Todd Makes Bet On One Tech Stock Up 300% Since March
By Todd Gordon
January 12, 2021
Tech stock Sonos has risen nearly 300% since March, and TradingAnalysis.com founder Todd Gordon is betting on an even bigger move to the upside.
Sonos, which makes wireless speaker systems, has risen to a nearly $3 billion market cap after its surge. Its stock is up another 11% just this year.
Gordon said earnings growth should fuel more gains for the stock, especially after its last earnings report blew past analysts’ estimates. The company earned 33 cents a share in its September-ended quarter on nearly $340 million in revenue, beating expectations on the top and bottom line. Shares soared 30% the day after it reported those results in mid-November.
“For the current fiscal year 2021, they’re expected to generate sales of $1.44 to $1.5 billion, and that’s about 11% to 15% growth,” Gordon told CNBC’s “Trading Nation” on Tuesday.
The technical setup also looks strong, according to Gordon.
“You’ve broken up through the IPO high,” he said, pointing to its post-debut peak of $23.60 hit in August 2018. “I do like the breakout in Sonos. As we take a look on the weekly MACD, which is moving average convergence divergence, it is still pointed up, looks fine, and the daily [MACD] you can see has begun to try to push in turn up, which is a bullish continuation signal.”
Gordon initiated a dual approach for exposure to Sonos – he bought an outright position in Sonos through its shares and put on a position through the options market. He said an upside call option could prove useful should any news break of Sonos as a takeout target. He bought a 30 call option with June expiration for $3.15 per spread.
“Remember, if you buy a 30 call at expiration [you] need to be at least the premium paid above that to breakeven so it would be $30 plus $2.15 which I’m going to pay,” said Gordon. “Everything above $33 should be profit so a little lottery ticket in there.”
Disclosure: Gordon holds SONO.
Founder and Lead Analyst of Trading Analysis
Todd has been trading as a career for the last 20+ years. His goal is to not only provide insightful analysis, but to teach people how to think and grow as professional traders. Todd is a practitioner of Elliott Wave Theory and he uses it to gain an edge in the highly competitive trading arena. In addition to trading professionally, Todd has worked as an analyst and researcher at two different hedge funds. Click Here To Learn More about Todd Gordon