In the first Executive Decision segment of his "Mad Money" program Monday, Jim Cramer spoke with Satish Malhotra, president and CEO of The Container Store (TCS) , a specialty retailer of storage and organization products that last week posted strong third-quarter earnings on 11% same-store sales growth.
Malhotra said his company is the only retailer that dedicates more than 10,000 SKUs to home organization. Malhotra said The Container Store isn't immune to rising materials costs as well as transportation and labor shortages, but it has a great team that has been able to mitigate these pressures thus far.
Let's check out the charts of TCS, which was upgraded to Buy today by TheStreet Quant ratings service.
In this daily bar chart of TCS, below, we can see that prices have bottomed out over the past four months. This is obviously not a big bottom pattern but it is a start. Prices have rallied above the bottoming 50-day moving average line and have closed above the 200-day line. The On-Balance-Volume (OBV) line has mirrored the price action and made a saucer-like bottom. A rising OBV line means that buyers of TCS are more aggressive. The Moving Average Convergence Divergence (MACD) oscillator recently moved above the zero line for a new buy signal.
In this weekly Japanese candlestick chart of TCS, below, we can see an improving technical picture. Prices rallied with a large white (bullish) candle to close above the 40-week moving average line. The weekly OBV line has turned upward from late September. The MACD oscillator has crossed to a cover shorts buy signal.
In this daily Point and Figure chart of TCS, below, we can see a potential upside price target in the $23 area.
In this weekly Point and Figure chart of TCS, below, we used close-only prices and a five-box reversal filter. Here the chart suggests a long-term price target in the $80 area.
Bottom line strategy: After the sharp price gains over the past two weeks, TCS is likely to trade sideways to slightly lower for a couple weeks. Traders should let this period of consolidation/correction unfold before probing the long side. Buyers may need to risk below $10.
