A humorous look at the companies that caught our eye, for better or worse, this week
Lululemon Athletica (STAR)
Business quiz! Shares of Lululemon Athletica surged to a record after the company: a) unveiled a new line of “breathable, sweat-wicking and fully drool-resistant" athletic apparel for newborns and infants; b) opened the first Lululemon Land theme park, just outside Los Angeles, featuring the world’s largest yoga mat and other must-see attractions; c) announced that revenue jumped 22 per cent and earnings per share soared 25 per cent, both topping expectations, prompting the company to raise its full-year outlook. Answer: c.
Michaels (STAR)
Whether you enjoy making little houses out of Popsicle sticks, knitting sweaters for the kids or using a hot glue gun to stick all of the bowls and plates together in the cupboard as a YouTube prank – the look on my wife’s face was priceless! – Michaels has all the arts and crafts supplies you need. Investors got an even better surprise when the retailer’s stock jumped this week, lifted by better-than-expected results for the second quarter and by hopes that a resumption of U.S.-China trade talks will prevent the imposition of new tariffs in December. Lighten up, honey!
Dirtt Environmental Solutions (DOG)
Contrary to what you might think, Dirtt Environmental Solutions has nothing to do with hauling waste or remediating toxic industrial sites. However, it did dump a pile of dirt, figuratively speaking, on investors’ heads this week: Shares of the company, which designs and manufactures custom interior spaces, dropped after it cut its full-year forecast, citing the loss of certain projects and revised timing of others. With Dirtt now expecting revenue to be roughly flat this year instead of up by mid single digits, investors could use a shower.
Descartes Systems Group (STAR)
“I think, therefore I am.” – philosopher René Descartes. “I think my stock went up this week, therefore I made some money.” – Descartes Systems investors. Shares of the company that provides software to logistics, transportation and other businesses jumped after Descartes posted a 20-per-cent increase in revenue and a 30-per-cent rise in income from operations. With global trade turmoil creating more demand for Descartes’s services and the company now expecting fiscal 2020 EBITDA to be at the top end of its prior range, investors’ philosophy is to buy more shares.
BetaPro Canadian Gold Miners 2X Daily Bull ETF (DOG)
Mommy always said, “Don’t talk to strangers, look both ways before you cross the street and, whatever you do, stay away from leveraged ETFs.” But you didn’t listen to Mommy, did you? After rallying for weeks amid falling interest rates and growing trade tensions, the price of gold tumbled more than 2 per cent on Thursday – one of its biggest drops of the year – as rhetoric between China and the U.S. eased. Owning an ETF that delivers twice the return of an index of gold mining stocks was a great idea – until gold stocks got clobbered.
John Heinzl