Thinking about Deckers ($DECK) and Boot Barn ($BOOT)? Here is my take. – September 21, 2021
DECK BOOT
I want to look at a couple of stocks today. First of all, we will look at Deckers ( NYSE: DECK ). Now, Deckers ( NYSE: DECK ) is very strong technically. You can look here at the weekly chart and you will see, recently, like in the 2nd quarter here, this was in a pretty tight volatility squeeze and finally broke out on massive volume, no doubt at earnings. So that was then, this is now. You can see the little red line there, that’s the 50-day moving average, so it is bouncing right along the 50.
If we go in and look at this on a daily chart it becomes more evident. This was a big move back here. Our next earnings report isn’t due until my older brother Jim’s birthday on November 4th. I don’t know if Jim owns any Deckers ( NYSE: DECK ), UGGs, something like that, I couldn’t tell you. But I know that this company is kind of firing on all cylinders. The earnings per share rating (EPS) is really, really strong, in the top 1 percent of all traded stocks that IBD follows. And so, fundamentally, it’s really strong. Technically it is also strong, it’s in the top 93 percent in terms of relative strength, strength relative to the S&P 500 ( INDEXSP: .INX ).
So if we look at Deckers ( NYSE: DECK ), that’s fine. You buy the stock here, maybe put a stop down about 6 percent. It would have to fall below Wednesday on the 8th, a couple of Wednesdays ago, it would have to fall below this intraday low of 398.25 in order to give you the sense that maybe this rally is going to turn out to be a dud. But until the stock breaks below there, then frankly, even if the stock kind of traded lower bit, as long as it didn’t get through there it would be okay. If it holds there and then starts rebounding, then you just kind of have a double bottom. At the same time, you are also looking at this same crap, this is in a range.
So that’s one stock; now, we have Boot Barn ( NYSE: BOOT ) on our Active Trade List. I keep a list for our members, that gives them stocks, why I am looking at it, what the entry is, what the stop is, the rationale. We raise stops, we exit, they are basically complete trades. This is another one similar to Deckers ( NYSE: DECK ). This one actually has a relative strength that is even higher, it’s 97, so it’s stronger. It’s moving higher than 97 percent of all stocks in the universe of IBD, and it’s got monster earnings as well, very, very consistent.
This is what you want to see, you don’t just want to see one quarter where there are great numbers. That’s the type of thing where people buy the stock and then they wonder why they got crushed. It’s because it was kind of a one-quarter wonder. Savvy traders know that so they will sell into it. The better way to do it is, you look for companies that have consistently strong earnings and this one does.
The interesting thing is, for 2021 the earnings estimates are for a buck 93 a share. For 2022, for next year, they are at 414.00 a share. So this is a breakout. This would be a breakout year in 2022 and I think that is why the stock just continues to move higher. The market is looking for a lot of good things from Boot Barn ( NYSE: BOOT ), that’s why we have it on the list. It is not a stock, we’ve had it on for a while, you can see where we bought it. It’s not up a huge amount.
The bottom line is though, this is not just screaming higher, wow, look at that thing go. It is just kind of drifting along but it is generally in an uptrend. And in a volatile market like this, do you know what? I could take a few stocks, I could take a few of these kinds of stocks. Anyway, I like Boot Barn ( NYSE: BOOT ).
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