Report
Dave Nicoski ...
  • Ross LaDuke
EUR 42.38 For Business Accounts Only

Vermilion Compass: Weekly Equity Strategy

Upgrading Discretionary, Downgrading Staples

New developments outlined in today's report are of the bullish variety. The way we see it, the positives continue to heavily outweigh the negatives. With positive new developments and essentially nothing new to be worried about, our view remains bullish. Buy the dips.

· Sector Relative Strength Rankings & Weighting Recommendations. We are upgrading Discretionary to overweight; RS on the cap-weighted Sector (XLY) is breaking out to all-time highs. Additionally, we are downgrading Consumer Staples to underweight; RS is breaking below major support for both the cap- and equal-weighted Sectors (XLP and RHS, respectively). Reduce exposure to Staples and add to Discretionary. One actionable idea is Chipotle (CMG)... see charts below and pages 2-3.

· Emerging Market Equities With Major Bullish Price & RS Inflections. Helped by a weaker dollar and a recent surge from Chinese equities (ASHR, FXI), the MSCI EM index (EEM) shows major bullish price and RS inflections. RS on the EEM (vs. the S&P 500) is breaking above a multi-year downtrend, a welcomed sight considering foreign equities have lagged for years, and EM is about as risky as it gets (i.e., this is a positive for risk sentiment)... see page 4.

· Commodities, Baltic Dry Index At Multi-Month Highs. The Baltic Dry index and commodities (Bloomberg Commodity Index, Copper) are hitting multi-month highs, classic signs of an improving economy... see page 5.

· Key Levels. The S&P 500 is breaking above 3155 short-term resistance and has officially “filled the gap” from 6/11/20. The path of least resistance remains higher, however the highs from June in the 3181-3233 zone is near-term resistance to watch. Support levels to watch include 3155, 3085, and 3000. The growth-oriented Nasdaq 100 remains leadership; key support levels to watch include 10,300 and the 20-day MA..
Underlyings
1-800-FLOWERS.COM Cl A

1-800-FLOWERS.COM is a provider of gifts. The company's gifts include fresh flowers and a selection of plants, gift baskets, foods, confections, jewelry, candles, balloons and plush stuffed animals. The company's segments are: Consumer Floral, which includes the operations of the company's primary brand, 1-800-Flowers.com, FruitBouquets.com, Flowerama, Personalization Universe and Goodsey; Gourmet Foods and Gift Baskets, which includes the operations of Harry & David (which includes Wolferman's), Cheryl's (which includes Mrs. Beasley's), The Popcorn Factory, DesignPac and 1-800-Baskets (which includes Simply Chocolate); and BloomNet Wire Service, which includes the operations of BloomNet and Napco.

Aero Grow International Inc.

Alamos Gold Inc.

Alamos Gold is engaged in the exploration, mine development, and the mining and extraction of precious metals, primarily gold. Co.'s s primary asset is the Mulatos Mine and holds the mineral rights to the Salamandra group of concessions in the State of Sonora, Mexico, which includes several known satellite gold occurrences.

Alibaba Group Holding Ltd

Alio Gold Inc

Alio Gold is a junior resource company engaged in the operation, development, exploration and acquisition of resource properties in Mexico.

Amazon.com Inc.

Amazon.com serves consumers through its online and physical stores. The company also manufactures and sells electronic devices, including Kindle e-readers, Fire tablets, Fire TVs, and Echo devices, and the company develops and produces media content. The company provides programs that enable sellers to grow their businesses, sell their products in its stores, and fulfill orders through the company The company serves developers and enterprises of various sizes, including start-ups, government agencies, and academic institutions, through its Amazon Web Services segment, which provides a set of global compute, storage, database, and other service offerings. In addition, the company provides services, such as advertising.

B2Gold

B2Gold is a Vancouver-based gold producer with three operating mines (two in Nicaragua and one in the Philippines), a fourth mine which has entered into the commissioning and testing phase in Namibia and a portfolio of development and exploration assets in Mali, Colombia, Burkina Faso and Nicaragua. Co.'s reportable operating segments include its mining operations and development projects. The Other Mineral Properties segment consists of Co.'s interests in mineral properties which are at various stages of exploration. The Corporate and Other segment includes corporate operations and the Bellavista property in Costa Rica which is classified as held for sale.

Central Garden & Pet Co A

Central Garden & Pet is a producer and distributor of products for the lawn and garden and pet supplies markets. The company has two segments, Pet and Garden. The Pet segment is a marketer and producer of pet supplies. The company's principal pet supplies categories are dog and cat, aquatics, bird and small animal, wild bird feed, live fish and small animal, and animal health products. The Garden segment markets and produces a range of brands, including Pennington, The Rebels, AMDRO, Lilly Miller, Ironite, Sevin, and Over-N-Out. The company's principal lawn and garden product lines are grass seed, wild bird feed, insect control products, lawn and garden care products, and decorative outdoor patio products.

Chipotle Mexican Grill

Chipotle Mexican Grill together with its subsidiaries operates Chipotle Mexican Grill restaurants, which feature a relevant menu of burritos, burrito bowls (a burrito without the tortilla), tacos, and salads. The company operates Chipotle restaurants throughout the U.S., international Chipotle restaurants, and non-Chipotle restaurants. The company uses various herbs, spices and seasonings to prepare its meats and vegetables. The company also serves tortilla chips that are seasoned with lime juice and salt, with sides of guacamole, salsas, or queso. In addition to sodas, fruit and tea drinks, and organic milk, most of the company's restaurants also provide a selection of beer and margaritas.

Endeavour Silver Corp.

Endeavour Silver is engaged in silver mining in Mexico and related activities including acquisition, exploration, development, extraction, processing, refining and reclamation. Co. is also engaged in exploration activities in Chile. Co. has three operating mining segments, GuanacevA, Bolanitos and El Cubo, which are located in Mexico as well as Exploration and Corporate segments. The Exploration segment consists of projects in the exploration and evaluation phases in Mexico and Chile.

Floor & Decor Holdings

Floor & Decor Holdings is a holding company. Through its subsidiaries, the company is a specialty retailer of hard surface flooring and related accessories. The company's customers include installers and commercial businesses, Do It Yourself customers and customers who buy the products for installation. The company's primary product categories include Tile, Wood, Laminate/Luxury Vinyl Plank, Natural Stone, Decorative Accessories, and Installation Materials and Tools. In addition to its stores, the company's website FloorandDecor.com showcases its products, provides informational training and design ideas and has its products available for sale, which a customer can pick up in store or have delivered.

Home Depot Inc.

The Home Depot is a home improvement retailer. The company provides its customers an assortment of building materials, home improvement products, lawn and garden products, and decor products and provides a number of services, including home improvement installation services and tool and equipment rental. The company also maintains a network of distribution and fulfillment centers, as well as a number of e-commerce websites. The company provides a number of programs for its Professional Customers to meet their particular needs, and for its Do-It-Yourself and Do-It-For-Me customers, the company provides a number of installation services. The company also provides tool and equipment rentals for its customers.

iA Financial

Industrial Alliance Insurance and Financial Services is a life and health insurance company. Together with its subsidiaries, Co. is engaged mainly in the development, marketing and distribution of individual and group insurance and annuity products, savings and retirement plans, mutual and segregated funds, publicly-traded securities, auto and home insurance, mortgage loans, and other financial products and services. Co. also operates mutual fund, securities and trust companies. The operations of the life and health insurance business extend throughout Canada and certain regions of the U.S., while the general insurance operations are concentrated mainly in the province of Quebec.

International Tower Hill Mines Ltd.

International Tower Hills Mines is engaged in the business of acquiring, exploring and evaluating mineral properties, and either joint venturing or developing these properties further or disposing of them when the evaluation is completed. At Dec 31 2016, Co. was in the exploration stage and controlled a 100.0% interest in its Livengood Gold Project in Alaska, the U.S.

Jaguar Mining

Jaguar Mining Incorporated. Jaguar Mining Inc. (Jaguar) is a gold mining company engaged in acquisition, exploration, development and operation of gold producing properties in Brazil. The Company holds mineral concessions comprising approximately 54,000 hectares in the Iron Quadrangle mining district of Brazil. Its projects include Turmalina, Caete and Paciencia. It holds mineral concessions totaling over 140,332 hectares in the State of Maranhao and over 34,855 hectares in the State of Ceara. Its property portfolio also includes Gurupi Project and Pedra Branca Project. The Paciencia mining complex is located approximately 50 kilometers northwest of Belo Horizonte. The Pedra Branca Project is located in the State of Ceara in northeastern Brazil. The Gurupi Project is located in the state of Maranhao Brazil. The Caete mining complex is located in the state of Minas Gerais Brazil. The Turmalina mining complex is located in the Conceicao do Para municipality in the state of Minas Gerais.

JD.com ADS (N Shares)

Kirkland Lake Gold

Kirkland Lake Gold is a Canadian gold mining and exploration company with three producing mines in Australia: the Fosterville Gold Mine and the Stawell Gold Mine in the State of Victoria and the Cosmo Gold Mine in the Northern Territory. Co. also has a portfolio of development opportunities on its significant land package, including the Big Hill Project at Stawell and various projects in the Northern Territories. In addition, Co. owns title to a mining lease located in north-central Newfoundland, Canada.

Lowe's Cos.

Lowe's Companies is a home improvement retailer. The company provides home improvement products in lumber and building materials, appliances, seasonal and outdoor living, tools and hardware, fashion fixtures, rough plumbing and electrical, paint, millwork, lawn and garden, flooring, and kitchens categories. The company provides installation services through independent contractors in product categories, including appliances, flooring, kitchens, lumber and building materials, and millwork. The company also provides extended protection plans for various products within the appliances, kitchens, fashion fixtures, millwork, rough plumbing and electrical, seasonal and outdoor living, and tools and hardware categories.

Lumber Liquidators Holdings

Lumber Liquidators Holdings is a holding company. Through its subsidiaries, the company engages in business as a multi-channel retailer of hard-surface flooring, and hard-surface flooring enhancements and accessories, operating as a single operating segment. The company provides an assortment of exotic and domestic hardwood species, engineered hardwood, laminate, waterproof vinyl plank and porcelain tile flooring direct to the consumer. The company also features the renewable flooring products, bamboo and cork, and provides a range of flooring enhancements and accessories, including moldings, noise-reducing underlayment, adhesives and flooring tools. The company also provides in-home delivery and installation services.

Netflix Inc.

Netflix is an internet entertainment service with paid memberships members in several countries enjoying TV series, documentaries and feature films across a variety of genres and languages. Members can watch as much as they want, anytime, anywhere, on any internet-connected screen. Members can play, pause and resume watching, without commercials or commitments. Several members in the U.S. subscribe to the company's DVD-by-mail service. The company has three reportable segments: Domestic streaming, which streams content to its members in the U.S.; International streaming, which streams content to its members outside the U.S.; and Domestic DVD, which provides services consisting solely of DVD-by-mail.

Overstock.com Inc.

Overstock.com is an online retailer of blockchain technology. Through its online retail business, the company provides a range of products, including furniture, home decor, bedding and bath, housewares, jewelry and watches, among other products. The company sells its products and services through its Internet websites located at www.overstock.com, www.o.co and www.o.biz. The company's retail business provide goods to furnish and accessorize dream homes for its target customers. The company's Medici business develop the concepts of Government as a Service and a Technology Stack for Civilization by creating or fostering a set of products and solutions that utilize the transparency and immutability of blockchain technology.

PetMed Express Inc.

PetMed Express is a pet pharmacy. The company markets prescription and non-prescription pet medications, and other health products for dogs and cats, direct to the consumer. These pet supplies include: food, beds, crates, stairs, strollers, and other pet supplies. The company's non-prescription medications and supplies include flea and tick control products, bone and joint care products, vitamins, treats, nutritional supplements, hygiene products, and supplies. The company's prescription medications include heartworm and flea and tick preventatives, arthritis, dermatitis, thyroid, diabetes, pain medications, heart/blood pressure, and other medications, as well as generic substitutes.

Scotts Co. Cl A

Scotts Miracle-Gro provides lawn and garden products in the following categories: lawn care, which includes lawn fertilizer products, grass seed products, and lawn-related weed, pest and disease control products; gardening and landscape, which includes water-soluble plant foods, continuous-release plant foods, potting mixes and garden soils, mulch and decorative groundcover products, plant-related pest and disease control products, organic garden products, and live goods and seeding solutions; hydroponics, which includes horticultural, organic, lighting and hydroponics products; and controls, which includes insect control products, rodent control products, and weed control products.

Seabridge Gold

Seabridge Gold is a development stage company engaged in the acquisition and exploration of gold properties located in North America.

Sherwin-Williams Co.

Sherwin-Williams is engaged in the development, manufacture, distribution and sale of paint, coatings and related products to industrial, commercial and retail customers. The company's segments are: The Americas Group, which markets and sells Sherwin-Williams? and other controlled brand architectural paint and coatings, protective and marine products, OEM product finishes and related products; Consumer Brands Group, which supplies architectural paints, stains, varnishes, and industrial products, among others; and Performance Coatings Group, which develops and sells industrial coatings, automotive refinish, protective and marine coatings, coil coatings, packaging coatings and resins and colorants.

SiteOne Landscape Supply

SiteOne Landscape Supply is a holding company. Through its subsidiaries, the company is a national wholesale distributor of landscape supplies in the U.S. and Canada. The company's customers are primarily residential and commercial landscape personnel who focuses on the design, installation and maintenance of lawns, gardens, golf courses and other outdoor spaces. Through its North American network, the company provides irrigation supplies, fertilizer and control products, landscape accessories, nursery goods, hardscapes, outdoor lighting and ice melt products. The company also provides consultative services, as well as a series of technical and business management seminars that it calls SiteOne University.

Stamps.com Inc.

Stamps.com provides Internet-based mailing and shipping solutions in the U.S. and Europe. The company provides the following mailing and shipping products and services under the Stamps.com, Endicia, MetaPack, ShippingEasy, ShipStation, and ShipWorks brands: U.S. Postal Service (USPS) mailing and shipping solutions, multi-carrier shipping solutions, consolidation services, mailing and shipping integrations, mailing and shipping supplies store, branded insurance, and international. The company also provides customized postage under the PhotoStamps? brand name. Customized postage is a form of postage that allows consumers to turn digital photos, designs or images into valid USPS-approved postage.

Tractor Supply Co.

Tractor Supply is a rural lifestyle retailer. The company is focused on supplying the needs of recreational farmers and ranchers and all others who enjoy the rural lifestyle, as well as tradesmen and small businesses. The company operates retail stores under the names Tractor Supply Company, Del's Feed & Farm Supply, and Petsense and operates websites under the names TractorSupply.com and Petsense.com. The company's selection of merchandise is comprised of the following main product categories: equine, livestock, pet, and small animal products; hardware, truck, towing, and tool products; seasonal products; work/recreational clothing and footwear; and maintenance products for agricultural and rural use.

Vipshop Holdings (ADS) (N Shares)

Wayfair

Wayfair is a holding company. Through its e-commerce business model, the company provides customers with browsing, merchandising and product discovery for products from various suppliers. The company has online selections of furniture, decor, decorative accents, housewares, seasonal decor and other home goods. The company's mobile app also provides customers a way to shop for their home from their home using its View in Room 3D augmented reality tool. The company's sites include: Wayfair, Joss & Main, AllModern, Birch Lane, and Perigold. Wayfair is the only one of the company's sites that also operates internationally, operating as Wayfair.ca in Canada, Wayfair.co.uk in the U.K. and Wayfair.de in Germany.

Provider
Vermilion Research
Vermilion Research

Vermilion Research delivers timely, actionable, and unique research inputs to professional investors. Our research strategists highlight securities which we believe are at major inflection points, based on our various proprietary technical indicators, and offer asymmetric risk/return profiles. We believe our research methodology, which is not limited by industry sector or market capitalization, enables us to deliver superior investment recommendations.

Our process begins by organizing all actively traded stocks into coherent sectors, then into logical industry groups. We then apply our proprietary relative strength tools to identify developing price trends. Once attractive trends are identified within a selected sectors or groups, we screen for individual stocks which we believe offer the best risk/reward profile. Vermilion offers U.S. and global equity market research products. Vermilion’s research team, which has received numerous awards and accolades, has a combined 70 year of experience in the analysis of investment securities.

Analysts
Dave Nicoski

Ross LaDuke

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