Sell Now, Buy Later

Written by GSCR Staff   
Tuesday, 17 June 2014 08:38

 

If anyone watched the golf U.S. Open this past weekend you were probably as bored as we were.

The winner, Martin Kaymer won by 8 shots with machine like precision especially on the greens. Kaymer is a German, so go ahead and apply Arnold’s Terminator accent to the machine reference.   He was almost robotic. This is indicative of a real problem in a game that Tiger Woods brought to the mainstream. He has not won a major since 2008 and is currently on yet another injury hiatus. The game needs young stars to maintain any growth.

 

Moving this thought on the game of golf to the investing world brings us to our prior Market Monitor pick Calloway Golf Company (NASDAQ – ELY - $7.96). The stock is up over 17% since our initial highlight a little over a year ago, reaching a height of $10.27 in early April this year. We called for $11 by mid May and it never happened.

 

The time may be here to sell ELY and take the profit. The Company has hitched its wagon to golf exclusively, and the decline of golfers and TV viewership will be a detriment to long term revenue. The Company downgraded it sales forecast for 3Q 2014 versus 2013 by up to 5% down Y-o-Y. Additionally, the stock is very bearish on the short and long term Daily Moving Average technical analysis metric. While the products may be strong, decreases in revenue will lead to more selling. We say take the money on this one. Look to buy back in around $5.00 on ELY.

Have a great day!

 

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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