kohls stock

The Inside Story: Why Marc Chaikin Made Kohl’s Stock (KSS) his Bullish Stock of the Week

On Sunday, September 3, 2017, Marc Chaikin published his weekly Market Insights piece. As he always does, he calls out an opportunity, either bearish or bullish, that looks particularly ripe.

This Sunday, Marc said that Kohl’s stock (KSS) was a great value, and poised to move higher.

Below is the pick:

Bullish Stock of the Week: Kohl’s Stock (KSS) – $40.10

Kohl’s Corp. has a bullish Chaikin Power Gauge rating with positive Chaikin Money Flow, suggesting institutional accumulation. KSS has bested Wall Street estimates in each of the last 4 quarters, and analysts are raising their estimates for the 3rd quarter earnings that are due out on November 9th. With bricks and mortar retailers all but written off for dead in the face on Amazon’s success in e-tailing, it is time to look for the best of the retailers that have been beaten down in the selling stampede.

– Marc Chaikin | Market Insights 9/3/17

Why did Marc select Kohl’s stock? Let’s break down some of Marc’s process in finding Kohl’s.

1.) Marc started with a top down view. The Retail Industry has been hammered. This has been due to the continued success of Amazon and to a lesser extent Walmart, catering to buyers online rather than in the “bricks and mortar.” Marc felt, and the Chaikin Power Gauge stock rating for Kohl’s confirmed, that these fears may have been overdone, and there should be some upside potential in retail.

2.) Earnings Surprise is a big factor in the success of a stock. Not only is there positive momentum in a positive surprise, typically stocks react positively when there is a surprise. Then the Wall Street analysts get to work. They digest the earnings report, and then adjust their estimates for future quarters higher. Each of these estimate raises should positively impact the stock prices. In this case, Kohl’s stock has routinely beaten earnings estimates. So, one earnings surprise can lead to multiple positive events for the stock.

3.) Kohl’s Money Flow turned positive and that means that institutions have begun to notice that Kohl’s is a decent value. Institutions will put tailwinds in the stock as they start to buy large blocks of stocks. At its core, the price of a security is dictated by supply and demand, and if there is large demand coming from institutions (which can dwarf individual investors) then that is good for the future direction of the stock.

4.) Finally, Relative Strength beginning to move from red to green means that the stock is undergoing a “personality change,” and might be moving into a very bullish pattern.

Marc clearly looked at all of these factors, and came out with its rating. The stock has responded positively, moving up 5% so far this week.