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The “Dip” is Here - U.S Stocks to Watch this Quarter

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The trumpets have sounded, and the “dip buyers" are out in full force to capitalize as seasonal trends on the S&P 500 are sticking to proper form this year.

Not only has seasonality been a thing this year, but another catalyst that could ignite investors to drive prices higher is the current U.S company earnings reports.

Here are a couple of EasyUSD stocks to watch over Q4:

Lululemon Athletica Inc. (LULU)

This popular athleisure company famous for its athletic apparel and accessories for women and men could be set for lift-off over the fourth quarter of 2021 and beyond.

Lululemon Athletica, which operates in two main segments, namely company-operated stores and direct to the customer, has been firing on all cylinders. The activewear pioneer which business was booming pre-pandemic is widely expected to grow earnings at an annualized rate of 34% from 2020 to 2023. "Yoga wear brand Lululemon is set to beat its targets, bolstered by its strength in athletic clothing and forays into experiential retail, footwear, and personal care, along with a digital push” - Poonam Goyal

Looking at the valuations, one might expect the company to be overvalued, but just like its sought-after premium appeal and accessories, it's worth paying extra. Wall Street is exceptionally bullish on the stock, lagging the broader S&P 500 with targets upward of 22% over the next year.

  • Share Price: $ 417.38
  • Market Cap: $ 52.38 billion.
  • P/E Ratio: 63.9x
  • P/B Ratio: 19.6x
  • Dividend (Annual Yield %): N/A
  • 52 Week range low of $ 269.28 and $ 437.32 share high.
  • Next earnings date: 9 December 2021

Outlook – Brand relevance is everything nowadays, and Lululemon's premium-priced brand is exceeding expectations, evidenced by the 58.1% increase in revenues over Q2. One of the key growth drivers for the company is the men’s category which has outpaced the woman’s segment over the last two years. CEO Calvin McDonald said: "This year, we will likely achieve the goal we set to double our men's business, and we remain on track to quadruple our international business by 2023, if not sooner,"

The Lululemon brand is also famous under teens, which according to a recent Piper Sandler clothing brand survey, the company ranked 5th overall under this lucrative demographic. This puts the past quarter's 41.2% growth in online sales into perspective despite disruptions.

"While supply chain disruptions are having ripple effects across the global economy, Lululemon's premium status affords the company the ability to invest in more air freight ahead of the important holiday shopping season while still expanding its gross margin” - Neil Patel

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Marathon Digital Holdings Inc (MARA)

Marathon Digital Holdings, a digital asset tech company that focuses on blockchain ecosystems and the generation of digital assets, has gained over 404% YTD, and more could be in store.

The cryptocurrency miner has become a point of interest again after the recent rally in Bitcoin and the latest Securities and Exchange Commission (SEC) approval of a Futures based Bitcoin ETF.

Marathon Digital is one of the largest enterprise Bitcoin self-mining companies in North America and sells the coins to generate revenue. The company's latest second-quarter earnings report showed a 220% increase in revenue from Q1 to Q2 but missed analysts' year-over-year estimates on revenue. But keep in mind that Marathon Digital still grew YoY revenue by an astounding 10,147% from the second quarter of 2020, which should be noted.

  • Share Price: $ 53.77
  • Market Cap: $ 4.87 billion.
  • Forward P/E Ratio: 18.2x
  • P/B Ratio: 8.4x
  • Dividend (Annual Yield %): N/A
  • 52 Week range low of $ 2.06 and $ 57.75 share high.
  • Next earnings date: 12 November 2021

The company has increased its Bitcoin mining activities during Q3 and produced 1 252.4 new-minted bitcoins, a 91% production increase quarter-over-quarter. The crypto-miner increased its total bitcoin holdings to around 7 035, with a market value of approximately $336.3 million.

Marathon CEO Fred Thiel had this to say about scaling operations: "In the second quarter of 2021, we continued to effectively scale our operations by increasing our hash rate 196% sequentially from 0.7 EH/s at the end of the first quarter to approximately 2.09 EH/s by the end of June,”

Outlook – The digital asset self-mining company has led other popular blockchain and crypto companies like Riot Blockchain Inc. (RIOT) by some margin over the last year, which could continue. Marathon is ramping up activity, and with a flurry of bitcoin future ETFs set to hit the market, new interest in cryptocurrencies should send the price of bitcoin soaring. While the bitcoin miner’s share price is still aligned with the price fluctuations in bitcoin, we could see some upside to the end of the year if the heard starts to pile in.

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Sources: EasyResearch, Bloomberg, Koyfin, Lululemon Athletica Inc., Jennifer Saibil, Neil Patel, Marathon Digital Holdings Inc, Investor’s Business Daily, Adelia Cellini Lineker, CNBC, Securities and Exchange Commission (SEC), SeekingAlpha.

Take note: Stock data was taken on the 19th of October 2021 during the U.S stock market open. 

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Barry is a market analyst with GT247, with a wealth of experience in the investment markets. Now in his tenth year in the markets, Barry "The Beef" Dumas brings a combination of technical analysis and fundamental insights to the table

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