'Twas The Week Before Christmas

Written by GSCR Staff   
Friday, 20 December 2013 08:19

So I was in line at Chipotle (NYSE – CMG) the other night at one the Company’s highest volume stores in town around 6:30, dinner time.  They were out of rice, shredded beef, and chicken.  Someone screwed up royally, and probably cost the company several thousand dollars as people were turning around and leaving.  I wonder if someone was held accountable as running out of food at dinner time is inexcusable.

A bigger screw up in the IT world occurred yesterday when Target (NYSE – TGT) announced that 40 million of its credit cards were compromised in a massive security breach.  As today’s tagline states, it is the week before Christmas with 5 big days of shopping left.  Can you think of a bigger PR problem that could hinder the all important holiday sales?  It is surprising that the stock only took just over a 2% loss on Thursday.  I wonder if the Company hired the same consulting firm who rolled out the Obamacare website.

Speaking of security, it may be time to review one of our picks from earlier in the year in the Market Monitor.  We featured LifeLock, Inc. (NYSE – LOCK - $15.75) back in February and the stock is up nearly 65% since that time.  LOCK is a mixed bag when it comes to our three point checklist for small caps in the market.  The bears are growling when it comes to the technical analysis for both the Daily Moving Average and the Put/Call ratio.  On the bullish side, a net accumulation run of nearly 10% on over 850,000 shares traded per day has taken place over the last three months.  Finally, the simple valuation offers a slightly bullish picture.  The trailing 12-month P/E is a massive 2,625!  The forward 12-month P/E is of 36 is still fairly high but consensus analyst estimates are for 20% growth in revenue in 2014.

We see headlines like the Target fiasco as a great catalyst for stocks like LOCK

Additionally, the firm continues to expand its product portfolio and make key acquisitions.  If you are a short termer it may be time to take some profits for what looks like a bumpy ride over the next couple of months, otherwise the $18 level is a nice target for 2014.

Have a great weekend!

Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours.

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