2. Now let's look at Groupon (GRPN), which operates online local commerce marketplaces that connect merchants to consumers by offering goods and services at a discount worldwide.
Groupon traded up 5.53% on Monday, closing at $6.49 per share.
- Monday's range: $6.18 - $6.63
- 52-week range: $5.18 - $12.76
- Monday's volume: 20,992,651
- 3-month average volume: 17,487,200
Groupon is also a rounded bottom breakout, since it closed over the 50-day simple moving average yesterday.
Groupon was having a tough time and has traded down 56% since January. The share price gapped down and the stock faced hugely bearish days.
The bears were in control. Now, price action is back on the climb. Groupon's share price is up 22% since May 7. This trade needs to confirm a bit, and hopefully today the price action will pull back a little to offer a better entry.
I'd look for an entry around the t-line at $6.25, but the stock could be a buy on any positive strength. I'd set my stop below Friday's low of $6.12.
As with all rounded bottom breakouts, the ultimate target is the 200-day simple moving average, which is at $9.16. That will be a 41% trade to the upside, and then you won't need to use coupons to buy anything.
Right now, Groupon is offering a coupon on their share price. It's cheap and has potential. Stay long until you see a confirmed sell signal, or a close below the t-line.
Here's a counterpoint from TheStreet Ratings on Groupon:TheStreet Ratings team rates GROUPON INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate GROUPON INC (GRPN) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Internet & Catalog Retail industry. The net income has significantly decreased by 846.8% when compared to the same quarter one year ago, falling from -$3.99 million to -$37.80 million.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Internet & Catalog Retail industry and the overall market, GROUPON INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to -$20.72 million or 336.49% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- The share price of GROUPON INC has not done very well: it is down 19.28% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- GROUPON INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, GROUPON INC reported poor results of -$0.14 versus -$0.10 in the prior year. This year, the market expects an improvement in earnings ($0.11 versus -$0.14).
- You can view the full analysis from the report here: GRPN Ratings Report