Credit: Shutterstock photoWhat's Happening
Home goods retailer At Home ( HOME ) will report its first-quarter numbers after the market close on June 7. Analysts forecast earnings of $0.27 for the quarter. HOME has been a top performing stock over the last year, with shares up 10.1% in 2018.
Technical Analysis
HOME was recently trading at $34.83, down $3.00 from its 12-month high and $16.43 above its 12-month low. Technical indicators for HOME are bullish with a strong upward trend. The stock has recent support above $34.00 and recent resistance below $37.00. Of the eight analysts who cover the stock, seven rate it a "strong buy", and one rates it a "hold". HOME gets a score of 85 from InvestorsObserver's Stock Score Report.
Analyst's Thoughts
Ongoing strength in the housing market has kept HOME shares trending higher. While rising rates do pose a risk to the overall housing market, and housing-related stocks, for now rates remain incredibly low on an historic basis, and it will take several additional rate hikes before rates reach a point that could materially impact the sector. Analysts remain very upbeat on HOME, and expect to see the company grow earnings by 24.8% per annum over the next five years. Traders are looking for a small earnings beat for the quarter, with a whisper number of 28 cents per share, a penny above the consensus. Analysts have set a $37.13 price target on the stock.
Stock Only Trade
If you're looking to establish a long stock position in HOME, consider buying the stock under $34.75. Sell if it falls below $31.25 or take profits if it gets to $40.00.Bullish Trade
If you want a bullish hedged trade on the stock, consider a July 25/30 bull-put credit spread for a 40-cent credit. That's a potential 8.7% return (64.8% annualized*) and the stock would have to fall 12.7% to cause a problem.
Bearish Trade
If you want to take a bearish stance on the stock at this time, consider a July 40/45 bear-call credit spread for a $0.35 credit. That's a potential 7.5% return (56.1% annualized*) and the stock would have to rise 15.8% to cause a problem.
Covered Call Trade
If you like the stock but wish to lower your cost basis on a new position, you may want to consider a July $35 covered call. Buy HOME shares (typically 100 shares, scale as appropriate), while selling the July $35 call for a debit of $32.00 per share. The trade has a target assigned return of 9.3%, and a target annualized return of 70.6% (for comparison purposes only).The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Originally published on InvestorsObserver.com
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.