For his "Executive Decision" segment of Mad Money Friday night, Jim Cramer sat down with Lee Bird, chairman, president and CEO of At Home Group (HOME) , the home goods retailer with shares that are off 78% for the year as investors fear Chinese tariffs will crimp earnings.
Bird explained that At Home is still largely misunderstood by investors. He said the company is the low price leader in their category, coming in under competitors like Wayfair (W) , but they simply don't get credit for it. That's about to change, however, as At Home has a plan to start bringing their low prices into focus for customers.
When asked about the effects of tariffs, Bird said that they've been working for over a year to migrate and mitigate the effects of tariffs and will continue to do so. In many cases they can bypass the middleman and deal directly with manufacturers, all of which helps to keep costs under control.
Let's check and see if some of this positive news is being reflected in the stock price.
In this daily bar chart of HOME, below, we can see that prices have been in a bruising decline the past 12 months including a big downside price gap in early June. Over the past three months the price action and some of the indicators have started to improve a bit.
HOME is now above the bottoming 50-day moving average line. The line had a negative slope for much of the past year. The 200-day line is still bearish and intersects well above the market around $17. The pace of trading has been heavier the past three months indicating a possible shift in ownership from weak hands to stronger hands.
The daily On-Balance-Volume (OBV) line showed improvement in April and May before prices gapped lower suggesting that some investors were surprised by the decline. The OBV line improved last month indicating that at these lower levels buyers are acting more aggressively.
The Moving Average Convergence Divergence (MACD) oscillator gave a cover shorts signal in late June and it is about to cross the zero line now for an outright buy signal.
In this weekly bar chart of HOME, below, we can see the sharp price decline from the middle of 2018. From $40 down to $5 is a game changing decline. Prices are well below the declining 40-week moving average line.
The weekly OBV line is bearish from 2018 to July of this year when it moves up sharply. The MACD oscillator is crossing to the upside for a cover shorts buy signal.
In this Point and Figure chart of HOME, below, the price gap gets "filled in" with "O's". An upside price target is indicated.
Bottom line strategy: HOME has been battered and bruised but not left for dead. Buyers have been attracted in recent weeks. Experienced investors with patience can probe the long side of HOME for a recovery to the $10-$12 area and maybe $18 longer-term.