Re: For trades to work, you gotta be right twice. Any suggestions on that?
It depends on how many trades we're talking about.
If you don't succeed on the first, then go for two out of three. -- Heh, heh.
I can explain my rationale for WSM if it helps any. When I saw they had corrected more than 30%, it didn't make sense to me that the company's actual performance justified a price drop that severe. I thought it was more of a valuation play where it got to be overvalued to the point it couldn't generate enough buying pressure to keep rising, thus it was a normal correction and a buy the dip candidate.
This is when I looked to how the analysts had WSM rated.
Jefferson Research -- Buy
Argus Research -- Buy
The Street - Buy
CFRA - Buy
Reuters - Hold
Credit-Suisse - No coverage
Of the analysts following WSM, from the sources I use, 32 analysts follow WSM.
23 Analysts - Bullish
6 Analysts - Hold
3 Analysts - Sell
CFRA says:
WSM is riding the wave of strong spending on home decor driven by pandemic, work at home, and leisure at home. WSM is executing at a higher level of sales growth and wider margins to drive profitability. Key drivers are focused executive leadership and better aligned stores to addressable market. In-house design, digital platform, and culture are driving strong results, as evident YTD in FY 22. We think supply chain bottlenecks, especially in China and Vietnam, do create uncertainties, but we think these worries will be in the rear mirror in FY 23.
Valuation:
WSM seems fairly valued with a PEG of 0.82x that is inline with the Specialty Retail industry median of 0.89x, although their PE is 12.07x, above the industry median of 9.41x.
When you toss all of this information into a tumbler and turn it around several times, it indicated to me that WSM was a Moderate Buy so I added in moderation.
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