In his first Executive Decision segment of "Mad Money" Thursday. Jim Cramer spoke with Lee Bird, chairman and CEO of At Home Group Inc. (HOME) , the home decor retailer.
Bird said At Home is experiencing a record year with record sales and profitability. The company has paid down its debt. At Home currently has 219 stores, but Bird said it can easily support 600 locations.
Bird said his company is taking market share from competitors. When asked about sourcing, Bird said 60% of its goods are imported from overseas, where prices are better.
Let's check out the charts from the comfort of our home.
In this daily bar chart of HOME, below, we can see that prices rallied from just $2 back in March and April to briefly over $22 in October. Impressive returns in anyone's book. Prices have made three rally highs since August and the easy conclusion would be that we are seeing some sort of top formation - a head and shoulders perhaps, or just a triple top. The problem with this conclusion is that major tops need something to reverse.
Yes, prices are up ten-fold, but the rally only went on for five months or so. Tops play out over months or even quarters to reverse a major advance. I do not consider five months a major advance. Five years? Yes. Prices have been crossing above and below the 50-day moving average line, and the slower-to-react 200-day moving average line is still rising and intersects down around $10.50 or so. The On-Balance-Volume (OBV) line shows weakness, which is not uncommon when a stock moves sideways. The Moving Average Convergence Divergence (MACD) oscillator shows weakness since August and is now below the zero line for a sell signal.
In this weekly bar chart of HOME, below, we can see that prices made a huge decline from 2018 into 2020. This downtrend was broken in June of this year and now prices are above the rising 40-week moving average line. The weekly OBV line made a low in April but has moved sideways the past four months, telling us that buyers and sellers of HOME are more in balance. The MACD oscillator is above the zero line but in a take profits sell mode.
In this daily Point and Figure chart of HOME, below, we can see a potential downside price target in the $12 area.
Bottom line strategy: In the short run we could see HOME decline further to the $12 area or even the round number of $10 to fill the gap from late July. After this potential decline we could see HOME make a large base with several months of sideways price movement. I am inclined to see how this new base plays out before making a commitment.
