Cricut ( CRCT) is another name I love, but get frustrated no options market exists yet.
The name received some looks during COVID as a possible at-home play, but I see it more similar to Etsy ( ETSY) over the longer term, rather than just another at-home play.
The stock, like many other names over the past two days, has broken out higher. That said, I'm not looking to chase today or buy for a trade, however, if we can successfully retest the $34 to $35 area, and not break below the 50-day simple moving average (SMA).
Unfortunately, the stock is so new that we haven't done much testing of moving averages. We did "test" the 50-day SMA earlier this month with the stock bouncing strongly off the level back in the first week in July then a second time a few days ago. Some might not consider this enough data to call it a test, but I think it qualifies.
On the secondary indicator side, we have Full Stochastics, parabolic stop-and-reverse (PSAR), and MACD all turning bullish. These are in conjunction with price, so I consider this price action confirmation, not bullish divergences. Etsy brought the crafting market to life in terms of being able to sell what you create. Cricut is a brick-and-mortar type of play of the crafting market. It has a strong user base and an integrated platform with connected machines, subscriptions, and an accessory and materials market. My wife actually has a Cricut machine to create some projects. If you ask me which machine, I couldn't tell you. If you ask me how it works. Again, no clue. But I'm not the target market. She's part of groups that share all kinds of crazy projects and creative uses for different Cricut products.
No debt. Growing revenue. Profitability. Decent insider ownership and institutional ownership. This checks a lot of boxes. One concern is a lock-up release forthcoming and earnings with high expectations in the first half of August. Either of these catalysts could create an opportunity to get into the name at lower prices.
Last quarter, revenue grew 125% to nearly $324 million. Connected machine revenue grew 148% and subscription revenue grew 140.6%. These are massive numbers. Really, this is the Peloton Interactive ( PTON) of at-home crafting. International revenue skyrocketed 253% and presents a huge growth opportunity for CRCT as it is still only one-tenth of the company's revenue. While user growth rose 76% year-over-year, paid subscribers more than doubled in the same time frame and still only represent one-third of total users. Almost as impressive is the Average Revenue Per User rose from $7.20 to $9.96.
Overall, I view CRCT as a long-term play with significantly more upside than current analyst price targets. Once we get through the initial lock-up release, which I see as a potential buying opportunity if there is a sell-off, CRCT should be a long-term, core holding retail related name.
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