Key Calls This Week: Patrick and Impinj

By Linda McDonough • February 14, 2017

There are several key conference calls I’ll be listening to this week, but the two below are the most important to the Profit Catalyst Alert portfolio. Although we just sold Patrick industries, its commentary will influence how Winnebago, where we have a put position, trades.

Please note you will need to enter the conference ID number after dialing in and may be asked to provide your name to a recorded line. These calls are for listening purposes only and questions are traditionally limited to brokerage firm analysts.

No need to fret if you’ve got a busy schedule- I will be listening and will post updates for all subscribers.

Patrick Industries’ fourth quarter conference call has been scheduled. The details are below.

Thursday, February 16, 2017 at 10:00 a.m. Eastern Time.

Webcast Details:

Interested parties are invited to listen to a live webcast of the call on Patrick’s website at www.patrickind.com under “Investor Relations.”

Dial-In Details: The dial-in number for the live conference call is (888) 771-4371. The access code is 44270396.

Here’s what to listen for on the call:

Patrick supplies components to Winnebago (WGO). Look for commentary regarding Class A and other motorized RVs. WGO’s focus has been on these larger, less popular RVs. Last quarter wholesale shipments of Class A motorized RVs were down 4%. I expect this quarter’s wholesale shipment number to be similar. Shipments of trailers and “fifth wheel” trailers will also be discussed. These numbers are not as relevant to the WGO trade.
Look for any commentary on dealer inventories. Patrick and other component makers need to be sensitive to how many units RV dealers have on their floors. Any slow- moving product will hit the RV manufactures, WGO in particular.

Impinj’s fourth quarter conference call has been scheduled. The details are below.

Thursday, Feb. 16, 2017 at 5:00 p.m. ET

Webcast Details: Webcast from the company’s website at investor.impinj.com.

Dial-In Details: Listen to the call by dialing +1-412-317-6060. A telephonic replay of the call will be available one hour after the call and will run for five business days. It can be accessed by dialing +1-412-317-0088 and entering passcode 10098908.

Here’s what to listen for on the call:

Although we’d all love to hear that Impinj’s software is being tried out by Amazon for its checkout-less grocery store in Seattle, any confirmation on this call is unlikely. I am going to focus on the adoption of Impinj’s RAIN technology, specifically how many ICs (basically computerized tags) were delivered in 2016 and how many are expected in 2017. Estimates look for 5.6 to 5.8 billion tags in 2016 and growth of at least 20% in 2018.

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Derek: Las Vegas, NV

02/14/17 ‐ 1:20pm ET February 14, 2017 at 1:20pm ET

Sounds good, thx for the info!

Derek

DR083157

02/14/17 ‐ 4:18pm ET February 14, 2017 at 4:18pm ET

Linda, do you still recomend entering the PI trade at this late date?

Linda McDonough

02/15/17 ‐ 7:29am ET February 15, 2017 at 7:29am ET

Yes I do. PI reports this Thursday after the close. I think the company’s tagging technology has great applications in many industries, including retail. I have a $45 target on the stock and it is basically flat with where I recommended it.
Best,
Linda

DR083157

02/15/17 ‐ 10:58am ET February 15, 2017 at 10:58am ET

Which options do you like?

Linda McDonough

02/15/17 ‐ 2:43pm ET February 15, 2017 at 2:43pm ET

I currently have two option positions open, the HEES March (expire 3.17) calls with a $30 strike and the WGO March (expire 3.17) puts with a $29 strike. Both are trading well below my entry point and I think offer good value.
Best,
Linda

Rob Hoefsloot

02/15/17 ‐ 12:09pm ET February 15, 2017 at 12:09pm ET

Hi Linda, how does your system work when the markets enter into a long downtrend? Can we still expect similar results or should we expect decreased profits per trade?

Linda McDonough

02/15/17 ‐ 2:38pm ET February 15, 2017 at 2:38pm ET

Hi Rob,
One of the benefits of me looking for good put buying opportunities is the ability for subscribers to profit when the market turns south. I do not make specific market timing calls but rather look for industries unwinding and the companies that will suffer the most. In addition, all of my recommendations are chosen because they are profitable, growing earnings and trading at a reasonable value. While that is not a guarantee against a stock going down in a big market turn, I have found stocks like that perform better in a rocky market.
Best,
Linda

John

02/16/17 ‐ 9:35pm ET February 16, 2017 at 9:35pm ET

Linda,

Im new to options. Im learning more about them with my subscription to Jim Finks OFI. My question is this, can you increase your position (i.e. buy more contracts) on an existing option ? I ask because of your response to DRO83157. I know your trades are different from what Jim Finks doing . I just wanted to be clear on this . Thank you

John

Linda McDonough

02/17/17 ‐ 10:38am ET February 17, 2017 at 10:38am ET

John,
Welcome aboard. You are correct, the option trades that I recommend are very different than Jim Fink’s. I choose the strike and expiration for each trade based on when I think an event will occur and what kind of movement I expect the stock to make because of that event. Once the trades are over a week or so old, I would recommend maybe looking at a further out expiration date. The same goes that if the price of the stock has changed dramatically, another strike might be better. I do not base the trades on “mis-pricing” of options or on generating income from those that might expire worthless. Please feel free to ask about any specific option trade as each one becomes a different animal once it’s traded for a few days.
Best,
Linda

Guest User

02/17/17 ‐ 9:40am ET February 17, 2017 at 9:40am ET

What do you recommend we do with PI shares? sell, buy more?

Linda McDonough

02/17/17 ‐ 10:33am ET February 17, 2017 at 10:33am ET

I think Impinj is a great buy here. Despite being asked outright,the company would not confirm or deny Amazon being a customer. It did note that Amazon recently joined the RAIN alliance, which supports PI’s technology. In addition further on in the call an analyst asked if RAIN worked with smartphones, a supposed knock against PI. In fact, RAIN does work as a reader with smartphones so that would allow someone like Amazon to use the technology for “checkout-less” stores.
The stock is down because earnings guidance for the first quarter are lower than expected. This is due to technology investments. Revenue will be slightly higher than expected and tag IC growth for the year is expected to be 32%, higher than the 20% hoped for.
Best,
Linda

George Goldman Parvu

02/17/17 ‐ 11:01am ET February 17, 2017 at 11:01am ET

Hi Linda,
Do you have any new option (stocks) recommendation for next week…??? I just want to be ready and prepared……
Thanks.

Linda McDonough

02/20/17 ‐ 6:44am ET February 20, 2017 at 6:44am ET

Hi George,
I don’t have any trades planned for events this week but I should have some soon. Thankfully the market is closed today, which gives me some quiet time to find some new ideas. Stay tuned!
Best,
Linda

Melody Pfingsten

02/21/17 ‐ 1:02pm ET February 21, 2017 at 1:02pm ET

Linda, why do you think pi continues to go down?
I find it odd they are down close to 40 percent from recent highs.
I see 4 points ago you said great buy; just curious if you have any clues.

Linda McDonough

02/21/17 ‐ 3:32pm ET February 21, 2017 at 3:32pm ET

Melody,
PI is one of the most expensive stocks in the portfolio. When I recommended it I noted that the stock was trading higher on hopes of Amazon becoming a customer. It could be going down because a large investor bought the stock assuming Amazon would come on board quickly or it could be that some investors did not expect revenue growth to slow from 2016’s blistering rate. However, estimates do not appear to be dependent on Amazon buying product from PI or on higher revenue growth. When the numbers come in pretty much as expected and the company supports future estimates, a sharp sell off is often a good buying opportunity. However it is a risky one, so you could think about a $27 stop loss on half your position.
Best,
Linda

Thomas Browne

05/05/17 ‐ 12:52pm ET May 5, 2017 at 12:52pm ET

Hi Linda:
Thanks for another fantastic investment idea. PI reached your 41.00 target, and given today’s schizophrenic reaction to earnings (or the lack thereof), I decided to exit this one with a 44% gain in around 5 months. Quite incredible! Given the volatility, maybe it will be one to re-visit someday. I might have sold too soon, but you never go broke taking a profit, especially when an investment surpasses your goals. Thanks again!
Regards, Tom

Linda McDonough

05/05/17 ‐ 12:59pm ET May 5, 2017 at 12:59pm ET

Thanks for the kind words Tom! I’m always happy when a trade works out.

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