3 actions have a good week
Jhe second half of 2022 is doing much better than the first six months of the year. The market rose for all four trading days in July, and Monday’s trading holiday didn’t stop the good times from rolling.
Many stocks are up. Celsius Fund (NASDAQ: CELH), Soft (NYSE:CHWY)and Levi Strauss (NYSE:LEVI) three stocks are coming in for investors this week. Let’s see why they are on the rise.
1. Celsius Fund
It’s not just the sparkling drinks from Celsius Holdings that are giving people a boost these days. Celsius stock soared 17% this trading week ahead of Friday’s action.
The growth has been heartbreaking for the flavored canned beverage distributor, which it says burns calories by improving short-term metabolism rates. You can find Celsius cans everywhere these days, and the revenue gains are accelerating.
- 2019: 43% revenue growth
- 2020: 74% revenue growth
- 2021: 140% revenue growth
Revenue soared 167% in the first quarter of 2022. In a market where analysts cut price targets as stocks slid, a bullish Mark Astrachan from Stifel reversed the trend last month by raising its price target for Celsius from $67 to $77. The stock closed just above $77 on Thursday. It’s up to you, Stifel.
One of the biggest surprises is the poor health of pet stocks over the past year. Remember when we all took in dogs and cats in 2020 when we realized we wanted furry companions to weather the storm during the pandemic? Weren’t we supposed to spoil them for years? Stocks that were supposed to be the obvious beneficiaries of the trend went to the dogs.
Chewy might be ready to teach the bear market a new bullish trick. After three straight quarters of disappointing financial results, Chewy finally rose after last month’s financial update. The online retailer of pet food, accessories and other supplies surprised analysts with a small profit. It had failed to beat earnings forecasts in its previous three quarterly updates. The 20.6 million active customers may be only 4% higher than a year ago, but Chewy has seen average spend per customer jump nearly 15% over the past year.
Investors are ready to heat up again with Chewy. The stock has climbed 22% over the past four trading days.
3. Levi Strauss
Let’s finish things off with denim. Levi Strauss released encouraging financial results shortly after Thursday’s close. Revenue increased 15%, up 20% in constant currency, to $1.47 billion for its second fiscal quarter. Analysts were only modeling $1.43 billion on revenue. The pace of earnings was even better as the jean icon came out on top with adjusted earnings up 26% to $0.29 per share. Wall Street was content with adjusted earnings holding steady at the $0.23 a share it had posted a year earlier.
With investors watching margins more than ever these days in this climate of inflation and supply chain constraints, it’s refreshing to see revenue growth outpacing revenue gains. Levi Strauss also increased its quarterly dividend by 20%. It now yields 2.9%.
The report was not perfect. Levi Strauss simply reaffirmed his guidance on both ends of the income statement. It continues to see revenue growth of 11-13% this fiscal year. The $1.50 to $1.56 he is targeting in terms of adjusted earnings per share is only a 4% upside in the middle of that range. After a solid pace in its last quarter, it suggests that the second half of the financial year will not follow analysts’ expectations. The silver lining is that we’ve seen Levi Strauss offer conservative advice before. In the meantime, we have a growing apparel stock trading at less than 11 times this year’s earnings with a yield of almost 3%. The upgrade is as comfortable as Levi Strauss jeans.
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Rick Munarriz holds positions at Celsius Holdings, Inc. and Levi Strauss & Co. The Motley Fool holds positions and endorses Celsius Holdings, Inc. and Chewy, Inc. The Motley Fool has a Disclosure Policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.