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    Daily General Discussion and spitballin thread - April 30, 2021 Investing

    April 30, 2021

    Daily General Discussion and spitballin thread - April 30, 2021 Investing

    Daily General Discussion and spitballin thread - April 30, 2021

    Posted: 30 Apr 2021 02:01 AM PDT

    Have a general question? Want to offer some commentary on markets? Maybe you would just like to throw out a neat fact that doesn't warrant a self post? Feel free to post here!

    This thread is for:

    • General questions
    • Your personal commentary on markets
    • Opinion gathering on a given stock
    • Non advice beginner questions

    Keep in mind that this subreddit, and this thread, is not an appropriate venue for questions that should be directed towards your broker's customer support or google.

    If you would like to ask a question about your personal situation or if you are asking for advice please keep these posts in the daily advice thread as that thread is more well suited for those questions.

    Any posts that should be comments in this thread will likely be removed.

    submitted by /u/AutoModerator
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    Daily Advice Thread - All basic help or advice questions must be posted here.

    Posted: 30 Apr 2021 02:00 AM PDT

    If your question is "I have $10,000, what do I do?" or other "advice for my personal situation" questions, you should include relevant information, such as the following:

    • How old are you? What country do you live in?
    • Are you employed/making income? How much?
    • What are your objectives with this money? (Buy a house? Retirement savings?)
    • What is your time horizon? Do you need this money next month? Next 20yrs?
    • What is your risk tolerance? (Do you mind risking it at blackjack or do you need to know its 100% safe?)
    • What are you current holdings? (Do you already have exposure to specific funds and sectors? Any other assets?)
    • Any big debts (include interest rate) or expenses?
    • And any other relevant financial information will be useful to give you a proper answer.

    Please consider consulting our FAQ first - https://www.reddit.com/r/investing/wiki/faq And our side bar also has useful resources.

    Be aware that these answers are just opinions of Redditors and should be used as a starting point for your research. You should strongly consider seeing a registered financial rep before making any financial decisions!

    submitted by /u/AutoModerator
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    Legendary Wall Streeter Charles De Vaulx Dies Of Apparent Suicide

    Posted: 29 Apr 2021 08:51 AM PDT

    This is a tough game. Even the pros get slayed. This fund manager took his own life earlier this week. From $20B down to $1B. He was a hardcore value investor in a world that currently favors growth stocks (and rotating back into value).

    Here's a piece on his fund from MS.

    https://www.morningstar.com/.../behind-the-rise-and-fall...

    What I took away from this:

    1. you don't need to be a professional wall street guy to be a good investor
    2. don't over subscribe to any investing ideology (eg. growth, value, small cap, etc.). be able to be pivot and be flexible to adapt.
    submitted by /u/lamntien
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    Beijing’s Squeeze on Fragile Real-Estate Developers Is Getting Real - Wall Street Journal Article

    Posted: 29 Apr 2021 11:58 AM PDT

    Read the article here: https://www.wsj.com/articles/beijings-squeeze-on-fragile-real-estate-developers-is-getting-real-11619682390

    Getting completely lost in the current wild bull market is the fact that China's markets and economy have been starting to once again show cracks and signs of weakness. A lot of that is a product of the government starting to restrict their stimulus efforts in an attempt to keep the growth in debt and leverage in check. China has been the first market to really pull back stimulus, which probably isnt surprising since they were the first to be hit by and recover from Covid.

    In the above linked article, there are some very.... interesting happenings relating to the Chinese property market. I don't for one second believe that China would ever purposefully burst their property bubble, since that would be a self-inflicted wound that would do a massive amount of damage.

    That being said, as with any credit-fueled bubble, you tend to see these catch-22 situations pop up where regulators are forced to decide between:

    1. Allowing the bubble to grow larger and larger, losing any type of control over how it behaves and worsening the fallout when the bubble inevitably bursts.
    2. Clamping down on credit expansion, preventing the bubble from growing larger, but also risking being the pin that pops the bubble itself.

    They seem to be going for option 2 right now. China recently tried to curb credit growth in 2018, and that played a major role in the markets that year, where both bonds and stock indexes saw a mild decline on the year. Despite the impact, China didn't even end up actually reducing the debt in the system, but just slowed the level of growth.... until Covid hit and the floodgates were once again reopened to credit growth.

    Obviously, the thing to watch for is whether China can walk the tightrope of reducing leverage growth without triggering a cascading failure of the very fragile economy. One thing to keep in mind here is that China has greater ability to manage debt issues like this due to their economy not really being market-based, and the level of control the Gov't has over all the pieces in the puzzle. That's not to say that's all good - the ability to stall a forced deleveraging also means that the problems tend to metastasize quicker and to a far greater extent since the cans typically just get kicked down the road further. It's the classic moral hazard dilemma.

    Good Twitter Thread On This Article

    Quoting from Michael Pettis, who is always astute, and is a reasonably non-biased source on China's economy. Read thread here.

    "Important article by @Birdyword, who discusses the shift from bank loans to buyers' deposits in the liabilities of Chinese property developers. As usual I'm especially interested in the balance-sheet impact: as long as things are going well, the shift barely matters, but it matters a great deal if the developer ever gets into trouble and is unable to finish a project.

    This creates at least two problems. First, a default by a large developer can cause what is effectively a "run on the bank" as other buyers around the country become reluctant to put up further deposits with other property developers.

    This process can be highly self-reinforcing as it forces property developers to cut back further on operations, and so alienate even more deposits. Of course the more developers rely on deposits to fund their operations, the more likely it is that a problem with one large developer spreads to other developers around the country. Regulators can force banks to lend, but they can't force households to put up deposits.

    Second, Beijing will have to choose either to let households take the loss or to force banks to step in and make them whole. The former seems politically unlikely, but the latter means that what had looked like a reduction in banks' exposure to real estate developers was never a meaningful reduction at all but rather the conversion of direct liabilities into contingent liabilities. For all the regulatory agitation, in other words, there was never an improvement in financial-sector risk.

    For many years we've seen that "deleveraging" in China has meant reducing leverage in one part of the economy while increasing it in another. This isn't incidental. It is fundamental to the way the growth model works. "

    Some other general thoughts & notes

    • The Shanghai Composite index is down 6% in RMB terms (ASHR etf is down 13% in US markets). In general, there has been emerging weakness in Chinese indexes compared to US stock indexes. Obviously this can reverse, but it's worth noting the divergence.
    • The USDCNY exchange rate reversed in February for the first time since Covid hit in any meaningful way before starting it's fall again in recent weeks. Could be a sign that a durable trend reversal is coming, which tends to signal Chinese economic weakness from a market perspective.
    • China has been putting curbs on developers for a little while now ( since end of 2020) due to excessive speculation & credit growth - read more here on some of the details
    • Chinese property is the primary means of savings for Chinese citizens.
    • Beijing recently reduced restrictions on capital being allowed to leave their borders. This may potentially have an effect on property values and the exchange rate, although it's tough to say if and how much this will matter.

    Discuss Below

    submitted by /u/cbus20122
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    Twitter Q1: Revenue of $1.04B (+28.8% Y/Y)

    Posted: 29 Apr 2021 05:14 PM PDT

    Twitter slides 11% as Q1 users, revenue come in largely as expected

    • Q1 Non-GAAP EPS of $0.16 beats by $0.02; GAAP EPS of $0.08 beats by $0.10.

    • Revenue of $1.04B (+28.8% Y/Y) beats by $10M.

    • Twitter (NYSE:TWTR) is 11% lower in early postmarket trading after first-quarter earnings showed a beat on profitability, but revenues and user numbers that were in line with expectations - a tough sell in a quarter of tech earnings blowouts.

    • The company also offered subdued Q2 revenue guidance in line with expectations.

    • Revenues rose 29% to $1.04B, largely as expected.

    • Those gains reflected "accelerating year-over-year growth in MAP revenue and brand advertising that improved throughout the quarter," says Chief Financial Officer Ned Segal. "Advertisers continue to benefit from updated ad formats, improved measurement, and new brand safety controls, contributing to 32% year-over-year growth in ad revenue in Q1."

    • And monetizable daily active users grew about 20% to 199M, vs. expectations that the company would hit the 200M mark this quarter. That figure was up 7M sequentially.

    • Average U.S. mDAU came to 38M, vs 33M a year ago; international mDAU were 162M, vs a previous 133M.

    • Costs and expenses rose just 21% to $984M, and so operating income swung to a gain of $52M vs. a year-ago loss of $7M. Operating margin was 5%.

    • And net income swung to a gain of $68M, vs. a year-ago loss of $8M.

    • Net cash from operations rose to $390M from a prior-year $247M.

    • For Q2, it's guiding to revenue of $980M-$1.08B (vs. consensus for $1.05B), and a GAAP operating loss of $170M to $120M.

    submitted by /u/Chippye
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    Long/short personal portfolio construction

    Posted: 29 Apr 2021 10:16 PM PDT

    I've always had a keen interest in shorting (probably about 40 percent short at the moment), and was wondering how others who follow a long/short strategy construct their portfolios in terms of

    1) percent mix, 2) risk and sector exposure (e.g. only having long/short pairs of stocks in same sector) 3) ways to structure to work in both bull and bear markets

    In bull markets, I find myself drawn to shorting highly volatile stocks because anything with decent fundamentals seems like a bad choice...but that accordingly increases the drawdowns in my portfolio

    submitted by /u/rugarias
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    Alkemy and the Rebirth of Plastic Recycling Tech

    Posted: 29 Apr 2021 08:38 AM PDT

    Since the 1960s, plastics have been a ubiquitous feature of modern civilization. Unfortunately, plastic bags, wrappings and disposable cups are wreaking havoc on the environment, given their high concentration of petroleum, tendency to interfere with wildlife and inability to decompose in landfills. If a solution isn't found, plastics will wreck natural habitats, choke streams and pollute groundwater. In other words, they'll strangle the geosystem to death.

    The solution for a sustainable way to use plastics seems to be recycling. However, at present, only about 1/10 of plastics are recycled. A big part of such a small fraction is that no one has found a profitable and efficient way to recycle dirty plastics into value-added goods.

    Until now, that is. Alkemy Solutions just had their IPO, and these guys look poised to take the world of recycling and cleantech by storm. Alkemy came up with a unique process for the recycling of plastic bags, a usual non-starter for most recycling companies acrossthe world.

    Plastic bags recycling is economically non-viable and global plants won't touch it despite government incentives.

    Alkemy has both solved the economics aspect of this issue by making the recycling of dirty plastics a money-making machine. In fact, the process is so efficient that Alkemy's plant undertakes both recycling and the production of finished products from the plastics they salvage. The unique vertically integrated structure solves the problem of finding companies that will manufacture items from recycled plastics and saves the planet in the process.

    In a recent trial run in Israel, Alkemy cornered 70% of the market for recycled construction materials, polyethylene surfaces, and water-proof sealants.

    The company is developing a wide menu of products and additional applications for its recycled plastics. As they gain traction, reduced costs and global concern over the environment make for strong projections of a titanic increase in demand for Alkemy's recycled plastics. This is an opportunity to invest in the planet's future. Read up on em, do your own DD for crying out loud, but take a look, Alkemy really seems like a special one.

    "The future will be green or not at all"

    -Bob Brown

    https://www.entrepreneur.com/article/370671

    submitted by /u/_GreenNorth
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    Question about stocks risk and profit management

    Posted: 29 Apr 2021 03:03 PM PDT

    Hi all, I've got to ask you about opinions and suggestions on my current risk and profit management.

    I've been using it about a while to a success but now I'm thinking that it might be tweaked a little.

    So basically I have four Risk Percent thresholds of possible losses: 10%, 20%, 30% and 40%. Each of these is correlated to Decimal Amount of profit (reward part of risk and reward), 10% is 0,25; 20% is 0,5; 30% is 1 and 40% is 2.

    When setting stop loss/take profit I first set my entry price. From that I calculate stop loss by doing simple equation: SL= Entry - (Entry * Risk Percent).

    After SL is calculated I calculate take profit: TP= [(Entry - SL)* DecimalAmount ]+Entry

    So what do you guys think about it? I was thinking that I might be taking too little profit, especailly that I'm more of a swing/position trader.
    What would you guys suggest?

    submitted by /u/badwolfus
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    Basic Overview of the FDA Drug Approval Process

    Posted: 29 Apr 2021 05:35 AM PDT

    Welcome to Part I of my Pharma Stocks Guide. I see a lot of interest in pharmaceuticals and my goal is to provide people with a little more information so they can make an informed decision. Today's topic will be: The FDA Drug Approval Process

    The FDA Drug Approval Process can be broken down into 4 main sections: Pre-Clinical, Clinical Trials, Post Clinical, and Post Approval.

    Pre-Clinical

    1. A drug's journey begins in the lab where researchers will look at thousands of compounds and eventually select a few that they believe are promising.
    2. After gathering initial data on the compound the next step is further testing. This will be done either In Vitro (testing done in a petri dish/ test tube) or In Vivo (animal testing).
    3. After successful testing, the pharmaceutical company will submit an Investigational New Drug (IND) application to the FDA. This includes all of the data gathered so far and a plan for testing the drugs on humans (clinical trials).
    4. The FDA has 30 days to review the IND application and ensures human lives aren't at unreasonable risk. If the FDA accepts the IND, we move on to section 2 (Clinical Trials)

    Clinical trials

    5) Phase 1 studies consist of 20-100 healthy volunteers that last for several months. The exception being a drug used in cancer patients will be studied in patients with that type of cancer. The goal is to assess safety by monitoring how the drug affects the body as a whole, how long it lasts in the body, and any side effects that may appear. Results of Phase 1 studies do not indicate effectiveness. I'll repeat this because I believe it's important: results of Phase 1 studies do not indicate effectiveness. As of 2018, the FDA states roughly 70% of drugs will pass phase 1.

    6) Phase 2 studies consist of several hundreds of people with the disease/condition. Studies here typically take months- 2 years. The goal here is to observe effectiveness of the drug in the intended patient population. This is where we first get to see if the drug truly works. Safety and side effects are monitored further as well. Approximately 33% pass phase 2.

    7) FDA and pharmaceutical company meet to discuss plans for large scale Phase 3 studies

    8) Phase 3 consists of several thousands of participants. These studies typically last 1-4 years. The goal here is to continue to observe effectiveness and safety as well as seeing how different doses of the drug or in combination with other drugs affects the outcome. It is important to note that because the studies are larger and for a longer duration, the results are more likely to show long term or less common side effects. Should either happen, it almost always affects the stock negatively. Approximately 25-30% of drugs will pass Phase 3.

    Post Clinical

    9) The pharmaceutical company files a New Drug Application (NDA). The NDA tells the FDA everything about the drug up to this point. This includes Pre-Clinical data, data from all clinical trials, as well as how the drug will be manufactured, and proposed labeling.

    10) The FDA has 60 days to decide if they will accept the NDA or reject it. If accepted, the drug is now under FDA review by a review team. Each team member will review their particular portion of the NDA. For example, the medical officer reviews all clinical data, the pharmacologist reviews all Pre-Clinical data, a chemist evaluates the drug's chemical compound and stability, etc. If the NDA is rejected, the company and FDA will have to work together to resubmit a new NDA at a later date.

    11) An inspection team is sent to the manufacturing site of where the drug will be made to assess for any issues that may affect the production of the drug.

    12) After a thorough assessment of the reports from each review team member and the inspection team (typically 6-10 months), the FDA will either approve the drug or issue a Complete Response Letter (CRL) stating the drug and the application cannot be approved in its current form. This isn't the end of the drug's journey however, a company can work with the FDA and resubmit a NDA.

    Post Approval

    13) Phase 4 Clinical trials (often referred to as post marketing surveillance trial). These are studies conducted in a large scale (thousands of people) to continue to monitor the safety and efficacy of the drug after FDA approval. The company is required to send periodic updates on safety and efficacy to the FDA.

    Looking at some General Numbers

    • · From start (Preclinical research) to finish (FDA approval) a drug's journey typically takes 10 years
    • · Some studies suggest the overall chance a drug gets approved is 10%. Other studies suggest 14%.
    • · If we go by the FDA numbers, lets say we have 100 potential drugs. 70% will make it to phase 2. We now have 70 hopeful drugs and only 33% make it to phase 3. We now have 23 hopeful drugs and only 25% make it to pass phase 3. So now only 5-6 drugs have made it this far (5-6%).
    • · These numbers don't exactly match because certain drugs like say for your skin are easier to get approval than cancer drugs
    • · Regardless of which approval percentage you go with, studies show 2 common themes: The FDA drug approval percentage is low and the drug approval chance for cancer drugs is extremely low (usually around 3%). Also, fuck cancer.

    In Summary

    • Preclinical Trials: the company does lab research on the drug via petri dishes or animal testing. No humans yet.
    • IND (Investigational New Drug) application is sent to FDA. If approved we move on to clinical trials
    • Phase 1: small group of healthy volunteers. Goal to observe safety. Timeline several months. 70% pass rate
    • Phase 2: medium sized group of people with the intended disease/condition. Goal to observe safety AND efficacy. Timeline months - 2 years. 33% pass rate.
    • Phase 3: Large scale study for long duration. Goal to further assess safety and efficacy. Timeline 1-4 years. 25-30% pass rate.
    • Company then files NDA and will undergo FDA review. Hopefully approval after that.
    • Phase 4: Studies safety and efficacy of the drug after FDA approval and in a large population.
    • From start to finish, drug's typically take 10 years to make
    • The overall approval chance for a drug is quite low (10-14%)
    • Please please be careful/contain your excitement when you see positive Phase 1 results. It really doesn't mean much.

    This is a general overview of the FDA drug approval process. I hope this has been informative to some and if so, I may try to write some more quick guides in the future regarding pharmaceuticals.

    submitted by /u/CheckOutMyDoubleDs
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    Broker recomendation for Spain

    Posted: 29 Apr 2021 11:21 PM PDT

    Hello and good Morning. I am from spain and have been using Etoro, buying partial shares has been really helpful but I don't trust Etoro anymore, and since I do want to do some dividends, they already take 30% tax when it's 19% in spain. I am looking for a European, Spanish Broker for really long term investing. Wanna hear y'all opinions ok some i have researched, and if you have any other please let me know... I have looked into Degiro, but the problem is i either open one account and add monthly untill I pass the 20k mark, since they will let people borrow my shares and transfer it to their other safer account. Interactive Broker seems really good, i just didn't understand much their fees, and it seems like they would be greater for more Active trading, and more money. And then there is Mexem, who is practically interactive brokers in Spain, i also did not understand their fees... If anyone use these broker or recommend any other please let me know. I appreciate it.

    submitted by /u/Teuuz
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    Listed Residential Real Estate Firms?

    Posted: 29 Apr 2021 09:41 AM PDT

    I've been thinking a lot about the combined effects of higher inflation, higher taxation and expanded tax credits. It's led me to a focus on "starter homes" or low-middle for-sale housing. RE can hedge inflation and I believe the significantly increased credits for larger, low income families will make home ownership within reach for these former perpetual renters. I think the lower end of for sale housing should see the incredible gains of the past year continue and expand to formerly "bad" neighborhoods when the current residents financial position improves.

    With this being said, is there a passive investment vehicle for this prospectus? The hassle and risk with buying a couple homes myself isn't really appealing to me.

    Anyone have any ideas?

    submitted by /u/chunk121212
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    $NIO when is the proper upside ?

    Posted: 29 Apr 2021 10:56 AM PDT

    I have read several articles on $NIO with great news as below ⬇️

    I am read more about the EV Market and where it is going including what is happening in Europe and what is happening in China and the US Obviously. There is a serious mismatch between current results, future income, assets and expectations.

    Despite the fact that $NIO consistently announces good news and have a forward looking strategy with great investments coming in the future as a investor I just don't get why the share price is not booming!

    It is so frustrating to see. I am in for the long haul but obviously once wants to see results. If your team do the all the right things, training, the right players etc you expect them to win, right now I just see other teams winning and they not doing 10% of what $NIO is doing. 😩😩

    What is happening with $NIO$NIO investing

    submitted by /u/ricardomackenzie
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    Apple stock price reaction to stellar Quarterly earnings

    Posted: 29 Apr 2021 11:33 AM PDT

    Apple is a great long term buy according to my opinion. My Portfolio is 100% Apple. I believe this company has so many more avenues to venture into and maintain healthy growth over the following decade. I think Apple is going to beat the market return by a significant margin over the long term. My Risk tolerance is high, so no diversification.. :)

    For anyone wondering why the stock is down following blowout earnings like this, there are two main reasons:

    1. Covid has given tremendous tail wind to the stock by boosting its Products and services revenue: People are working from home, on their devices longer than ever boosting the need to purchase new products and buy services. However, market is slightly worried this trend may reverse when world finally deals with Covid in upcoming 6 months to a year.
    2. Sustainability of current growth: Iphone was a big driver for growth this year due to 5G Upgrades. But, this may slow down as more and more people upgrade to Iphone 12 family and hence when Iphone 13 (or 12s) comes out, the demand might not be so strong. The 2022 - 2023 demand for new Ipad/Mac/Wearables may also decrease as people use their devices less given opportunities for travel and recreation open up. So, again sustainability of this stellar growth is something that worries the market and market is pricing in the fact that next year numbers might show muted growth.
    3. Chip shortages: Apple along with all other companies that use semiconductor chips in their machines are facing chip shortages. Apple's this Quarter was not impacted at all because of Supply buffers, but next Quarter onwards Apple might see 4-5 BN in lost revenue due to this external factor which it has little control over. Having said that, Apple has superb negotiating skills and Tim Cook is a Supply Chain guy himself, so I am sure, Apple will be fine on this front in the long term.

    TLDR: Apple is an amazing growth machine but stock is still down after stellar Quarterly results due to concerns over Post Covid demand of products and services, Lower Iphone upgrades once majority upgrade to 5G, and Chip Shortages. The stock is pricing in these concerns, but over the long term, Apple has been and will reward its investors.

    submitted by /u/flying_cofin
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    Brazil's Recovery - could be a good time for some Brazilian stocks

    Posted: 28 Apr 2021 08:58 PM PDT

    TL;DR - Brazil *may* be over the covid hump and their economy could start recovering. Might be a good time to look at some stocks as they start to swing up.

    I'm not going to post specific, in depth TA or research into any particular stocks, I just thought I'd try to pay back for some of the great tips i've benefitted from.

    Their economy is still way down just like ours was and is just showing signs of swinging up. If they can come close to how our economy has recovered there should be some opportunities to at least double some investments.

    They appear to be over the hump, but again, we don't know if any future strains will change that:

    https://graphics.reuters.com/world-coronavirus-tracker-and-maps/countries-and-territories/brazil/

    Here's some of the larger companies:

    https://en.wikipedia.org/wiki/List_of_largest_Brazilian_companies

    I invested in several airline stocks last year, of course they panned out well. Brazil has 3 different large airline companies that have almost equal market share, LTMAQ filed for bankruptcy last year because of the pandemic.

    https://en.wikipedia.org/wiki/LATAM_Brasil

    https://finance.yahoo.com/quote/LTMAQ/key-statistics?p=LTMAQ

    and GOL :

    https://finance.yahoo.com/quote/GOL?p=GOL&.tsrc=fin-srch

    I jumped on GOL a couple of months ago, and it's started rising

    Azul:

    https://finance.yahoo.com/quote/GOL?p=GOL&.tsrc=fin-srch

    ​

    Again - this is not an in-depth DD, i'm not an expert in stocks, Brazil, covid or the economy. to me, some of these looked like they will print. Just like I did last year, i looked at what the stock was doing pre-covid and looked for the largest potential gains, and did some rudimentary stock analysis.

    Personally, i'm in

    GOL - 100 - $7.94

    AZUL - 60 - $21.80

    ITUB - 500 - $5.04

    BBD - 300 - $4.30

    I'm tempted to buy some LTMAQ, would be curious to get anyone's thoughts on that. yes, big risk, but of course they also dropped the largest and could gain back the most, but they are way underwater...

    submitted by /u/Fletcher_Thunder
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    DD: Mother's Day is May 9th - Go Get Her Some Nice $FLWS

    Posted: 29 Apr 2021 05:19 AM PDT

    1-800-FLOWERS, or FLWS, just smashed their 3rd quarter earnings, so I wanted to write up a bit of due diligence on the company. In spirit of today's DD, here's: a piece of digital art representing the Tulip bubble of the 1600's.

    Intro: If you're unaware of 1-800-FLOWERS than you probably live in a cave where no sun shines and it's cold and lifeless, but I'll give you a pass because you probably also believe it's an over-the-phone floral delivery service. Good news, it's not. 1-800-FLOWERS is a leading e-commerce provider of products and services designed to inspire more human expression, connection, and celebration which today reported results for its Fiscal 2021 third quarter ended March 28, 2021. This colorful description comes from the marketing department so to give a better idea, it operates in three segments: Consumer Floral; Gourmet Foods & Gift Baskets; and BloomNet. The company offers a range of products, including fresh-cut flowers, floral and fruit arrangements and plants, gifts, dipped berries, popcorn, gourmet foods and gift baskets, cookies, chocolates, candies, wine, and gift-quality fruits, as well as balloons, candles, keepsake gifts, jewelry, and plush stuffed animals. Alright, that's enough- use Google if you want to know more of the basics.

    Note: This is a cyclical business. If it wasn't clear to you already, I'm going to state now that their quarterly results vary based on the celebrated holidays within their time frame. For example, in the year 2020, the quarters that ended in March & September had roughly the same amount of Net Revenue but the quarter that ended in June had 1.5 times that amount. The Holiday season quarter ending in December more than doubled that very same quarter ending in June.

    Metrics:

    1. ROIC, as of today for the TTM, is 19.66%. Over the last 5 years, starting at 8.11%, FLWS ROIC has steadily increased and is now more than twice it was only 5 years ago. (GuruFocus.com) ROA & ROE are both also currently greater than 10%, but I'm not usually as focused on those metrics. (Finviz.com)
    2. Institutional Ownership is 88%. In previous posts of mine, I've mentioned that I like seeing high enough IO to inspire confidence from the big guys, but a margin large enough to allow more big guys to come in and drive the price up with bulk buying. 88% is a great spot for Institutional Ownership. (Finviz.com)
    3. D/E, as of prior to this most recent earnings report, is .34. I hate seeing debt, whether it be short or long term but the upside here is that FLWS has proven how to make lending work for them. At any rate, they are far from their own worst enemy, but here's the hot button topic that everyone is talking about: FLWS has a 27% Short ratio. As far as I'm concerned, this is way too high for such a strong business, but it's more important to note that this ratio is very likely based on cyclical, quarterly moves in the stock price. In my opinion, this is a risky, but fair short term trading strategy for a cyclical business like this. I believe, based on these fundamentals, that there's way too much risk betting against FLWS, even quarterly, but Hedgies gonna Hedge. (Finviz.com)
    4. PEG Ratio was at .8 at market close yesterday for the next 5 years. For the last 5 years, EPS grew 24% without emphasis on their ecommerce business. This is with a P/E ratio of only 15, I mind you. With today's quarterly report, this is only going to get stronger. If you need me to spell this out, I will- their margins are only going to get stronger from here on out AND they're still undervalued. (Finviz.com)
    5. Operating Cash Flow doubled from 2019 to 2020 and then more than doubled from 2020 to the TTM. (Yahoo Finance)
    6. As of this morning, FLWS raised their share buyback program to $40 million. This management team knows what they're doing. They're taking full advantage of the shorting a cyclical business by purchasing their own shares when they know the price will be undervalued. All of this value comes right back to the shareholders for free.

    Bear Case: No company is perfect, so it's important for me to poke holes in any potential investment I'm considering. The bear case for 1-800-FLOWERS is consumer-centric. My research talking to people about the service and products have largely revolved around the same issue: Flower quality. Despite FLWS offering many different products and services, it appears that most people I have spoken to have felt somewhat disappointed by the flowers that have been delivered. In my own personal opinion when I have used the site for flower delivery, I did not experience the same- but again, that's just my own opinion. There were plenty of positive comments made about other offerings, but consumer sentiment is a piece of the puzzle when considering supporting a company, so I've taken this into account and will continue to monitor any changes.

    Subjective Analysis: I think FLWS has what it takes to really bloom (sorry, I had to). A track record of a strong financial foundation, growth on the horizon by way of their Bloomnet and focus on their Ecommerce presence, and the ability to do all this with great margins and leadership team that wants shareholders to succeed.

    Disclaimer, because apparently that's a thing now: The above is not advice, just an analysis meant for educational purposes.

    submitted by /u/F1rstxLas7
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