walmart micron options

Breaking Down WalMart, Micron – Plus Amazon, Apple, Biotech, SP500

This column is my opinion and expresses my views. Those views can change at a moments notice when the market changes. I am not right all the time and I do not expect to be. I disclose all my positions clearly listed on the page, and I do not trade my account on the stocks spoken of in this column unless fully disclosed. If that does not work for you stop reading and close the page. Do not bother me or harass me.

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Breaking Down WalMart, Micron & Amazon, Apple, Biotech, SP500- The Mott Capital Monster Week In Review

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It was a short trading week, but the S&P 500 managed to put up new records, with the index closing over 2,600 for the first time. From this point forward one needs to ask themselves what will stand in the markets way from continuing to rise for the balance of the year? With earnings season over, a no surprise Fed meeting in December, and Tax reform nearly complete, there is very little, if anything from holding the market back till after the new year.

As we noted earlier in the week, the underperformance by Hedge Fund’s could push the S&P 500 onward and upward towards 2,700

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#Micron Technology ($MU) just continues to power higher in 2017, with shares up about 126 percent. Even more amazing shares are now up nearly 150 percent over the past 52-weeks.

Micron closed out the week right at resistance, at $49.75. Should the price rise above that resistance, the stock likely has much further room to run, perhaps as high as $58.

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micron options

Micron Options

Micron options for expiration on January 19, show massive amounts of open interest, with nearly 87,000 contracts of open interest at the $50 strike price and 55,000 contracts of open interest at the $55 strike price. With a cost of roughly $3.5 for the $50 strike price options, it represents a notional value of almost $30.5 million in open interest. It also tells us that the price of the stock needs to rise to a price of $53.50 just for those options to break even.

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#Amazon shares also broke out last week, another positive sign for the market.


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Joining #Apple

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Biotech shares continue to improve as well, as measured by the Nasdaq #biotech #ETF ($IBB)

The ETF continue to show it is strengthening after a rough October and start to November. Should it continue to trend this way, a move back to $320 seems on the way. However, the iShares Biotech ETF ($XBI) has failed thus far to break out of its downtrend.

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WalMart – Breaking Down eCommerce Growth

It is still confusing when thinking about #Walmart and what the company’s report of 50 percent revenue growth for eCommerce actually means. After reviewing the earnings release, and some other data points I can’t figure out what the revenue was and it what it grew too. The only metric is that comp sales in the US increased by 2.7 percent that eCommerce was 80 bps of that growth. Total sales for the quarter in the US grew by 4.3 percent, to $77.7 billion.

WMT Chart

WMT data by YCharts

WalMart is now up by 40 percent in 2017, a massive rise for a such a slow growing company. Walmart is currently trading at nearly 21 times one-year forward estimates, and well above its historical forward PE ratio.

WMT PE Ratio (Forward 1y) Chart

WMT PE Ratio (Forward 1y) data by YCharts

The same can be said of its one-year forward price to sales ratio.

WMT PS Ratio (Forward 1y) Chart

WMT PS Ratio (Forward 1y) data by YChart,

It still remains that eCommerce is not independently reported, or broken out, so it can only make me believe the ecommerce number is not that large. Also given the low 4.3 percent overall growth rate, the number could not be that big. In fact, y/y revenue growth rates had regularly been declining until just recently.

WMT Revenue (Quarterly YoY Growth) Chart ecommerce

WMT Revenue (Quarterly YoY Growth) data by YCharts

Could we assume that if eCommerce grew by 50 percent, it represents most of that $3.1 billion in sales growth in the US? If that is the case, total US ecommerce represents only $9 billion of the company’s $123 billion in the quarter? Possible?

Certainly not as impressive when thought about it now.

Until Tomorrow.

Free Articles Written By Mike:

Why Micron Is Poised To Rise 20%

Netflix Stock May Rebound 17%, Options Trades Indicate

Why The Worst Isn’t Over For IBM’s Stock

Amazon, Microsoft, and Apple May Fall Up To 11%

Qualcomm and NXP Are Cheap Based on Marvell Takeover

JP Morgan and Citigroup Are Facing More Decline

Why Biotech Sage Therapeutics Is Overvalued

Why NVIDIA’s Valuation May Be A Giant Bubble

We offer a lot of great commentaries all week talking about the major and relevant market events. Be sure to subscribe to get all our free commentaries sent directly to your inbox or follow us on Twitter.


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Tags: #SP500 #biotech #amazon #walmart $wmt $xbi $ibb $amzn $aapl $spy $spx