This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

SuperValu Is About to Spoil

Stocks in this article: SVU WMT TGT SWY WFM GS GHL

Dividend investors who bought SuperValu to collect the fat dividend will hit the bricks by the weekend with a new lesson learned; sometimes it doesn't pay to chase yield.

SuperValu already was trading below the widely followed 200-day moving average, adding fuel to the liquidation based on chart technicals. Revenue is trending down in much the same way as the stock is falling.

SVU Revenue Per Share TTM Chart SVU Revenue Per Share TTM data by YCharts

Earnings appears even worse than revenue with large per share and over all losses in the last four years.

SVU Earnings Per Share TTM Chart SVU Earnings Per Share TTM data by YCharts

Safeway's stock didn't fall in afterhours trading in sympathy with SuperValu. While Safeway is not adding to shareholder value recently, the company may find itself in a good position if SuperValu begins to sell off or close stores. Target, Wal-Mart, and Whole Foods are executing fantastically, demonstrating if you provide what the consumer desires, profits will follow.

Insiders own less than 1% of the company, but in the previous six months they didn't sell enough to develop a clear bias. I like to see management's and investors' interests aligned. With SuperValu, I can't say it's the case.

Based on my experience with gap downs following news-driven events similar to SuperValu, investors will see short-term lows Friday or Monday. I expect the stock to open on Thursday near or under $4 per share with morning strength, followed by weakness as the day progresses.

Upon reviewing the SuperValu chart, I expect short-term resistance near $4 and again at $5. Round numbers often attract like a price magnet and repel, causing a bounce. Expect a lot of volume to trade near $4 a share, but also be prepared for bargain hunters to start positions under $3.50 as an entry.

If you are looking for Thursday's drop to signal a buying opportunity, you may find Friday or Monday to offer the best opportunity. There is no hurry jumping on board with SuperValu. Stocks dumping as a result of headline news normally take at least one, and more often two, good quarters before the market to find value. Watch for the second break above $5 as the one that "sticks."

2 of 3

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs