Pat Connolly's avatar
$110.3m follower assets
Are Discount Retailers a Robust Business?
When I initially read about supply chain disruptions I assumed this would hurt discount retailer's ability to source inventory. This Wall Street Journal Article seems to disprove my assumption. GroceryOutlet echoed the reporting from the WSJ article where they said the supply chain issues provided opportunity.

I understand how shifts in fashion can render existing inventory obsolete creating opportunities to source discounted clothing but for other categories I am beginning to question why so much discounted inventory exists.

Are discount retailers levered to the notion that traditional retailers will always be error prone in their demand forecasts? There are a host of multi-billion dollar businesses reliant upon sourcing inventory from traditional retailers that couldn't sell the items on their shelves.

Do improved data insights & more effective inventory management techniques shrink the overall pool of discounted inventory?

Overall the stock performance of these businesses hasn't been great the last year. To dig deeper one could track inventory trends for each company to see if they have in fact struggled to source inventory. It all seems very counterintuitive to me.

A high level view of how some of the businesses source inventory;

$OLLI - "Brand name and closeout merchandise represented approximately 65% and non-closeout goods and private label products collectively"

$TJX - "We take advantage of opportunities to acquire merchandise at substantial discounts that regularly arise from the production and flow of inventory in the apparel and home fashions marketplace"

$GO - "Our flexible buying model allows us to offer quality, name-brand opportunistic products at prices generally 40% to 70% below those of conventional retailers"

$BIG - "we purchased approximately 24% of our merchandise, at cost, directly from overseas vendors, including approximately 15% from vendors located in China"
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Stock Picks for an Uncertain Time: Allen Bond, Jensen Investment Management
Allen Bond, managing director and portfolio manager at Jensen Investment Management in Portland, joins the Contrarian Investor Podcast to provide some stock picks for an increasingly uncertain -- and inflationary -- time in global financial markets.

Content Highlights
  • Investors have two major issues they're grappling with right now: Ukraine and inflation (4:38);

  • To protect against inflationary pressures, Jensen looks for businesses that have pricing power (9:56);

  • Mastercard ($MA) and TJX ($TJX) are two such stocks (12:15);

  • Background on the guest (16:53);

  • Three additional stock ideas, starting with ADP ($ADP), another company that is difficult to displace (26:00);

  • Broadridge Financial Solutions ($BR), the leading provider of proxy services (32:55);

  • Pfizer ($PFE) has sold off since making Covid vaccine headlines last year, but continues to generate a ton of cash -- and put it to productive use (40:30).

Listen here:
Upcoming Earnings Calendar (Feb 21th - 25th)
Hey guys! Here's the upcoming earnings calendar! Several very interesting reports coming up. Here's what I'll be looking forward to.

  • $MELI - How much did inflation impact their logistics margins?
  • $SQ - Cash App Users and Revenue Growth
  • $COIN - I think they will deliver a monster quarter. Crypto volatility should incentivize trading, driving commissions revenue above forecast.

If you'd like an easier way to track earnings dates, you can automatically sync your portfolio's earning dates to your personal calendar with just a couple of clicks here.




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February earnings
I think upcoming earnings are going to be really important in this volatile market. Companies will likely get punished (further) on even slightly bad results or outlook, and I'm hopeful strong earnings like we saw with $TEAM or $AAPL will buoy the overall market or at least software sector that I'm playing close attention to.

Personally, I have a handful of companies on my buy list including $CRM, $COUP, $ESTC, $SMAR, $POSH, but will only do so once they make it past earnings either scathed (lower price) or unscathed (peace of mind) :)

So we've put together our most anticipated earnings for all of Feb!

Keep an eye out!
21: $UIS
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Retailers Reporting Strong Comparable Sales
This week, several big-box retailers reported earnings. Despite the number of supply chain issues companies are facing and the elevated inflation consumers are seeing, comparable sales are still strong.

The data from these companies suggest consumers are in great shape. However, it's possible some of these sales might be from consumers doing some early holiday shopping, and next quarter's numbers might fall short of expectations.

An interesting stat to look into that might give some context to these great numbers is how many people have moved into higher tax brackets since the pandemic began. My thought is that although there were many people who were negatively impacted by it, there was (and still is) a large wealth transfer happening
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Upcoming Earnings Calendar! (Nov 15th-19th)
Earnings season is slowly coming to a close, but there are still several highly interesting events coming up. Here's next week's earnings calendar and what I'll for looking forward to.

  • $SE: insights on their global e-commerce expansion.
  • $NVDA: comments on their product availability and supply.
  • $WMT: Update on their Walmart+ membership and comments on inflation/labor shortage/supply chain issues.
  • $DLO although this stock is too richly valued for me, I like their business and I'm following it in case there's a good buying opportunity post-earnings.

Comment below which earnings report you are looking forward to the most!

Friendly reminder: you can automatically sync your portfolio's earning dates to your personal calendar with just a couple of clicks here.

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