PhotoSynth commented on a stock · Nov 28, 2024 03:36

Looking ahead..".

$e.l.f. Beauty (ELF.US)$ I think that sometime between this Friday and next Friday we are potentially going to see one more attempt by the shorts to take a stab at control as investors harvest tax losses for year end tax purposes , which they may get,… for the short term anyway….. unless the entire market breaks down,… which the jury still seems to be out on (visa vis what my observations are anyway, insofar as my opinion regarding pundits trying to whistle past the graveyard) when it comes to the new administrations potential implementation of tariffs.

Like the other companies in this sector, there is “some” exposure to China…

Nonetheless, this a great company with a bright future no matter how you slice it, and may well weather any market downturns better than many other sectors,…. as while financials and the Mag 7 are reaching for new highs, many are largely up against the very top of their price trend channels.

Conversely,E.L.F is one of those companies that appears to have already troughed. As such, it may be more “durable” over the long term. So while a market correction is quite possible over the next two months or so, it is far more likely to hammer those sectors that have been ripping, while those who’ve already taken their lumps, will likely either show less volatility than other sectors, or actually be the beneficiiary of fund flows coming out of other “high flying” sectors, thereby further supporting the increasingly limited downside elasticity in E.L.F, which may actually serve as a boon to the stock’s establishing a solid foundation in its upward trajectory.

So regardless of how the overall trades, I believe ELF is both at a level that will both show support against “overbought” conditions in other sectors, and is in a position to show far greater average returns than other more recently popular sectors of the market. My price estimates for the stock still hold, as does my belief that the influx of buying should start to manifest itself, especially as the shorts get flushed out in a squeeze that is inevitable as forward momentum really begins to pick up, despite some opinions that the sector wont recover the way I expect.

As even though many people put makeup in the discretionary spending category, …. most women that I talk to dont see it that way in any way shape or form, but see it as more of a staple subject to consumers choice of how much to pay for the various essential components of makeup that they want to buy. As far as that dynamic goes, this is more beneficial to ELF than any of the other players in the sector.

For those that are intereted, TORM is another company that I view almost identically to ELF. As it too has gotten hammered over the last several months, has a captive market with shipping LNG all over the world. And our LNG exports are at an all time high and are expected to greatly increase under the next administration driving revenue in $/tonnage rates higher, as well as continually increasing traffic, especially between the U.S. and Europe as well as Japan.

It trades at a massive discount to its fair value, has been subject to a lot of year end tax loss harvesting, excessivdly pressuring its stock price, but as such its massive dividend now sits at a whopping 27%, which TORM has largely been reasonably consistent at paying out. So, as I see it, TORM, now trading at $20.85, has an upside of 85 - 100%, and that just gets it back to fair value. Additionally, at this price I believe the downside elasticity from this level is extremely limited. As such, barring extraordinary circumstances, it would appear that TORM is poised to be one of 2025’s best stocks for both capital growth and dividend income. As such, Morningstar has given TORM a 5 star rating. ……. So for what its worth. Please your own homework.

Happy Thanksgiving evryone! 🦃

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