shares.
The name Vintage Capital Management should ring a bell, they recently bought out $RCII for a near 50% premium to what the stock was trading at earlier this month. The price tag for $RCII was ~$1.4 BILLION. In contrast $VSI sports just a $173 Million market cap. Also $VSI is seeing new positions opened up by other firms with Tamarak and Millennium recently disclosing new stakes in the company.
While the slide from the $50+ price level down to the 2017 lows had a lot to do with funds running for the exits, the recent price stabilization and reversal higher has been from new investors. I'd imagine those getting into $VSI the last few months think the worst is over for the company. I agree.
Despite that, there is still a strong percentage of the float in the hands of short sellers, who still think the stock has further to slide. Earnings continue to disappoint, revenue is falling, but at a much slower rate. The company still sports some $50 a share in annual revenue, has modest debt, which they recently began addressing through a large pre-payment, and is now starting to show growth outside of their stores with a 20% increase in digital commerce.
My first thought, seeing Vintage Capital taking a large stake in $VSI, was that we are going to see another $RCII type buyout. Anything is possible. Clearly $VSI shares are getting accumulated, and I don't mind coming along for the ride. I entered some short term calls on Friday and some longer dated ones. I think the stock could see $10-$12 by the fall buyout or not. If earnings surprise, or we get a buyout offer... perhaps even higher. That's my thoughts behind going long via calls. It could head back to $5 next week and stay there until 2020. But I not so sure that will be the case. I like the risk/reward here.
$GME - Gamestop
I'm not going to get into a detailed discussion today. I still have July Calls, and recently entered some November calls. The big short position:
has only grown over the years. They've been right in 2018, the stock has finally given way, recently hitting a 10 year support level. That support level held, and the stock looks poised for higher prices.
Gaming is growing is leaps and bounds. I know digital sales are growing, you don't need a disk or cartridge for most of the games these days. But clearly Gamestop has stuck around for a reason. The company does some $90 a share in sales. They are looking at other ways to bring customers into the store.
There has been recent buyout chatter that has helped lift the stock.
Buyout or not I think it can go back over $20 into the late summer early fall. As such, I am long calls for that possible move.
A few other stocks I like the next few weeks:
$FSLR looks to have found its footing after a nasty spill. There's a decent set-up for upside with a move to $60 a likely scenario.
It's been an incredible decline from the January highs. I do think we are starting to see a momentum shift finally, with last weeks action the first positive sign in quite a while $OLED is not going away, and I do think this stock trades back over $100 in the short to medium term. $120+ is possible later this year in my opinion. For now a move back over resistance will be a nice start.