Buy Alert: Kohl’s Corp. (KSS)

By Jim Pearce • January 11, 2017

TRADE INSTRUCTIONS
Date: January 11, 2017
Name: Kohl’s Corporation
Symbol: KSS
Type: Open
Limit: Buy below $43

TRADE TARGETS
Holding Period: 4 months
Target Return: 11.6%
Annualized Return: 34.8%
Target Price: $48
Stop Loss Level: $37

COMPANY DESCRIPTION
Kohls Corporation operates department stores in the United States. It offers private label, exclusive, and national brand apparel, footwear, accessories, beauty, and home products to children, men, and women customers. Kohls Corporation was founded in 1962 and is headquartered in Menomonee Falls, Wisconsin. Link to company website.

TRADE RATIONALE
The retail sector got crushed last week after Macy’s and Kohl’s reported holiday sales that came in about 2% below expectations, with Kohl’s also reducing guidance for full year earnings by 8%. Kohl’s share price dropped 20% on the news, after having already dropped 10% in December when rumors of a weak Christmas shopping season surfaced after lackluster November numbers were released.

Sure, the stock deserved to get knocked down as a result, but according to our RPM it is now oversold and likely to bounce back soon. KSS briefly traded below its lower Bollinger Band last week before crossing back above it yesterday, so it should be able to move back up towards its 50DMA with minimal resistance now that it appears most of the selling is over.

However, it may take some convincing to get institutional investors buying back into the stock, so I am putting a four-month target holding period on KSS to encompass its next two quarterly earnings reports. The year-end report is due on February 23rd, by which time we should have a very good idea as to which way this trade is heading.

NOTE: KSS is optionable

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Larry Johnson

01/11/17 ‐ 12:28pm ET January 11, 2017 at 12:28pm ET

Filled at $40.50 @ TDAmeritrade

Derek: Las Vegas, NV

01/11/17 ‐ 1:10pm ET January 11, 2017 at 1:10pm ET

Bought July $47.50 call
Sold Feb $47.50 call

Net Debit $1.73

black arrow

01/11/17 ‐ 3:33pm ET January 11, 2017 at 3:33pm ET

at risk of asking a dumb ? so is this a calendar spread?
And a personal note hope you and yours are hi & dry

Derek: Las Vegas, NV

01/12/17 ‐ 3:15pm ET January 12, 2017 at 3:15pm ET

Hey BA!

Yes this is a calendar spread/horizontal spread.

The family and I are doing well, enjoying a good start to a new year. I hope the same for you. Are you going to the Wealth Summit in April?

Derek

black arrow

01/12/17 ‐ 3:27pm ET January 12, 2017 at 3:27pm ET

after 2016 don’t have enough wealth – sorry.
We are doing fine My wife and I even got in some great X-C skiing at Craftsbury, VT twice before weather turned bad. Last Sunday we got the 3 kids out. They like alpine better, but had fun on X-c too.
Thanks for the info that its a calendar. I may just try the calendar I dumped all bio/health related upon the surprise from the new Pres on he is upset with pharma. good to see some green on the screen.
Cheers

Derek: Las Vegas, NV

01/12/17 ‐ 3:35pm ET January 12, 2017 at 3:35pm ET

Awesome! That’s one thing I love about Vegas, we can drive 20 minutes to hit the slopes and still enjoy the warmer weather in the valley.

Now might actually be a good time to go long bio/heath while the the sectors are down. I’m sure they will rebound at some point. Personally I like buying stocks when others finds them unfavorable.

Derek

black arrow

01/12/17 ‐ 3:49pm ET January 12, 2017 at 3:49pm ET

Thanks for the tip Derek!
Hows this for dedication? Just returned from optometrist an hour or so ago had what I call the seeing eye dog test,. things are not totally clear but got in the Cal spread. I picked up the mid kid SS [read step son] now time to go back to get the youngest SD she is at knitting. Thanks to you I squeezed in another trade. GTG my next trade[s] will be after hours for tomorrow AM.
Thanks for sharing, I can see you are smarter than the average…

black arrow

02/01/17 ‐ 2:00pm ET February 1, 2017 at 2:00pm ET

Hi Derek,
On the 17 Feb 17 47.5 is your strategy to let it expire ‘worthless’?
I crack up at that term – wont be worthless to you or I.
Cheers

Derek: Las Vegas, NV

02/01/17 ‐ 3:16pm ET February 1, 2017 at 3:16pm ET

Hey BA,

Yes, just let it expire and then sell another one. A day or two before expiration I’ll look and see what the best option is.

Derek

Jeff

01/11/17 ‐ 1:13pm ET January 11, 2017 at 1:13pm ET

KSS BTO April 17 37.5 put
KSS STO April 17 47.5 put
Spread filled for 6.03c

Maria R

01/11/17 ‐ 4:24pm ET January 11, 2017 at 4:24pm ET

Did a put credit spread Apr 17 40/45 @$3.00 Cr.

Thanks, Jim and Jeff.

Jeff, I would not have the courage to do a put credit spread until your post.

Jeff

01/11/17 ‐ 6:07pm ET January 11, 2017 at 6:07pm ET

Maria I recognize you from OFI you have skills ?

Maria R

01/11/17 ‐ 6:31pm ET January 11, 2017 at 6:31pm ET

🙂 thanks for the vote of confidence, Jeff

black arrow

01/11/17 ‐ 7:23pm ET January 11, 2017 at 7:23pm ET

Maria did you buy or sell the 40?
Thats a Super credit fer sur

Maria R

01/11/17 ‐ 7:32pm ET January 11, 2017 at 7:32pm ET

BTO Apr17 $40
STO Apr 17 $45
I hope it works out. Still dipping my toes in.
Thanks to all of you. And black arrow, slowly learning charts. Thanks

black arrow

01/11/17 ‐ 3:49pm ET January 11, 2017 at 3:49pm ET

The credit spread sounded GREAT – but it would not fill fer me. Not sur yet if Dereks spread is a calendar?

And although Larry got a better price than I, [again] I did get filled well in the guidelines
This is where Jim Pearces system is cool in my in my opinion, cause left to my own devices I would not have thought of buying KSS.
Thanks for a new one Jim

Derek: Las Vegas, NV

01/12/17 ‐ 3:20pm ET January 12, 2017 at 3:20pm ET

Same here, I would not thought of KSS as a new trade, but I do like the trade rationale.

black arrow

03/21/17 ‐ 10:37am ET March 21, 2017 at 10:37am ET

Hey Derek

Larry Johnson

01/18/17 ‐ 10:04am ET January 18, 2017 at 10:04am ET

Double-downed on the $2+ drop: picked up a couple APL $45 call options on the cheap as well as another 100 shares of the stock at $39.06/share.
Let’s see what happens.

Larry Johnson

01/18/17 ‐ 11:33am ET January 18, 2017 at 11:33am ET

Well, that was a nice, quick, tidy, little profit…LOL
Thanks goes out to Credit Suisse for that downgrade that was probably already built into the stock price to begin with.

Dramatic License

03/20/17 ‐ 1:44pm ET March 20, 2017 at 1:44pm ET

Any idea what has been up with KSS lately? Seemed solid till just now.

Jim Pearce

03/20/17 ‐ 4:14pm ET March 20, 2017 at 4:14pm ET

I have not seen any news on it today, but I did notice that trading volume on Friday was more than double its recent daily average so that suggests either an institutional investor or share repurchase program may have been at work. Will keep an eye on it.

Dramatic License

03/20/17 ‐ 4:18pm ET March 20, 2017 at 4:18pm ET

Thanks, Jim. Something is going on there. 🙂

Stephen Weil

03/21/17 ‐ 10:00am ET March 21, 2017 at 10:00am ET

My stop loss is at $37
should I let it kick in cost me 40.35?

Jim Pearce

03/21/17 ‐ 10:04am ET March 21, 2017 at 10:04am ET

The war on retailers is a bit mystifying to me, especially when esoteric metrics are being used to justify it such as this one: http://blogs.barrons.com/stockstowatchtoday/2017/03/20/the-biggest-loser-kohls-tumbles-4-8/?mod=yahoobarrons&ru=yahoo&yptr=yahoo. In the final analysis it is profitability that matters most, so I don’t feel the current sell-off is justified based on the logic being used to drive it.

Stephen Weil

03/21/17 ‐ 10:07am ET March 21, 2017 at 10:07am ET

sounds like hang on a bit and hold?

Jim Pearce

03/21/17 ‐ 10:12am ET March 21, 2017 at 10:12am ET

Yes. By rule, I have to sell any portfolio holding that closes below its stop level (dividend adjusted), but you don’t have to. Unless something material arises to justify the selling then I’d view this drop as more of a buying opportunity since the economy is still growing and people haven’t stopped spending money on clothes.

Stephen Weil

03/21/17 ‐ 10:13am ET March 21, 2017 at 10:13am ET

thanks

Derek: Las Vegas, NV

05/11/17 ‐ 9:23am ET May 11, 2017 at 9:23am ET

Decent earnings, but not good enough. Kohl’s’ comparable store sales decreased 2.7%, which the market doesn’t seem to like.

https://www.zacks.com/stock/news/260185/kohls-corp-kss-beats-q1-earnings-despite-comps-decline?cid=CS-ZECO-FT-260185

Derek

Jim Pearce

05/11/17 ‐ 9:48am ET May 11, 2017 at 9:48am ET

If Macy’s hadn’t also reported today then I think the reception to Kohl’s results would have been better, but right now they are all being painted with the same brush. I’m convinced there is the opportunity for some longer term trades in the retail sector, as not all of them are going to succumb to Amazon despite what the stock market seems to be telling us.

Dramatic License

05/11/17 ‐ 9:50am ET May 11, 2017 at 9:50am ET

Ugh, really wishing I had just sold 15 minutes ago.

Jimmy Cook

05/12/17 ‐ 9:26am ET May 12, 2017 at 9:26am ET

If you thought things couldn’t get any worse, here is some news from Marketwatch I saw this morning.
Kohl’s price target cut to $43 from $47 at Cowen & Co.

Will Wingfield

05/12/17 ‐ 11:11am ET May 12, 2017 at 11:11am ET

KSS sold at $36.57 just prior to your note. Had gotten out of the options earlier. Thank you, Jim.

Janis Bell

05/12/17 ‐ 3:27pm ET May 12, 2017 at 3:27pm ET

What deja vu! I went to sell KSS, it was no longer in my portfolio as a stop had been triggered last month at the exact same price I am reading now.

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