Small caps are doing well as third quarter earnings are coming out, notes Nick Hodge, editor of Family Office Advantage, suggests Nick Hodge, editor of Family Office Advantage.
Among small cap stocks, Dufry (DUFRY) is our most recent purchase. We’re buying it below US$5.50 to benefit from both the positive environment for small caps, but also the ongoing reopening.
Covid cases are dropping in a big way. The seven day rolling average of case counts in the U.S. has fallen by more than half since September -- from 175,000 per day last month to 72,000 per day today.
Travel is resuming. Dufry benefits from that as the operator of the Duty Free stores you see in airports. And that is being reflected in Q3 numbers, which came out today. It now has 1,850 stores open, approaching 85% of pre-pandemic levels.
Those stores are recovering well enough for the company to increase its free cash flow targets for 2021 to $13 million per month versus prior expectations to break even.
Margins are also improving thanks to greater-than-expected cost cutting measures. Dufry now expects to achieve $1.87 billion in savings this year up from the $1.2 billion forecasted in August.The stock recently had a dip, providing a nice opportunity to buy. Continue to buy/accumulate below US $5.50.
We also want to establish a position in Playboy (PLBY) below US$23.50. We traded it for profit recently as I was getting more familiar with the company.
I continue to view it as capitalizing on the social economy, metaverse, and cryptos/NFTs. It recently launched an NFT project called “Rabbitars,” which can be purchased to unlock experiences within the Playboy community.
Shares are stronger lately on the announcement. The company reports earnings on November 15th. Be patient and wait for a pullback below US$23.50 to get in.